Higher education officials in Hawaii are warning that the college students in the state may find it more difficult to obtain scholarships over the next year or two, the Honolulu Advisor reports.

The problem lies with the hundreds of local scholarship funds that rely on interest earned on their endowments. With value of many endowments across the state having fallen, along with the markets, local financial aid experts predict that 2009 will see more people applying for significantly less scholarship money than in years past. For instance, the Hawaii Community Foundation, which awarded some $5 million in scholarships in 2008, has seen a significant increase in scholarship applicants this year. Although the foundation is working hard to maintain its giving in 2009, Rhona Kekauoha, a scholarship officer at the foundation, said there have been some "minor effects" from the economy.

The University of Hawaii Foundation, another major scholarship provider in the state, typically awards more than $12.5 million annually from hundreds of funds. In a typical year, an endowed fund of $35,000 will earn between $1,200 and $1,500 in interest, which can be used to fund a scholarship or grant. But 2009 will not be a typical year, said UH vice president for student affairs Karen Lee. "It's going to be less," Lee predicted. "We are now seeing some reports from some of our endowed scholarships that they're not spinning off as much revenue."

Making matters worse, Hawaii governor Linda Lingle has proposed some $395 million in cuts to the state's general fund budget, including approximately $40 million from the Department of Education budget and $13.5 million in cuts for the UH system. At the same time, with college enrollment up across the state, competition for scholarships is expected to be intense. Still, financial aid counselors are urging students not to despair and encouraging them to apply early for any scholarships that are still available.

But while state-based scholarships may be harder to obtain, students shouldn't have a problem securing federal loans, said Frank Green, executive council member for the Pacific Financial Aid Association. "There hasn't been any problem in access to [loans]," Green noted. "But the choice in lenders has dropped a little bit. You used to be able to go to a community college and have ten different lenders to choose from. Now, maybe you're down to three or four to choose from."