HB777 SD1

SECTION 1. In 2001, the Hawaii educator loan program and special fund were established to recruit college students to become educators and to ensure that these graduates teach in our public schools. The legislature finds that although the program has proven to be successful, the State is still experiencing a teacher shortage. In particular, hard-to-fill positions, including special education, regular education shortage categories, and teacher positions in rural areas have posed a significant teacher recruitment and retention challenge for our public schools.

The purpose of this Act is to establish an educator loan forgiveness programs to recruit and retain qualified teachers to teach in public schools located in rural areas throughout the State, to amend the loan forgiveness schedule for the Hawaii educator loan program, and to appropriate funds for these programs.

SECTION 2. Chapter 302A, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§302A- Educator loan forgiveness program; special fund. (a) There is created the educator loan forgiveness program to be administered by the department in partnership with a financial institution whose operations are principally conducted in Hawaii, for the purpose of providing financial support to teachers who complete a state-approved teacher education program and agree to teach in the Hawaii public school system at a school located in a rural area, as determined by the department and for a period of time to be determined prior to each award. Eligibility shall be determined by the department on a competitive basis. The amount awarded to a teacher shall be determined by the department based on need for financial aid and proof of a state-approved teacher education degree. The maximum amount that a teacher may receive under this program shall be an aggregate amount equivalent to tuition payments and costs of textbooks and other instructional materials necessary to complete a state-approved certification training program.

(b) There is created in the treasury of the State the educator loan forgiveness program special fund, for the purpose of providing funds pursuant to subsection (a). The following may be deposited into the special fund: appropriations made by the legislature; private contributions; repayment of loans, including interest and payments received on account of principal; moneys received from collection agencies under subsection (g); and moneys from other sources; provided that:

(1) Moneys on balance in the special fund at the close of each fiscal year shall remain in that fund and shall not lapse to the credit of the general fund; and

(2) An amount from the special fund not exceeding five per cent of the total amount of the special fund may be set by the department to be used for administrative expenses incurred in administering the special fund.

(c) The department shall adopt rules to implement the educator loan forgiveness program. The rules shall be adopted pursuant to chapter 91, but shall be exempt from the public notice and public hearing requirements.

(d) Liability for repayment of a loan shall be canceled upon the death or permanent total disability of the borrower.

(e) Upon a showing of proof that the loan recipient has completed a state-approved teacher education program and for each year that the loan recipient teaches in the Hawaii public school system at a school located in a rural area, loan forgiveness shall be provided to the recipient as follows:

(1) Ten per cent of the total amount of the loan and interest shall be waived every year for the first five years of repayment; and

(2) Twenty-five per cent of the total amount of the loan and interest shall be waived every year for the sixth and seventh years of repayment.

(f) If a loan recipient who is a graduate of a state-approved teacher education program subject to this section fails to teach in the Hawaii public school system at a school located in a rural area for a minimum number of years, as determined by the department prior to the award, from the recipient's original date of employment with the department, excluding temporary leaves of absence, then the recipient shall repay any remaining loan balance.

(g) In accordance with chapter 103D, the department may enter into written contracts with collection agencies for the purpose of collecting delinquent loans. All payments collected, exclusive of a collection agency's commissions, shall revert, and be credited, to the educator loan forgiveness program special fund. A collection agency that enters into a written contract with the department for the collection of delinquent loans pursuant to this section may collect a commission from the debtor in accordance with the terms of, and up to the amounts authorized in, the written contract."

SECTION 3. Section 304A-702, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows:

"(a) All loans made under this subpart shall bear interest at five per cent simple interest. Repayment of principal and interest charges shall commence one year after graduation or three months after a loan recipient ceases to be enrolled in a state-approved teacher education program and shall be paid in periodic installments within a [~~six-year~~] seven-year period. The university may charge late fees and all other reasonable costs for the collection of delinquent loans.

(b) Upon a showing of proof that the loan recipient has completed a state-approved teacher education program and is employed as a full-time teacher in the Hawaii public school system, one-tenth of the total amount of the loan and interest shall be waived for every year of the first five years, and [~~the remaining balance shall be waived after the sixth year~~] twenty-five per cent of the total amount of the loan and interest shall be waived every year for the sixth and seventh years of repayment that a loan recipient teaches in a Hawaii public school in a hard-to-fill position as determined by the superintendent of education, including special education, regular education shortage categories, or Title 1 schools, and in one of the following capacities:

(1) As an elementary school teacher teaching in the field of elementary education who has met standards as set forth by the Hawaii teacher standards board; or

(2) As a secondary school teacher teaching in the subject area that is relevant to the loan recipient's academic major as certified by the department of education who has met standards as set forth by the Hawaii teacher standards board."

SECTION 4. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2007-2008 for deposit into the educator loan forgiveness program special fund.

SECTION 5. There is appropriated out of the educational assistant loan forgiveness program special fund the sum of $ or so much thereof as may be necessary for fiscal year 2007-2008 for the purposes of the state educator loan forgiveness program.

The sums appropriated shall be expended by the department of education for the purposes of this Act.

SECTION 6. There is appropriated out of the general revenues of the State of Hawaii the sum of $1 or so much thereof as may be necessary for fiscal year 2007-2008 to be deposited into the Hawaii educator loan program special fund to be used for student loans.

SECTION 7. There is appropriated out of the Hawaii educator loan program special fund the sum of $1 or so much thereof as may be necessary for fiscal year 2007-2008 to be used for student loans.

The sum appropriated shall be expended by the University of Hawaii for the purposes of this Act.

SECTION 8. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 9. This Act shall take effect on July 1, 2020.

HOUSE OF REPRESENTATIVES	H.B. NO.	777
TWENTY-FOURTH LEGISLATURE, 2007		H.D. 2
STATE OF HAWAII		S.D. 1