How to pay as you go and without debt
By Michael Schneider, President
About one in six Americans has student debt. Even more alarmingly, about 20 percent of those in debt are over the age of 50 – parents and grandparents are spending their retirement nest egg to pay off their families’ college loans. Student debt permeates generations.
Kenajah Upchurch, a sophomore business management student in Houston, didn’t want to go into heavy debt on her family. Self-proclaimed “budget person,” Kenajah recognized McPherson College Student debt project as a way to finish college with a pay-as-you-go plan. She joined the project this academic year because, she says, “it appeals to my business acumen. I am ready to work now so that I can relax later.
The Student Debt Project combines financial literacy training, jobs, mentorship, and college matching funds to help students eliminate their need for loans. Kenajah is one of some 170 students currently participating in the program, all on track to graduate with little to no student debt.
And it works, even during a pandemic.
Despite the fact that COVID-19 shortened their work schedules this spring, students participating in the 2019-20 Student Debt Project were able to reduce their expected student loan debt, on average, by $ 10,000 each. That’s over 30 percent of debt reduction expected at graduation in just a few months in the project.
In the United States, the average student loan debt upon graduation is $ 29,076. That’s only slightly lower here in Kansas, where 58% of the Class of 2019 left their respective public and private college campuses with an average debt of $ 27,216 per graduate. Making average payments of around $ 200 per month, it takes most Kansas graduates – and / or their parents and grandparents – over 11 years to pay off their student loans.
But it doesn’t have to be like that.
By the end of the 2020-2021 academic year, over 200 McPherson College students will participate in the Student Debt Project, each assigned to one of 40 mentors who offer monthly budget advice. , setting personal and financial goals and staying on track to achieve them. Our Career Services office helps every student find paid internships or other part-time jobs to help them pay off their debt. And this year, students have already reduced their projected average debt at graduation to 35% below the national average.
As an added incentive, McPherson College contributes 25 cents for every dollar students earn and apply toward their college debt.
Kenajah – who balances her education while continuing to play women’s basketball and work part-time as a campus guidance manager, volleyball line coach and Wal-Mart clerk – says the extra 25 cents gives her a bit of a break from her budget and means she doesn’t have to work so many hours or sacrifice study time for work.
“When I look at my future, I am confident that I can start enjoying my life sooner after college without worrying about student debt,” Kenajah told me.
Closing the student loan gap
In student loan parlance, the “spread” is the amount a student will owe upon graduation after all scholarships and personal contributions have been applied. The gap is where most colleges stop their financial aid, leaving students to ask for thousands of dollars in loans to pay off the balance. Sometimes students apply for more loans than they need, which only prolongs the vicious cycle of indebtedness.
The Student Debt Project was designed by McPherson College to close this loan gap, so that students don’t end up with a mountain of debt. We did this because we never take a student’s future well-being – or their future financial health – for granted.
There is no “typical” student or “typical” amount of financial need in our program. Each student enters the Student Debt Project from a different personal and financial perspective. Their family income spans the entire financial spectrum.
And that’s as it should be. Because this program is not just about money.
The Student Debt Project is not just a way to pay off college loan debt before graduation. It’s also about embracing life skills such as budget discipline, time management, goal setting, and the intrinsic value of mentoring – aspects of a college education that will serve students through to. adulthood.
The American ideal of obtaining a college degree is alive and well. But the prospect of grappling with years of student loan debt – stacked on top of pandemic angst – should cause prospective students and their families to think long and hard about their choices. It literally pays off to attend a school like McPherson College, a campus community that not only prepares students academically, but helps them bridge the gap to start a financially healthy, debt-free post-graduation life.