The University of Hawaii’s community college system is the most affordable public two-year institution in the nation, according to a new report that analyzed what students and families earn and can therefore afford to pay for a postsecondary education in each state.

The report by the Institute for Research on Higher Education at the University of Pennsylvania’s Graduate School of Education ranked states based on the percentage of annual family income needed to cover educational expenses at public and private two- and four-year institutions. Overall, Hawaii ranked third in the nation for college affordability.

“The guiding perspective of college affordability in this study is tied closely to the economic circumstances of students and families. College affordability is defined as the percent of family income that would be required to pay all educational expenses, after financial aid, to attend college full time,” the study’s authors wrote. Educational expenses were calculated as tuition, room and board, and books.

“This study does not define college affordability policy based on what the ‘market can bear’ or what other states or their peer institutions charge students,” the report said.

The University of Hawaii’s seven community colleges enrolled 30,370 students last fall, representing 54 percent of the student body across the 10-campus UH system. Full-time resident tuition at the community colleges is $126 per credit hour for the 2016-17 academic year. That amounts to $1,512 per semester and $3,024 a year for full-time students.

With room and board, the cost of textbooks and financial aid factored in, the report calculated the net cost to attend a UH community college as:

>> $4,281 a year for low-income families earning below $30,000 a year.

>> $5,248 for middle-income families earning between $30,000 and $48,000.

>> $7,069 for families earning between $48,001 and $75,000.

>> $9,155 for families earning between $75,001 and $110,000.

Overall, across income brackets, Hawaii families would need to spend 13 percent of their annual income to cover the cost of attending a UH community college full time — the lowest percentage among the 16 states that enroll at least 40 percent of a state’s undergraduates.

“Hawaii has the most affordable public two-year institutions in the nation,” the report said.

Expanding access

The percentage of students taking out federal student loans varies across the community college campuses from a low of 6 percent of students at Leeward Community College to 31 percent of students at UH Maui College (which offers some four-year degrees), according to the U.S. Department of Education.

John Morton, UH’s longtime vice president for community colleges, said that the two-year colleges are designed to provide access to higher education.

“As the (affordability) study points out, we work toward being affordable, and we are also committed to having cost not be a barrier for any Hawaii resident attending the community colleges,” he said.

Because tuition is comparatively low, Morton added, financial aid through federal need-based Pell Grants (which do not need to be paid back), UH and private scholarships, the GI Bill for service members and veterans, and employers covers much of the cost for need-based students.

“We are more focused on removing cost as a barrier for any need-based student. With the financial aid now available, we are close,” he said. “We estimate that we could have all tuition, fees, books, supplies and transportation covered for all students with need statewide (at community colleges) with an additional $2.5 million in aid. We will be pursuing this goal both in the UH Foundation capital campaign and with the state Legislature.”

‘It’s pretty affordable’

Students seem to agree that studying at UH’s community colleges is affordable.

Suraj Mehta, 21, moved to Hawaii from Illinois to pursue a college education and started out at Honolulu Community College. Even at the nonresident rate he had to pay his first year here — which is almost three times higher than resident tuition — Mehta said costs were still reasonable.

“I definitely think it’s pretty affordable. It hasn’t caused any hardships for me or my family,” he said.

Mehta took his required math, science and physics courses at Honolulu and Kapiolani community colleges before transferring to UH Manoa, where he’s now a junior majoring in computer engineering and pursuing a minor in computer science. He credits his community college experience with various hands-on and project-based assignments for landing a part-time job with the National Oceanic and Atmospheric Administration on Ford Island, where he does database programming.

“I definitely feel that the community college programs helped me get STEM (science, technology, engineering and mathematics) experience that probably got me the job,” Mehta said.

Richard Kahakui, 21, agrees that the community colleges are affordable, but said he’s had to combine assistance from his family, income from a part-time job and scholarships to cover all of his educational expenses.

“My original intent was to go away for school, but money is always an issue. So when I couldn’t get a scholarship to at least pay for room and board and some tuition, that was out of the question,” Kahakui said. “It was way too expensive.”

“But it didn’t stop me from going to college,” the Kamehameha Schools graduate said. “I just decided to take the cheaper, less direct route and go through the community colleges and then move to a four-year university.”

He studied at Windward Community College for 2-1/2 years, using scholarships from UH and Kamehameha Schools to help offset the cost of tuition. He transferred to UH Manoa last fall and is majoring in computer engineering.

“We’re in Hawaii, where it’s hard enough to get a job for most people, and so to get a good job that keeps you in Hawaii, that’s the big thing,” Kahakui said of his goal to get a college education. “My parents put a lot of effort into helping me be successful, so I think it’s only fair that I do my best so I can get a well-paying job to help them eventually.”

Tuition subsidies

The affordability report, meanwhile, ranked Hawaii fifth most affordable in the nation for its public research university, UH’s flagship Manoa campus, where full-time resident undergraduate tuition is $10,872 a year. Families would need to spend, on average, 23 percent of their annual income to cover educational expenses, according to the report.

The study pointed out that Hawaii is one of the few states that does not provide tuition subsidies through state-run programs.

“Despite Hawaii’s overall high affordability ranking, attending college is a big expense for families earning less than $30,000 annually,” the report said. “Hawaii’s financial aid policies do little to alleviate costs for these families. The state provides minimal need-based aid to students attending public institutions.”

Although the state doesn’t budget for scholarships, UH policy requires that a minimum percentage of tuition revenue be set aside for need-based scholarships, including a minimum of 10 percent at Manoa (which actually sets aside 20 percent of tuition revenues), 12 percent at UH Hilo and West Oahu, and 8.8 percent at the community colleges. UH provided $46.7 million in tuition-funded financial aid during 2014-15, including $6.3 million at the community colleges.

Educated workforce

The affordability report also highlighted the importance of an educated workforce.

“Hawaii’s increasingly knowledge-based economy will require 70 percent of its workforce to have some postsecondary education,” the study said, adding that the state’s current attainment rates fall far short of these needs. “In order for Hawaii to address attainment gaps and workforce needs, the state must consider a comprehensive strategy in which college affordability is a central policy.”

Karen Lee, executive director of Hawaii P-20 Partnerships for Education, said a state initiative led by her organization to significantly boost the number of adults earning college degrees over the next decade is slowly advancing. The so-called 55 by ’25 campaign seeks to have 55 percent of Hawaii’s working population holding two- or four-year college degrees by 2025.

“We’re slowly inching up there. About eight years ago we were at 41 percent. We’re now at 44 percent,” Lee said. “We need more students in any kind of higher education. … We want to get the message out that it’s worth it.”

She cited an economic report that estimates the average UH bachelor’s degree recipient can expect to earn $1.04 million more in his or her lifetime over a high school classmate who never went to college.