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Online Donations Fight Student Debt at ScholarMatch, SponsorMyDegree

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For years, teenagers have used the Internet to connect with their families and friends. Now, they're using it to connect with strangers who can help them pay for college.

Take Eddie Ashley, a recent graduate of Oakland Technical High School in California. As a high school senior, Ashley wasn't sure how he would pay for his first year at the University of California Riverside, where he hoped to pursue a career goal in environmental engineering. He had lost his mother to an autoimmune disease in middle school, and although he managed to maintain good grades while caring for his younger siblings, the high school senior had limited funds for tuition.

Then one day, best-selling author Ayelet Waldman went online and found Ashley's profile on ScholarMatch.org, a new website that connects kind-hearted donors with San Francisco Bay Area high school students. Launched in late April, the website is the brainchild of Dave Eggers, author of "A Heartbreaking Work of Staggering Genius." On ScholarMatch, students create free profiles with personal quotes, educational hopes and scholarship goals. Online visitors can then register as potential donors and earmark funds for a particular student, or they can ask the ScholarMatch staff to choose a student for them. Waldman, who learned about ScholarMatch in an e-mail announcement from Eggers, stumbled upon Ashley's story.

"It seemed to me that Eddie was the kind of person who was going to college no matter what," she said. "The question was, would it break his back to go, or could we make it a bit easier for him?"

After registering, Waldman jumpstarted a community campaign to help Ashley reach his goal. She began by getting the word out to her 45,000-person mailing list, promising her friends, family and readers that she would match their donations to Ashley dollar for dollar. She also said she'd donate $5 every time somebody bought her new paperback novel, or $10 for every hardcover purchase.

Within a week, Ashley had reached his scholarship goal; with money from ScholarMatch, the Bay Area teen was headed to college.


As Tuition Rises, Filling the Financial Gap

The roots of the words "university" and "college" both mean community, but the cost of higher education excludes many aspiring students. During the past 20 years, the price of college tuition has increased more than any other major good or service, according to Anya Kamenetz, a Fast Company magazine writer who examined student debt for her book, "Generation Debt" and recently published the book "DIY U: Edupunks, Edupreneurs and the Coming Transformation of Higher Education."

"My research says that college affordability is terrible, and it's worse than it's ever been," she said.

At some private colleges and universities, tuition can reach $50,000 or more a year. Though public universities tend to charge a smaller fee, their tuition costs have also been rising, and government support is often unable to keep up.

To meet these skyrocketing costs, many college students turn to borrowing. According to a study by the College Board, there were more than $95 billion in student loans disbursed during the 2008-2009 academic year, with students at for-profit colleges most likely to borrow.

If they aren't careful, however, students can get stuck in a debt trap. About 60 percent of all graduates had some student debt in 2007-08, and a tenth of those debtors had taken at least $40,000 in loans. That's about 206,000 people, or a nine-fold increase since 1996, according to The Project on Student Debt.

ScholarMatch began partly because Eggers knew that traditional sources of college funding just weren't enough. He came to this realization when he saw that his own existing scholarship program could only help a handful of students. The program was organized by 826 Valencia -- a nonprofit tutoring, writing and publishing center that Eggers co-founded -- and it provided financial relief to some of the region's needy high school seniors.

"Every year, 826 Valencia would give five scholarships, but the other 100 applicants would go wanting," he explained in a press release.

Eggers decided he should help the wanting students, too.

"It's a heartbreaking process because all the applicants are amazing, and you've got to choose five," said Miel Alegre, ScholarMatch's director of operations. "So Dave [Eggers] got the idea to involve the community and start a website."


The Match-Making Process

When Eggers got his idea, he visited local high schools to spread the word. Alexis Vallin, 17, learned about ScholarMatch after she was not selected for one of 826 Valencia's annual scholarships.

"I went on the website and created my profile, and it was really easy," she said. "A month later I received an e-mail that somebody had donated for me."

The website has about 100 student users, and most hail from low-income households.

"In the back of my mind, I always had somebody telling me that I wouldn't be able to go anywhere because my parents don't have any money," said Vallin, who recently reached her ScholarMatch funding goal and will be attending college this fall.

Before a student can post a profile, they are vetted for college acceptance and financial need. To ensure confidence in the process, all donations are sent directly to the college, as opposed to a student's personal bank account. After students enroll, they stay connected to their donors via e-mail updates about school.

The average scholarship goal is $5,000, and it is often reached through multiple donations.

"We've had donors give $50, we've had donors give $5," said Alegre. "We're excited to see that this is a community effort."

Since ScholarMatch launched at the end of April, eight students have been fully funded, and about 20 students have received some money. All donations go toward tuition, though they do not necessarily fund the full amount. Instead, they fill a financial gap.

"People get into college and they get some money, but that never covers everything," said Alegre. "ScholarMatch gives students that extra nudge they need."

The website is currently limited to high school students in the Bay Area, but in time, Alegre said ScholarMatch will expand to accommodate more students across the country.


Microgiving and Online Scholarship Resources

Though ScholarMatch is just getting off the ground, it is part of a larger trend toward online college fundraising.

