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Nonprofits and Student Loan Debt

March 18, 2008

(Regina Mahone is new to the nonprofit sector. She worked as a freelance writer in Southern California before becoming the special projects assistant for institutional advancement at the Foundation Center in New York. This is her first post for PhilanTopic.)

Last fall, the Nonprofit Sector Workforce Coalition published an article by Lauren Asher, associate director of the Project on Student Debt, titled "Financial Barriers to Nonprofit Careers." In the article, Asher cited rising student loan debt as a significant obstacle for recent college graduates looking to join the nonprofit workforce.

"To recruit and retain the next generation of leaders," wrote Asher, "nonprofit organizations rely not only on young people's interest in serving others, but also on their financial capacity to enter and remain in this critical but lower paying sector. That capacity is increasingly limited by rising student debt burdens."

In the past, young people entering the nonprofit sector have been willing to accept modest salaries in return for the opportunity to "do good." But as living expenses (especially in major metropolitan areas, where nonprofit services tend to be most in demand) rise and student loan burdens continue to increase, nonprofit employers may need to find new ways to retain young idealistic professionals.

The numbers are sobering. "Three-quarters (74.5%) of new college graduates who take jobs with nonprofits have student loan debt," reports Asher. "Over the past decade, the average debt for graduating seniors with student loans more than doubled from $9,250 to $19,200 -– a 108% increase (58% after accounting for inflation). For graduates of public universities, the debt level rose from $8,000 to $17,250 -– a 116% increase (65% after accounting for inflation)."

What can nonprofits do to change the equation? Asher outlines a number of "common-sense" first steps:

  • Write an op-ed about the impact of rising student debt on nonprofits -– as both employers and essential community resources -- and submit it to your local newspaper, the Chronicle of Philanthropy, and other publications.
  • Ask the U.S. Department of Education to make student loan payments fair and manageable.
  • Support an increase in need-based grant aid for college undergraduates so that students of modest means graduate with less debt and more options.
  • Encourage colleges and universities to adjust their financial-aid policies to limit student loan burdens, especially for lower-income undergrads and graduate students training for careers in the social sector.
  • Document practices and provide benefits that help reduce employees’ student debt.

These are terrific suggestions, but how many nonprofits have even thought about the issue? Has your nonprofit? If so, we'd love to hear what you're doing to keep your young employees -- with or without student loan debt -- motivated and loyal to your organization and the sector.

-- Regina Mahone

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Posted by Bruce  |   March 18, 2008 at 05:12 PM

Recently, schools with large endowments like Stanford and Brown have been reducing or nixing tuition fees for students coming from families that fall below a certain income threshold. It'd be great to see some larger, more established nonprofits take the lead on creative financial solutions in the same way.

Posted by Regina Mahone  |   March 19, 2008 at 11:46 AM

I just recently came across an article on FLiP's blog (Future Leaders in Philanthropy) that also addresses this topic. Elizabeth Miller, Senior Program Associate at the Overbrook Foundation writes, "Despite these challenges, it’s important that the foundation and nonprofit sector work actively to address these barriers because the potential for young people to make a change and learn from the sector is enormous. Likewise, a young person’s enthusiasm and willingness may make the difference for a small not-for-profit that is trying to raise funds or to come up with new and innovative programs. Having young people involved in the nonprofit sector is a win-win for both the organizations and the young professionals."

She then goes on to offer three suggestions for organizations to improve retention of young nonprofit professionals:

1) Young people should be encouraged to participate in [professional associations of foundations or associations of nonprofits] as they are often on the front lines of improving knowledge about the sector itself, and the skills needed to succeed within it.
2) [B]uilding up networks of young people that are actively engaged and can act as stewards for the field. (such as FLiP and the Young Nonprofit Professional Association)
3) Nonprofit organizations themselves should develop substantial outreach programs, perhaps most effectively through summer internships [and fellowships] as a way to reach out to more young people.

The original article can be found here: http://flip.onphilanthropy.com/flip/2008/03/challenges-for.html

I wonder if any nonprofit organizations have successfully implemented any of these ideas, or intend to?

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