Tag: student loan debt

5 Solutions to Student Loan Debt Headaches

Posted on by robbie

Student loans are an inescapable fact of life for a significant chunk of Americans — 44 million, to be specific. These borrowers each owe an average of $37,000 in federal loans, and it’s overwhelming them. During the Obama administration, for example, about 8.7 million people defaulted on their student loans; that’s roughly one default every 29 seconds.
While a recent New York Times report found an increasing number of cash-strapped graduates are successfully getting their private loan debt erased, most won’t be that lucky. For everybody else looking to make a measurable dent in their educational debt, good financial practices, like finding the right repayment plan, combined with a bit of creative maneuvering is essential.

PUT POCKET CHANGE TO WORK

As the saying goes, every little bit counts. That’s the theory behind the ChangEd, an app that helps you incrementally — and painlessly — pay down debt by rounding up everyday purchases to the nearest dollar and depositing the spare change into an FDIC-insured account. For instance, buy a cold-brew coffee for $4.50, and ChangeEd will take the extra 50 cents and save it to your account. Every time your account hits $100, they’ll send a payment to the debt of your choice.

PARTNER UP WHEN SHOPPING

Before your next grocery or pharmacy run, check to see if your loan is eligible for Sallie Mae’s Upromise, which applies a cash-back bonus of up to 5 percent on certain purchases to help you pay down student debt. Big name retailers like Kohl’s, Walmart and Groupon participate, as do many travel sites and restaurants. “Upromise lets you earn rebates not just for college savings before college, but also for repaying student loans after college,” says Mark Kantrowitz, publisher and vice president of strategy for college-search and scholarship site Cappex.
There’s also EvoShare, which offers a similar system — shop at one of the site’s partner retailers, and you’ll earn a percentage back toward your student loan balances (or toward retirement savings, once you’ve paid off your student loans). “You can’t cash out,” says Miranda Marquit, a financial expert with Student Loan Hero. “It either has to go toward retirement or paying down your student loans.

SWITCH THE WAY YOU PAY

Here’s a solution that doesn’t require you to spend money to save it. By simply splitting your monthly payment in two, you could shave more than an entire year off the life of your loan. That’s because there are two months in the year in which you’d be making three half-payments, totaling up to one extra payment a year — and that can mean big savings over time. And if your loan has a variable interest rate, you’ll save even more — because half your payments will be processed early, you’ll lower the daily balance that’s subjected to interest charges.

MASTER THE ART OF NEGOTIATION

Over the last several years, a few large employers — and a handful of smaller ones, too — started offering student loan repayment as a perk to attract talent, says Robert Farrington, founder of The College Investor. “These companies will contribute anywhere from $500 to $10,000 a year toward their employee’s student debt.”
While only an estimated 4 percent of employers currently offer student loan benefits, it doesn’t mean you can’t bring it up yourself when considering a job offer. Many new hires are able to successfully lobby for a higher salary or more paid time off; it stands to reason that student loan reimbursement wouldn’t be off the table either.

GET IN WITH THE GOVERNMENT

Since it was signed into law a decade ago, the public service loan forgiveness program (PSLF) has allowed thousands of borrowers to find debt relief from federal loans. If you work for the government or a nonprofit, or hold a service-oriented position like teaching, nursing or law enforcement, the remaining balance on your student loans will be forgiven after 10 years on the job. Though the future of PSLF is in doubt under the current administration, for now it still stands as a wonderful way to rid yourself of debt while contributing to the greater good.
Bottom line: If you look around, there’s sure to be a strategy that will help you pay off your debt in less time. “There are solutions for all people with student loans,” says Brandon Yahn, founder of Student Loans Guy. “They just need to know what their options are and how to find them.”
Homepage photo by Justin Sullivan/Getty Images.
MORE: The Unlikely Group That Has the Power to Solve the Student Loan Debt Crisis

The Power of Video Games to Heal America’s Heroes, A Surefire Way to Keep Students in School and More

