Moving America Forward

The Average College Graduate Has a Whopping $30,000 in Debt. How One Startup Is Helping Them Pay It Back

March 13, 2014
by
Menu
The Average College Graduate Has a Whopping $30,000 in Debt. How One Startup Is Helping Them Pay It Back
Thinkstock
SponsorChange aims to foster a passion for civic engagement among recent graduates while helping them pay down their loans.

Two years ago Rozlynd Awa left Pittsburgh for Kaneohe, armed with a master’s degree in public policy from Carnegie Mellon University. A staggering $140,000 in student loan debt also followed her to the Hawaiian city, where she’s now an analyst for an education nonprofit. For that amount of money, Awa could have purchased a Porsche 911 (with embellishments, no less), flown around the world (roughly 14 times) or bought a home (albeit a modest one). “It’s overwhelming,” she says when she stops to think about it.

The only daughter to a single father, Awa wasn’t immune to hard work: She took on two jobs to help pay for college and grad school. Yet Awa was surprised when she learned she could volunteer at a company that might serve as a launching pad to an engaging career and at the same time earn money to pay down the money she owed. The opportunity came from a small Pittsburgh nonprofit called SponsorChange, which enables college graduates to chip away at their loans through high-level, skills-based volunteer work at sponsoring corporations. SponsorChange’s mission isn’t far off from programs such as AmeriCorps, but its focus on the private sector sets it apart from similar government-sponsored initiatives.

“Nearly two-thirds of students graduate with debt, which at times prevents them from doing the civic work that they really want to pursue,” says Raymar Hampshire, who co-founded SponsorChange in 2009 with personal savings and support from the Sprout Fund, an organization that invests in community projects in Pittsburgh. SponsorChange serves as a bridge between students, dubbed “change agents,” and companies, matching qualified graduates to specific projects. The sponsor businesses, which range from local law firms to the Boys & Girls Club of America, pay $1,000 per project to alleviate each student’s loan debt. So far SponsorChange has matched about 35 students to various projects, from business consulting to web development, which are split into 40-hour stints. “We wanted to give them a way to pay off that pesky debt a bit while still being involved in their community and increasing their network.”

MORE: This State Might Offer a Novel Incentive to Help Teachers Pay Off Loans

It’s a big problem to tackle. A mainstay topic in the debate about education reform, the average student loan debt has nearly tripled over the last 15 years, according to a study from the Pew Research Center, hurting recent graduates as they enter the workforce. In recent years, that growth has begun to set records: Outstanding loans soared past the $1 trillion mark in 2011, exceeding the nation’s total credit-card debt.

Awa’s $140,000 figure is no doubt exceptional, but the average debt for graduates of the class of 2012 was $29,400, up slightly from $26,600 in 2011, according to a report from the Institute for College Access and Success, a nonprofit research group. “Student loan debt is the biggest burden millennials carry into the economy, and it’s crippling their ability to be productive individuals in society who could be growing our economy,” says Joe Bute, president of Hollymead Capital Partners LLC, a consulting firm in Gibsonia, Pa., near Pittsburgh, where Awa completed her SponsorChange project. In fact, student loan debt has become so burdensome that some experts say it’s even hampering a recovering housing market.

Since the program offers only $1,000 per project and participants typically only complete one project, Hampshire, 31, says an equally important part of SponsorChange’s mission is to encourage a love for socially altruistic work among young adults. And students who have participated in the program, such as Awa, are quick to agree. At Hollymead Capital, Awa researched re-entry models and transitional programs for newly released prisoners. “I was less in it for the money, which was really negligible compared to the debt I carried,” says Awa, whose graduate degree focused on education policy. “For me, it was really about exploring a different side of public policy and seeing whether the experience might segue into something else.”

ALSO: This 6-Year High School Challenges Everything We Thought We Knew About American Education

It’s Hampshire’s greatest hope that SponsorChange can become an outlet for new graduates to pursue these kinds of civic-based explorations. Hampshire was motivated to found the organization because he lacked such an opportunity while working in the private sector, which included jobs at companies such as Merrill Lynch. “Yes, I was able to pay my student loans and live comfortably, but I wasn’t feeling 100 percent fulfilled,” he says of his corporate gig. “I wasn’t actually making an impact or contribution to my community. So I wanted other young people to not have to make that decision — to either pay off their student loans or pursue a job that fulfilled them.”

Hampshire says he’s received great enthusiasm from corporate sponsors as well, many of whom are eager to provide millennials a chance to pay off their debt in a productive way. “That’s what I like most about SponsorChange’s model — that they’re creating a scenario for students to engage with companies in a practical way,” says Bute. “It’s not just random work or students getting coffee. It’s very much project-focused. They get the job done. They see the results.”

Hampshire launched SponsorChange in Pittsburgh, though he’s hoping that recent national attention — including a Dewey Winburne Community Service Award in Austin, Texas, at the SXSW Interactive Festival — will help propel the nonprofit to expand further across the country. The nonprofit has plans for a program that can facilitate virtual volunteering, where students can do remote work such as web programming or research for companies in other locations. Hampshire is also planning an aggressive push to involve colleges and universities in recruitment. “We want to scale what we’ve done so far, which is mostly pairing Pittsburgh-based students with Pittsburgh-based companies,” he says. “Universities and colleges have a ton of talent that could be mobilized to do impact volunteering, and we want to be at the center of facilitating that process…and fundamentally changing the way we deal with student debt at a national level.”

DON’T MISS: This Congresswoman Has a Plan to Protect Students from Crippling Debt

Comments