Sector Solution: Why Should Nonprofits Care about the Rising Student Loan Debt? By Julianne Gassman

Sector Solution: Why Should Nonprofits Care about the Rising Student Loan Debt? By Julianne Gassman, Director of Community Engagement & the Nonprofit Leadership Alliance, University of Northern Iowa

It likely comes as no surprise to our member readers that student debt has been on the rise, and the trend is continuing, however, how many of us have paused long enough to consider the rising student debt and its impact on the nonprofit sector? Or have we considered how this debt creates barriers for young and new nonprofit professionals we seek to recruit? And are we contributing to the problem? Have we considered that students who study nonprofit management, once they graduate, might end up in another sector due to better wages being offered? These questions have surfaced for me as I watch students struggle financially. I frequently hear concerns about money, and see students decline jobs due to low wages and not being able to pay their bills. I decided to take a closer.

Wanting to know more about debt and students studying in the area of nonprofits, I worked with Kristina Kofoot while she was getting her Master’s degree. Her thesis topic looked at student loan debt and its impact on those who studied nonprofit management and leadership. First, we reviewed the problem in its larger context. Today, 44 million people owe over $1.48 trillion in student loan debt. That total is about $620 billion more than the total U.S. credit card debt. The average graduate from 2016 owes $37,172, an increase of 6% from the previous year as reported by Student Loan Hero. US News and World Report stated that most borrowers are on a 10-year track to pay off their debt, but research indicates that the average graduate is taking up to 21 years to pay off his or her student loans.

As one digs deeper into this problem, the findings become even more concerning. The rising cost of higher education disportionately impacts low income students who have to work full-time and still can’t cover the cost of tuition and living expenses.“The inequity is so crushing that an alarming number of these students—predominantly students of color—are dropping out of school altogether. One-third of low-income student borrowers at public four-year schools drop out, a rate 10 percent higher than the rest of student borrowers overall” (Poverty Talk, 2016).

What about students studying nonprofit management specifically? What is that story? Unfortunately, our study revealed the same grim statistics. We surveyed students across the country in the Nonprofit Leadership Alliance who are seeking a certification to become a Certified Nonprofit Professional (CNP). Nearly 500 students responded and told us about their debt and their first job. A guideline used to determine the amount of student debt one should take, is not to borrow more than you expect to make in your first year after you graduate. In our study, 47% percent of students reported borrowing $30,000 or more in student loans. Only 32% of students reported making $30,000 or more in their first job. At a conference for students seeking their CNP, I presented on this topic and at my session I asked students to anonymously report their student loan debt. One student reported having $95,000 in student loan debt, another $80,000 and one,yes only one, reported they didn’t have any debt. In total, 70% in the room had more than $30,000, and 30% reported having more than $50,000 in student loan debt. Kristina and I learned a few other things: 1) non-white students are taking out more in loans than white students, 2) non-traditional students and veterans are taking out more in loans than others, 3) students graduating in recent years are taking out more loans than students that graduated 5+ years ago, and 4) those taking out more in loans are more likely to take on a second job upon graduation.

Graduates burdened with so much debt suffer in many ways. A study by the American Student Assistance (2013) found that professionals with student loan debt were choosing to delay buying homes, getting married, having children, saving for retirement, and were deterred from entering their desired career field because of their debt. That last one…that worries me. Here is what Kristina and I found. Certified Nonprofit Professionals are not jumping ship on the sector due to debt. I suppose that is a bit of good news. Although it should be realized that we studied students seeking a unique certification and skill set and who were likely more dedicated to working in the nonprofit sector than those not seeking their CNP. So the good news comes with a significant qualification.

The big question remains, what can we do about the the growing student debt problem? Or, how can we lessen its impact on the nonprofit sector? Here are a few suggestions that are commonly shared in literature and worth repeating:

  1. Learn about and share information with your nonprofit employees about the Public Service Loan Forgiveness Program.
  2. Raise the issue with your leadership team and your board of directors as an issue affecting recruitment, retention and diversity.
  3. Offer paid internships, as opposed to unpaid internships where students “work” for free while paying tuition. Learn about a local funding opportunity at CVNA’s session on January 17th, 8:00am at Northeast Iowa Community Foundation.
  4. Contact Congress to strengthen the Pell Grant to help more students complete college without burdensome debt.
  5. Attend CVNA’s educational session and invite your co-workers on March 8th at 8:00am to learn about managing debt.

Student loan debt is not a problem unique to the nonprofit sector, however we need to raise awareness of the problem, its severity, and impact on our united dedication to making communities vibrant, healthy and embracing for all. I invite you to take action where you can so the nonprofit sector workforce is accessible to new graduates, and we aren’t creating barriers for those who want to make careers out of making a difference.

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