Posted on by robbie


How Games Are Helping Veterans Recover from Injury, Polygon
U.S. Army Major Erik Johnson discovered the healing power of video games firsthand while recovering from a horrible car accident. Today, the occupational therapist serves as Chief Medical Officer for Operation Supply Drop, a nonprofit that taps the therapeutic benefits of technology to help veterans and active service members recover from physical injuries, mental struggles, memory and cognitive problems and more. Sure, it’s unconventional to put a Nintendo Wii controller in a soldier’s hand during therapy, but the results are undeniable: reestablishing “themselves as an able body person who can enjoy things they used to enjoy.”
What Can Stop Kids From Dropping Out? New York Times
The massive amount of outstanding student loan debt might not be the biggest problem when it comes to higher education. What is? The fact that almost half of college freshmen fail to earn a bachelor’s degree within six years. Dropout rates are highest amongst minorities, first-generation undergrads and low-income individuals, but through advisory sessions at the first sign of trouble, classes that offer immediate feedback, tiny grants of just a few hundred dollars and more, George State University is helping these traditionally poor-performing students achieve higher graduation rates than their white peers.
The Bag Bill, The New Yorker
A self-described child of hippie parents, Jennie Romer fondly recalls visiting the local recycling facility with her parents. The weekly trips clearly had an impact on Romer, who’s spent much of her adulthood fighting for plastic bag bans. Success has been plentiful in California, with San Francisco, San Jose and Los Angeles all passing ordinances against the notorious environmental menace. Now Romer has her sights set on implementing a fee on plastic bags in the country’s largest metropolis. Will she add the Big Apple to her list of triumphs?
Editors’ note: Since the publication of the New Yorker article, the New York City Council has approved a 5-cent fee on plastic bags. 
MORE: The High-Energy Activity That’s Healing the Invisible Scars of War

Meet the Hard-Working Veterans Offering a Safe Passage to Chicago Youth

Posted on by robbie

“Veterans come from an environment,” says Eli Williamson, president of Leave No Veteran Behind (LNVB), “in which everyday they understand what their purpose is.” He continues: “When they come out of the military there’s this moment in which they say well, ‘what’s my new purpose?’”
Williamson asked himself this very question shortly after returning from a deployment to Iraq in 2004. His homecoming was met with the news that his student loans — which he used to pay for his college education before he went overseas — had come out of deferment. His friend and LNVB co-founder, Roy Sartin, was in the same situation. So the two army buddies from Chicago decided to write Oprah, in the hopes that the same charity that inspired her to give away cars might finance their student debt. When sharing their plans with other veterans, they discovered that student debt is a widespread burden for many returning servicemen and women.
Eventually they settled on a simple plan. “What if we were to raise dollars,” says Williamson, “apply those dollars directly to the veteran’s student loan account, and then require that veteran to give back 100 to 400 hours of community service once that debt has been paid?” From this idea, the nonprofit was formed.
Hakki Gurkan, a Chicago police officer and a veteran of Iraq and Afghanistan, accessed it for student loan assistance in 2011. His mother’s cancer had recently come out of remission, his father had been through hip replacement surgery, and Gurkan struggled to financially provide for both of them. After his loans were paid, Gurkan’s service project created LNVB’s most visible program: Safe Passage.
In response to the widespread violence among youth in parts of Chicago, LNVB approached the Chicago school system to see if veterans could help. Tipped off about repeated violent incidents on the corner of 35th and Martin Luther King Drive, LNVB deployed 20 veterans to the location to stand guard, positively engage with youth and maintain the peace. Several weeks of calm led to expansion, and now, more than 400 veterans have participated in the Safe Passage program, positioned at several hot spots for crime in tough Chicago neighborhoods. On any given school day, about 130 veterans patrol the streets. As a result, the Chicago police has seen a significant decline in violence in the communities served.
Coming from all walks of life, the service members are paid $10 an hour and work during the times that students are traveling to and from school. That important off-time between shifts gives veterans the hours they need to search for jobs and to attend interviews. LNVB also provides its workers resume assistance.
Williamson and Sartin see the skills of returning veterans as a largely untapped resource. And part of that skill set is a sense of mission, whether applied to an operation overseas or a local effort to keep America’s youth safe.
Says Williamson, “Our ability to come back as veterans and be useful to people other than ourselves is critical.”

