As 2025 progresses, borrowers in Hawaii and the Pacific Islands are experiencing major shifts in federal student loan repayment policies. These changes come amid unique regional challenges such as higher living costs, limited local financial resources, and distinct educational pathways, making the evolving landscape especially impactful for these communities.

From Honolulu to Guam, and across smaller Pacific territories, borrowers are adapting to resumed interest accrual, streamlined repayment plans, tightened forgiveness eligibility, and newly enforced federal borrowing caps. Below is an overview of the most significant changes shaping student loan repayment for Hawaii and Pacific Island residents in 2025.

1. Interest Resumes After Nearly Five Years

Federal student loans began accruing interest again in August 2025 after a nearly five-year pause initiated during the COVID-19 pandemic. This shift affects many borrowers across Hawaii and the Pacific Islands who had benefited from the temporary relief, particularly those enrolled in the now-suspended SAVE plan.

With interest rates now between 4% and 7.5%, loan balances are growing once again, even for those making regular payments. Given Hawaii’s notably high cost of living and the geographic isolation of Pacific territories, the return of interest places additional financial pressure on borrowers already managing elevated housing and transportation expenses.

Although this interest restart is not retroactive, it represents a return to pre-pandemic borrowing conditions, requiring careful budget adjustments for many families and recent graduates.

2. Federal Repayment Options Simplified

Previously, borrowers had access to multiple income-driven repayment plans such as PAYE, REPAYE, and SAVE. In 2025, the federal government consolidated these into two primary plans: a 10-year standard repayment plan and the new Repayment Assistance Plan (RAP), which adjusts payments based on income over a possible 30-year term.

This simplification aims to reduce confusion but may result in longer repayment periods and increased total interest costs for borrowers in Hawaii and the Pacific Islands. Many financial aid counselors in the region stress the importance of understanding RAP’s extended terms and preparing accordingly.

The phase-in of RAP begins with new borrowers in 2026 and will include existing borrowers by 2028.

3. Restart of Default Collections and Enforcement

Loan collection enforcement has resumed after a multi-year suspension. Borrowers in default in Hawaii and Pacific Island jurisdictions are once again subject to wage garnishment, tax refund offsets, and other collection activities.

Default rates in these areas, while generally lower than some mainland regions, are rising as borrowers face renewed repayment pressures. Local agencies and nonprofit organizations are ramping up outreach efforts to assist borrowers navigating collections and to provide education on loan rehabilitation options.

4. Forgiveness Pathways Are Narrowed

The criteria for loan forgiveness, including the Public Service Loan Forgiveness (PSLF) program, have tightened. Only borrowers enrolled in RAP continue to accrue qualifying payments toward forgiveness. Those in legacy repayment plans must transition to RAP or risk losing eligibility.

This shift impacts many public employees throughout Hawaii and the Pacific Islands, including teachers, healthcare workers, and government employees, who rely on forgiveness programs to manage their debt.

Shorter forgiveness timelines under previous plans have been eliminated for new borrowers, potentially extending repayment obligations by several years.

5. Federal Borrowing Limits Now Enforced

Federal loan limits are now strictly enforced, capping Parent PLUS loans for undergraduates at $65,000 per student and graduate borrowing at $100,000, with a higher limit of $200,000 for certain professional degrees.

For borrowers in Hawaii and the Pacific Islands, where educational opportunities often require attendance at out-of-state or private institutions with higher tuition, these caps are prompting some to seek private loans or alternative funding.

Families and students may also reconsider educational pathways in response to these new borrowing restrictions.

The changes to student loan repayment policies in 2025 represent a significant transition for borrowers across Hawaii and the Pacific Islands. With resumed interest, simplified repayment plans, reactivated collections, narrowed forgiveness options, and new borrowing caps, the borrowing environment is markedly different from recent years.

While these reforms are designed to streamline repayment and reduce federal loan risk, they also present challenges—especially in regions with high living costs and limited financial infrastructure.

Understanding and adapting to these changes will be critical for borrowers in Hawaii and the Pacific Islands as they work toward managing their education debt in this new landscape.