It’s no secret that many college graduates are finding it difficult to make ends meet. In today’s job market, they face longer periods of unemployment and many have been forced to accept lower paying job for which they are over-qualified. This, coupled with the increasing cost of a college education, has left many students scrambling for innovative ways to cover their student loan payments.
Some have taken advantage of the federal student loan repayment plans that allow them to lower their payments by extending the repayment terms, and others have applied for forbearance, giving them a temporary break from making any payments at all. Although these options may provide some relief, they do not actually reduce their overall debt. In fact, they actually increase the amount students will owe over time.
Volunteering to Reduce Student Loan Debt
Two organizations have taken note of the current economic climate for college graduates and have come up with similar creative solutions to not only help students make their student loan payments, but also help them reduce their overall debt in a shorter period of time. The concept? Give back by volunteering in the community to get back financial rewards.
It’s actually a pretty neat idea. When I was in college, I spent countless hours volunteering for local charitable organizations. It was an opportunity to not only gain new skills, but also to network and make a difference. Unfortunately, once I graduated and the realities of life set in, I found it nearly impossible to give away my time for free.
I had bills to pay, so earning a paycheck became my priority even though it was much less rewarding than helping others in need. This is where SponsorChange.org and ZeroBound.com are trying to make a difference. They both saw the potential to connect skilled college graduates with charitable organizations, allowing both to benefit from the partnership.
The nonprofits get motivated volunteers, and the students receive financial rewards from individuals and corporations that seek to sponsor worthwhile community projects. It’s basically a win-win for everyone. Here are the basics on both programs that enables students to volunteer to pay off student loan debt.
Volunteer to Pay off Student Loans
Raymar Hampshire and Robert Hampshire, Ph.D., co-founders of SponsorChange.org, launched their pilot program in 2009. Their goal was simple; increase the national volunteer service rate, and help college graduates reduce their loan debt by $10,000 (roughly half of the average college student loan debt at the time). To do this, they created a platform where students, otherwise known as Change Agents, could select a service project and invite donors to financially back their volunteer work.
Once students have adequate backing ($1,000 per project) and complete their hours (approximately 40 per project), the funds are sent directly to their student loan servicer. To date, the company has assisted 20 students with lowering their debt. Nonprofits or corporations interested in working with the orgranization can email email@example.com for more information.
Pros: No fees to participate.
Cons: Currently limited to Pittsburg (PA), Chicago (IL) and Washington, D.C. residents. Students must have a bachelor’s degree.
Zerobound.com is similar to crowdfunding websites, such as GoFundMe.com. Any student, 18 years or older, who has student loan debt may create a campaign. Students simply register for an account, create a personal profile, and share why donors should fund their campaign. Volunteer projects through a registered 501 (c)(3), nonprofit, community organization, or government agency are eligible for funding. Students must select a campaign goal and project duration, and are encouraged to share updates throughout their campaigns. Once the campaign concludes, the funds are sent directly to their student loan accounts.
Pros: Students anywhere can participate. Current college students, as well as college graduates, may use the platform.
Cons: Fees. Zerobound collects a 5% service fee for fully funded campaigns or 8% for campaigns that don’t reach their goal amount. In addition, the payment processor, Stripe, assesses a 2.9% processing fee as well as a $0.30 transaction fee.
Although I think the concept of both platforms is great, only time will tell if individuals and corporations will be willing to bankroll college graduates while they volunteer in their communities. The likelihood of students being able to significantly reduce their student loan debt through these initiatives is probably slim, but then again, those of us who have volunteered can tell you that we don’t do it for the money. If any portion of our student loans is wiped out by giving back, it’s just an added bonus.