The Last Thing Veterans Need Is Student Loan Debt…

Posted on by robbie

A common misconception is that any veteran who wants a college education can finance it through G.I. Bill. But sadly, this isn’t so. Both the old version and the new, post 9/11 one exclude certain education expenses and neither applies to student loan debt accrued before servicemen and women entered the military.
So the Chicago-based nonprofit Leave No Veteran Behind is offering a “Retroactive Scholarship” that has already helped 10 veterans pay off their student loan debt and get back on track toward productive post-military lives.
One of the first beneficiaries is Delaina Conour, who was attending college when the terrorist attacks on Sept. 11 spurred her to enlist in the Army. During training, she suffered a back injury and was eventually medically discharged, according to the Christian Science Monitor.
Delaina’s husband is a disabled veteran, and in 2006, they had a daughter with Down syndrome who has undergone 12 surgeries. The overwhelming medical expenses, coupled with her preexisting student loan debt, was too much. “We ended up forced into bankruptcy and ended up losing our home because of medical bills,” Conour tells Hayley Fox of Take Part.
Their bankruptcy declaration didn’t clear student loan debt, however, leaving the family with $15,000 worth of debt. But fortunately, Leave No Veteran Behind stepped up and covered Conour’s $10,000 portion of it. “I didn’t even know help like this existed,” Delaina says.
Every year, Leave No Veteran Behind’s scholarship committee meets to review applications. They give priority to veterans suffering hardships — including unemployment and medical difficulties. The committee selects several and pays their outstanding student loan debt off in full.
In exchange for paying off student loan debts, Leave No Veteran Behind also asks the vets to commit to 100 to 400 hours of community service “that leverages their military skills, civilian education and lack of indebtedness to help solve the most pressing issues facing their communities,” according to the nonprofit’s website.
Veterans Roy Sartin and Eli Williamson are the founders of Leave No Veteran Behind. Both struggled with student loan debt and unemployment when they returned from service in Iraq and Afghanistan. So in 2009, they started the nonprofit that they wished had existed for them.
So far, the organization has paid off almost $150,000 in student loan debt. By getting the word out about their efforts, Sartin and Williamson hope to eventually help 60 to 70 veterans a year, removing one big stressor as these soldiers transition to civilian life.
MORE: This Nonprofit is Making Sure Kids of Fallen Heroes Can Go To College

The Unlikely Group That Has the Power to Solve the Student Loan Debt Crisis

Posted on by robbie

We’ve talked about the staggering figure before: Americans owe $1.2 trillion in student loans. But one of the most compelling facts about this bubble, a recent government report found, is that this crushing debt doesn’t just affect the young. Senior citizens are also saddled with this financial burden — but they may also be the remedy to this crisis.
According to a Government Accountability Office (GAO) report, the federal student loan debt for Americans 65 and older has continued to rise from $2.8 billion in 2005 to a whopping $18.2 billion in 2013. Due to (frankly unreasonable) interest rates, an increasing population of older Americans can’t make their loan repayments: 4 percent of seniors now have student loan debt compared to only 1 percent six years ago.
About 80 percent of these seniors hold debt from their own education (versus college loans taken out for a child). Take Rosemary Anderson of Watsonville, Calif. The 57-year-old tells the Associated Press that the $64,000 debt she amassed from her undergraduate and graduate studies in her 30s has more than doubled to $126,000. Even though she has worked all her life, she could be in her 80s by the time she pays it all off. Unfortunately, if she doesn’t make the payments, she might default or see her Social Security benefits garnished by creditors. As a result, she might not have enough money to retire when the time comes. 

MORE: Ask the Experts: How Can We Keep From Drowning in College Debt?

Anderson is not alone. “As the baby boomers continue to move into retirement, the number of older Americans with defaulted loans will only continue to increase,” the GAO says. “This creates the potential for an unpleasant surprise for some, as their benefits are offset and they face the possibility of a less secure retirement.”

However, there might be a silver-haired solution. As Education Dive puts it, “seniors vote, and most successful politicians cater to seniors.”
A vast majority of seniors turn out to vote in each election (much higher than any other age group), which means that they also have significant political clout. Many senior citizens are also fiercely protective of the Social Security payments they receive from the federal government. So as more people see their money taken away due to unscrupulous lenders and predatory interest rates, they will demand reform. Politicians know they can’t upset this large voting bloc.
The public has been increasingly angry about mounting student debt, but there has been little government action to solve this enormously expensive problem (Sen. Elizabeth Warren’s bill to refinance student loans died on the senate floor in June). But when a growing sector of these politically powerful Americans are feeling the burden of student loans, they’ll take their sentiments to the polls.
If senior citizens are the ones who will ultimately push lawmakers to take action on student loan reform, let’s get out the vote — even more than usual.
DON’T MISS: When Seniors Have Nowhere Else to Turn, This Nonprofit Protects Them
 

