As Congress works to revamp student loan programs, brothers Raymar and Robert Hampshire have started their own loan initiative.
In April 2009, the brothers started SponsorChange.org (www.sponsorchange.org), a Pittsburgh-based philanthropic organization that helps college graduates earn payments toward their student loan debt in exchange for volunteer service. Raymar, 28, is a full-time graduate student pursuing a master’s in public policy and management at Carnegie Mellon University Heinz College. Robert, 32, is an assistant professor of operations research and public policy at Carnegie Mellon.
“Many college grads have to take a second or third job in order to make ends meet,” says Raymar, whose own $25,000 in undergraduate student loan debt is in deferment because of his status asÂ a full-time student. “Our program gives them the opportunity to do something more meaningful, utilize their skills, and give back to their community.”
The issue of student loan debt and record rates of defaults has been at the forefront of public debate for many years. In September, Education Secretary Arne Duncan announced that the student loan default rate for fiscal year 2008, the latest data available, has reached 7%, up from 6.7% in fiscal year 2007. And according to the Project on Student Debt, the average undergraduate debt for 2009 is $24,000. For the Hampshires, the statistics add urgency to the need to assist debt-weary college graduates with options to help them repay student loans.
Under the ambitious program, college graduates are matched with nonprofit agencies to do skills-based service projects. Here’s how it works: SponsorChange.org assesses the needs of various nonprofits to define projects that have a narrow scope and a finite end date. Once the specific need is determined, SponsorChange.org recruits and screens college graduates who have student loan debt, and sends the nonprofits, corporate sponsors, and private donors a list of possible volunteers. The nonprofits make the final selection. Participants in the program have an average debt load of $25,000 and an average monthly payment of $200. After a student completes a service project, the funds they earn are automatically transferred to the student’s outstanding loan account. Funds can be paid through nonprofit grants, corporate sponsors, or private donations. Service projects include business and leadership training, homelessness awareness programs, healthcare services, and job training exercises.
Sheena Hancock, a graduate of the University of Pittsburgh, completed a four-month SponsorChange project at a Wilkinsburg, Pennsylvania, Boys and Girls Club last year, as a leadership development counselor. After Hancock completed the project, the holder of her student loan received $600 from SponsorChange.org and $400 from the Boys and Girls Clubs of America.
So far, 19 students have participated in SponsorChange’s program, with the total amount paid toward student loan debt at about $9,500. Students volunteer about 50 hours of their time over a four-month period, and Raymar estimates that SponsorChange has saved participating nonprofits nearly $47,000, a figure he’s calculated based on market rates for the types of services the volunteers provide.
“SponsorChange.org is a platform for micro sponsorships,” says Robert. “It allows people to make donations and have a personal connection to a college graduate.”
So far the nonprofit has partnered with HmCapital, Mt. Ararat Baptist Church in Pittsburgh, the Sprout Fund, Pittsburgh Cares, and about a dozen or so private donors.
“Our program is transparent,” says Shawn Agyeman, director of marketing at SponsorChange.org. “The funds the participants earn are earmarked for student loan debt and nothing else.” Sponsors can track how nonprofits spend their donations by tracking the status of the project on the organization’s website. After they complete their service projects, students blog and post videos and photos to the site. “By tapping into the underutilized resource of volunteer support for nonprofits,” says Raymar, “we’re making it possible for everyone to have access to the funds they need to help pay back student debt.”
How They Did It
– Do extensive research and know your cause and consumer. “Student loan debt has been an ongoing issue for years,” Raymar says. “Focusing on a specific problem and exploring creative and new ways to address it make marketing and implementing the concept easier.”
– Start out small and expand. Robert says a small pilot project with a few volunteers is the best way to initiate a project. “Proof of concept is the key to knowing if you’re on the right track and if your idea is feasible,” he says.
-Â Don’t be afraid to form partnerships. The most effective way to present your idea to the community at-large is to develop alliances with community agencies and grassroots organizations. “Find synergy with partners and leverage those synergies,” Raymar advises. “You won’t be able to build your venture alone–you will need partners, especially initially.”