Here’s How Starbucks is Fixing the American Education System

Posted on by robbie

This news will probably justify the expense of your next Frappuccino.
In a surprising announcement, Starbucks is giving an amazing new perk to its workers across the country: A free college education.
The New York Times reports that the coffee powerhouse will pay tuition for any of its 135,000 employees to attend online college classes at Arizona State University as part of the Starbucks College Achievement Plan.
Incredibly, workers don’t even have to remain with Starbucks after receiving their degree — encouraging them to leave coffee-making for better jobs. Starbucks president and CEO Howard D. Schultz told the newspaper that he wants employee success to be “accreted to our brand, our reputation and our business,” and adds, “I believe it will lower attrition, it’ll increase performance, it’ll attract and retain better people.”
MORE: Get Schooled on How to Earn a Computer Science Education for Free
To qualify, an employee must work at least 20 hours a week at Starbucks and have the test scores necessary for admission into ASU. Employees who’ve already completed two years of college credits will have their tuition fully paid for. For those with less than two years of college, the company will pay partial tuition costs.
The company is also providing a dedicated enrollment coach, financial aid counselor, and academic advisor.
The fact is, the American education system is flawed; our $1.2 trillion student loan crisis proves it. These days, you need a college degree in order to land a competitive, well-paid job — but too many people have to go into a mountain of debt to obtain a degree. As Schultz says in the video below, “the last few years in America, we have certainly seen a fracturing of what I’d loosely describe as the American dream or the American promise.”
ALSO: These Seven Colleges Require Students to Earn While They Learn
He continues, “there’s no doubt the inequality within the country has created a situation where many, many Americans are being left behind. And the question I think for all of us is, ‘Should we accept that, or should we try to do something about it?'”
[ph]
According to the Times report, “70 percent of Starbucks workers do not have a degree but want to earn one; some have never gone to college, some have gone but dropped out, and others are in school, but have found it slow going.”
While employer-paid college tuition isn’t something new, it’s not very common. And programs like this are unheard of. Most companies want their workers to study subjects that will suit the company’s needs, while Starbucks allows employees to choose from 40 of ASU’s educational programs, from retail management to electrical engineering. (It’s also worth mentioning that the very successful global coffee company also offers health care for all employees — full- and part-time — and gives stock options, too).
As we previously reported, Shultz is the quintessential social innovator and philanthropist. This past March, he donated an extraordinary $30 million to help with the rehabilitation of our returning soldiers, putting the money towards research into brain trauma and PTSD — ailments that thousands of warriors suffer from.
Let’s go ahead and say it: Best boss ever.
DON’T MISS: Ask the Experts: How Can We Keep From Drowning in College Debt?

Ask the Experts: How Can We Keep From Drowning in College Debt?

Posted on by robbie

Have you paid off your student loan yet? If not, you’ve got lots of company. In 2012, total student debt in the United States reached $966 billion, a tripling over the previous eight years, according to the Federal Reserve Bank of New York. Current estimates put the figure even higher — more than $1 trillion. Over the past 35 years or so, the cost of college has also ballooned by a staggering 1,120 percent, so it’s no wonder that people are questioning whether higher education is really worth it.
The consensus, however, is yes. Going to college is still a good investment. You’ll earn more: On average, college graduates aged 25 to 34, who are employed full time, year round, make 50 percent more than their high-school-educated peers. Over a lifetime, that college diploma will earn you about $500,000 more on average, even after factoring in the cost of school.
And yet many graduates are withering under the weight of their student loans — a problem that could potentially negate any economic benefit of going to college in the first place. So, how do we ease the burden for students who need to borrow money to pay for their education? NationSwell convened a panel of experts to talk about how to fix the student loan system, as well as ways to help families spend their education dollars more wisely.
Read on for our experts’ thought-provoking ideas, and then join the conversation by leaving your own ideas in the comments box.

Beth Akers

Fellow, Brown Center on Education Policy at the Brookings Institution

NationSwell: What can be done to fix our broken college loan system?
Beth Akers: I’m not sure it’s entirely broken, but there are two areas where we can make some improvements. First is on the front end. Students are going into college and blindly taking on debt without a lot of information about the investment they’re making or the amount they’re taking on. The [Obama] administration has taken the first step toward solving that problem with the college-ratings system, and [once they] incorporate earnings information into the data available to prospective students, that will help families make wiser decisions on the front end.
Second, on the back end, a lot of these debts are actually affordable. For the most part, students are making good investments in higher education that do pay off over the long run. In theory, it shouldn’t be problematic for the majority of students to repay these debts, if their repayment period is over a sufficient period. So, what we need to do is focus on creating a repayment program for federal loans that makes the process more painless for borrowers. One way is through income-based repayment. Right now, this program is available only to a certain set of students [with low incomes]. I don’t think it’s crazy to expand eligibility for that program to people with larger earnings so that on average, people are repaying their debts over a longer period of time.
MORE: Ask the Experts—7 Ways to Improve K-12 Public Education
Like everything in education, there are a lot of barriers to information. It’s a very complex — perhaps unnecessarily complex — system. The result of that is that people underutilize the benefits that are available to them. We see that in a lot of different ways. [For example], students are taking on private student-loan debts, when they’re still eligible for government loans at a much lower interest rate. There’s evidence that people are not utilizing the programs properly and that they don’t have the information necessary to make good choices.
NS: How can students and parents be smarter about spending college money?
BA: You have to make wise decisions about where you spend your money and how much you’re willing to spend. There are a lot of great institutions that provide a good return on investment for students. But there are others that do not. The government is not in the business of telling students where to go, and as a result, the responsibility falls on parents and students.
One thing [prospective students] should look at is if people are actually graduating from the school. Graduation rates across institutions vary widely, and that’s a great indicator to see if the institution is doing at least the minimum of what they should. If students aren’t graduating at a sufficiently high rate, then you might want to be skeptical about spending your money there.
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In the future, it would be great to have employment information on the college scorecard, and that’s something that the administration is working on. Once it’s there, I would advise strongly that prospective students use this to make sure that they’re going to see a return that will justify taking on debt to go to college.
Choice is good, right? We have all these institutions, and students can pick a place that’s a perfect fit for them. That’s a really great environment to be in. Unfortunately, that also means that you have a lot of homework to do. There are so many options and the consequences are really very great for making the wrong decision.

Jessica Thompson

Senior Policy Analyst, The Institute for College Access & Success

NS: What can be done to fix our broken college loan system?
Jessica Thompson: I think the No. 1 way is to reduce the need for students to borrow on the front end. That’s going to involve two things: First, increasing our investment in grant aid, especially the federal Pell Grant — which now covers the lowest share of costs at a four-year public institution than it has since the program started — as well as state grants and institutional grants. The other piece is to restore state funding to public higher education, which has played a large role in shifting costs of public higher education from the public to the students and families.
If students do need to borrow some money in order to get to and through college, we have made several recommendations for improving the loan system. First, the current system is far too difficult to manage and understand, and can lead to suboptimal decision-making. There are currently four different income-based repayment plans for loans, and several non-income-based plans. It’s difficult to figure out what you qualify for and how. We recommend streamlining the repayment process so there’s only one income-based repayment plan that any student can opt into, and a limited menu of traditional plans, so that it’s easier for students to understand. We are big proponents for income-based repayment. It’s a crucial safeguard for borrowers who end up being unable to manage their loan payments. However, we don’t support making it the automatic or default repayment plan, because it’s not the best plan for all borrowers.
MORE: Bringing It Home: The International Org Now Helping U.S. College Students
Additionally, we need to improve student-loan counseling before, during and after college. This is a great opportunity for us to figure out what actually works to try to empower students to get the information they need in a way they can understand, enabling them to make good choices about borrowing and repayment.
Lastly, we have to educate people about private student loans and make sure that we are reducing the extent to which students and families are relying on them. These loans have variable interest rates, require co-signers, are not dischargeable in bankruptcy as of 2005, and don’t have repayment protection like income-based repayment, deferment and other options that federal student loans have. It’s the riskiest way to pay for college.
We found that over 40 percent of students who take private student loans have not maxed out their federal loan eligibility. Because of this, we support mandatory certification, which would require banks to go through higher ed institutions. In this case, the institution has the ability to counsel the students and tell them whether or not they still have federal student loans available. Currently, institutions don’t automatically package your maximum federal student loan availability in initial financial-aid offers. Many students just look at what the package offers and assume that anything beyond that, they’ll have to find another way to cover. In reality, they may have more federal loan eligibility.
NS: How can students and parents make wiser decisions about college?
JT: I don’t want to leave the impression that students and parents bear the sole responsibility for finding their way through this very complex and confusing process. But I think that actively seeking out as much information as possible to help make the best decisions for students on the front end — what types of schools to apply to and how many schools to apply to — can help maximize the benefits for the student.
Also, taking advantage of consumer tools like the net-price calculators, which all colleges now have on their websites, financial aid shopping sheets, which allow you to compare financial aid offers to one another, and the college scorecards, which give you basic metrics about each institution, can help arm students and families with information they need to make savvier decisions.
Students should also avoid private loans and certain types of institutions that data clearly show leave students worse off than before they started school. Frankly, the for-profit college sector has a poor track record in that regard. But also [families should] look at the repayment options and know that having to borrow some money is not a reason not to go. In the long run we still see that if you complete school and receive a quality education, this is an investment that will pay off. We want to make sure people aren’t scared away from higher education. It’s absolutely still worth it.

Melinda Lewis

Policy Director, Assets and Education Initiative; Associate Professor of Practice, School of Social Welfare at the University of Kansas

NS: What can be done to fix our broken college loan system?
Melinda Lewis: A lot of the conversation is about how much people pay in interest rates or the sheer amount of debt that students are taking on. Those are valid points, but we don’t think that they’re going to lead us toward the policy changes that are needed. Instead, we start by asking if the current debt-dependent financial-aid system and the rise in borrowing to finance education are eroding the power of higher education to facilitate economic mobility and greater equity in society?
These are large sums that students are borrowing, and when you look at them in comparison to earnings differential between a student who doesn’t go to postsecondary education and one who does, then clearly this is an amount of debt that’s “worth it.” But is the student who goes to college and obtains a degree and finances that education with student debt getting the same return on his or her college education as a student who gets the same degree but is able to finance his or her education without debt? We believe the answer is no. Therefore, there is reason to believe that our reliance on student debt is making it more difficult for an entire generation to use higher education as a platform for greater economic mobility and prosperity. In fact, a study published in November found that households with outstanding student debt had 63 percent less net worth, 40 percent less home equity and 52 percent less retirement savings than those with equivalent education but no outstanding student debt.
ALSO: The Man Behind ‘No Child Left Behind’ Has a Surprising Answer on How to Improve Education
If those are some of the effects of student loan debt, and student borrowing is going to be a part of the financial aid landscape, then what we need to do to fix the system is determine how to help post-college leavers — whether they’re graduates or not and we hope they are — accumulate assets even while they’re dealing with their debt obligations. Otherwise they will be hindered financially potentially decades into the future because of that student debt, particularly because it hits them at a critically important stage of their economic lives, when if they don’t build assets then, they’re going to be at a disadvantage in the future.
You know what every financial planner says, if you put a little bit of money away now, it’s better than trying to save a lot in the future. And that’s what a lot of these college leavers aren’t able to do because they’re diverting so much of their income to their debt maintenance. That means we’ve got to think about ideas like delays in repayment, so that individuals are able to purchase homes. Or maybe looking at more income-based repayment measures, where we divert some of those payments to an escrow account, so they’re simultaneously building assets. Quite honestly, we’re not spending enough time parsing out the different policy mechanisms that could help individuals and households build positive financial assets to compensate for the drain that the outstanding student debts represent.
Evidence about the inadequate accumulation of assets suggests that we could have a far bigger problem in the future. If we know that Americans across the board are not saving enough for retirement, and that’s a pretty well-accepted economic fact, and that households with student debt are saving 52 percent less that those that don’t have student debt, what are we going to see when this generation reaches retirement age? How can we expect this generation that is dealing with the effects of their own student debt to be adequately preparing for their own children’s college education?
NS: How can students and parents better prepare to pay for college?
ML: It’s really quite clear. We have a new paper coming out soon that looks at the ability of parental college savings to reduce student debt. It kind of sounds obvious, right? If your parents are saving for your college, you have to borrow less. But there hadn’t been any research done on it. Our analysis finds that students whose parents were saving for them have around $3,000 less in student debt. In this particular data set, what that suggests is that the way that students and parents need to prepare for higher education in this debt-dependent, financial-aid landscape, is to save.
This is difficult to do, not only because we have relatively low college savings across the board, but also because we don’t have adequate vehicles to facilitate college savings.  There are not enough incentives, especially for those who are lower-income and don’t benefit equitably from the tax-based incentives that are a part of things like the state 529 college savings plans. But it’s going to be even more difficult if parents are paying their own student debt at a time when they should be saving for their children’s future education. It becomes very difficult to imagine how, without some significant policy changes, we can expect families to get out of this debt cycle.
That’s why we need to take a step back and look at what the debt effects are on multiple levels. We need to build structures to help families save. How can we link college savings opportunities with employers? How can we make our existing tax credits for higher education refundable so that low-income families can benefit equitably? How might we explore something like what they do in Canada and the United Kingdom, what some states — like Maine, North Dakota, Nevada — are doing, in making deposits in children’s college savings accounts? Governments are structuring this asset-based approach to financing college a little bit differently, but all with the same rationale: We can use the same net resources, timed differently and delivered on the front end, instead of as a guaranteed debt at the point of enrollment and get better outcomes not only in college, but also for those who leave college, therefore enabling higher education to play the role that it’s really designed to in our society and our economy.
MORE: The Next Frontier in Online Education Isn’t What You’d Expect

These Seven Colleges Require Students to Earn While They Learn

Posted on by robbie

By now, you may have seen headlines or news stories publicizing that the amount of outstanding student loan debt in this country is more than $1 trillion. That haunting figure is seriously holding an entire generation back (not to mention, potentially crippling the entire nation). But a small group of “work colleges” are giving their students a financial leg up by providing them the opportunity to earn while they learn, the Associated Press reports.
These jobs aren’t just the typical work-study jobs of idly scanning IDs at the library for minimum wage. Rather, students at work colleges are gaining real-world work experience with jobs such as landscaping gardens, growing or cooking food, and public relations positions. Their pay also does more than merely supplement a diet of instant noodles and microwavable mac & cheese — students at work colleges make up to $11.10 per hour and can also earn credits toward graduation.
MORE: Helping College Students Graduate Debt Free and on Time
It appears these seven schools — Sterling College in Craftsbury, Vt.; Alice Lloyd College in Pippa Passes, Ky.; Berea College in Berea, Ky.; Blackburn College in Carlinville, Ill.; College of the Ozarks in Lookout, Mo.; Ecclesia College in Springdale, Ariz.; and Warren Wilson College in Asheville, N.C. — are becoming a more attractive alternative to higher education. One only needs to look at their skyrocketing enrollment to prove it. The AP reports that Sterling College saw a 26 percent gain from the fall of 2013 and already a 38 percent uptick from March 2013 to now. Berea College has seen a growth of nearly 300 applicants from 2009 to 2013.
According to the Work Colleges Consortium cited by the AP, the average debt of traditional four-year institutions hovers between $27,710 and $33,050. At the work colleges, however, students have a significantly smaller amount: a mere $12,121. The reason for the stark difference? Federal work study programs offer funds only for needy students, whereas these work colleges require all of their students to have a job, regardless of whether or not they can afford tuition.
Some students are even walking away with a degree debt-free, since Alice Lloyd, Berea College and College of the Ozarks completely cover tuition through work, grants and donations, the AP reports.
“It’s a core component of the educational program,” Robin Taffler, the executive director of the Work Colleges Consortium, told the AP. “It does not differentiate between those that can afford to pay for their education, from those that must work to cover their educational costs. And that’s a big deal. No student can buy their way out of this work program. So this essentially levels the playing field because everybody is doing a job.”
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The Average College Graduate Has a Whopping $30,000 in Debt. How One Startup Is Helping Them Pay It Back

Posted on by robbie

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.”
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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.”
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Here’s Why You Shouldn’t Scoff at a $10,000 Degree

Posted on by robbie

Our nation’s crippling student loan debt, now at a trillion dollars, is holding our country back. And yet, college tuition is still increasing. But what if schools could be more like South Florida’s Broward College that offers $10,000 degrees?
Affordable degrees sometimes carry a stigma. But according to the National Journal, many students who graduate from “cheaper” colleges like Broward are making more than their counterparts at traditional four-year schools. The report, citing a state-mandated study, writes: “Graduates from the Florida College System’s workforce-oriented bachelor’s degree programs earn about $8,000 more the year after graduation than university graduates.”
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Here’s why: At Broward, students learn skills that prepare them for the workplace. “As jobs have become more sophisticated, there’s a greater need for baccalaureate degrees that directly relate to the workforce,” says Linda Howdyshell, provost and senior vice president for academics and student success of Broward College told the publication.
We’re not saying that a large investment in college doesn’t pay off in the long run. It often does. But the reality is, too many graduates and their families are staring down a bottomless pit of loans. Not all of our graduates are getting jobs or are being paid too little in this still recovering economy. This low-cost Florida model shows that when it comes to getting jobs and paying back loans, there are many paths to consider.