"People are used to using social media, social networking and Google to find everything they need," said Kamenetz. "Whereas the application for student financial aid is a heavy form to fill out, you can also go online and do searches for Fastweb. So people find a more convenient way to find sources of money."

In particular, ScholarMatch follows a crowd-funding model that has inspired everyone from philanthropists to politicians. During the 2008 presidential race, President Barack Obama made headlines when he used small online contributions to help fund his $456 million campaign, with a quarter of his donors giving less than $200. Writers, filmmakers, inventors and others are using Kickstarter to raise money for all sorts of ventures, from an art and urban farming project to an independent puppet show production.

On Kiva.org, lenders can browse profiles of borrowers in the developing world, offering small loans to entrepreneurial projects, or perhaps to help a farmer buy fertilizer for crops. A man named Kushal Chakrabarti applied a similar idea to college financing in 2007 when he created Vittana, a non-profit organization that provides small loans to international students for college or trade school. Vittana's lenders have helped send about 200 students to school in Peru, Cambodia, Paraguay, Nicaragua, Mongolia and Vietnam, often $10 or $25 at a time.

In 2008, a Colorado couple created SponsorMyDegree.com to help college students in the United States. Like Kiva and Vittana, the website takes an adopt-a-student approach -- though it solicits donations, not loans. It parallels ScholarMatch in many ways, as its student-users also create profiles and ask strangers for tuition money.

The website's founders, Henner and Lilac Mohr, created the first two profiles.

"When we were in college we had a lot of student debt, and we thought if we begged online someone might help us out," said Henner.

Today, their website has about 10,000 users nationwide. Compared to Kiva or Vittana, however, SponsorMyDegree may be harder to keep up.

"Our model is more like a charity," Henner said. "We have to pay out of our pocket to keep it going. . . . With Kiva, you've got built-in loans so it's more sustainable."

Still, Henner said he is always surprised by the willingness of strangers to give.

"It's just amazing to see the generosity that's out there."


Millenials, Student Debt and Online Privacy

Websites like ScholarMatch and SponsorMyDegree reflect generational preferences, highlighting how college students today approach debt and online privacy.

According to Katie Elfering, a consumer strategist at Iconoculture who researches the Millennial generation, media and technology, today's students view debt differently than those who came before them. Many older Millennials, or people in their mid- to late-20s, saw college debt as a given and as more of an investment than a crippling burden. Today's recession-era students, or the younger Millennials, talk more with parents, teachers and advisers about financial issues. They started to consider how student debt might affect their aspirations after graduation.

"They're learning from the mistakes of older generations," said Elfering.

These lessons have led to creative approaches to avoiding debt issues.

"This generation tends to be very solutions-oriented and collaborative" she said. "They like finding actionable solutions that have them moving forward, even if they are small scale."

Microgiving fits well with this approach. Rather than trying to solve all their debt problems in one swoop, college students can ask for help from several potential donors.The popularity of social media sites like Facebook or MySpace may also affect how people share information and solicit help toward a certain goal.

"We've seen massive networks take hold and now we're seeing a bit more fragmenting," said Elfering. "People are looking for something more practical and useful, as opposed to something only rooted in connections."

But as students grow accustomed to sharing personal information online, are they sacrificing too much privacy? On SponsorMyDegree, one student revealed intimate details about her battle with anorexia, while another wrote about her mother's difficult divorce. By tugging on people's heart-strings, students could be hoping for some added generosity. But this openness could also be a generational trait.

"This generation has never known an Internet where privacy has really existed," said Elfering. "For Millennials, the mindset has always been that if someone wants my information, there's only so much I can do to protect it."

Perhaps the issue is less about privacy and more about control. Some people feel comfortable putting information into online profiles because they can determine how it's presented.

"It's a way for them to feel in control of their destiny, but it's also a way to feel in control of how people perceive them," said Elfering.

When it comes to financial discussions, students also harbor fewer inhibitions due to the economic recession.

"There is an increasing willingness to talk about money issues and college affordability," said Kamenetz. "Students don't see any shame in it because [debt] is just so common."

Still, the founders of ScholarMatch and SponsorMyDegree encourage student-users to take precautions. On ScholarMatch, people must register as potential donors in order to view a student's complete personal essay. ScholarMatch staff members must also approve a profile before it goes public.

"The personal essay can be really intimate," said Alegre. "We don't censor it, but for the purpose of keeping our students safe, we remind them that this information will be semi-public. We help them represent themselves in a way that will help them get donors."


Will Microgiving Make its Way to Universities?

Colleges may decide to follow the lead of peer-to-peer giving platforms like ScholarMatch -- perhaps by creating their own, institution-specific versions for current students and alumni.

"I wouldn't be surprised if colleges start offering these opportunities as selling points for students to help them afford tuition," said Elfering.

In May of 2009, three Harvard graduates launched Unithrive.org, a nonprofit website that matches alumni lenders with financially-needy Harvard students. The website is currently limited to undergraduates at Harvard University, but the founders have plans to expand to other institutions this summer.

These websites could foster a stronger sense of connection between alumni and students, but some financial aid experts doubt that universities will jump to the idea. As president of a higher education enrollment consulting firm, Jim Day talks with colleges about financial aid policy, family finances and initiatives they might undertake to help students pay for their degree. He has discussed similar websites in meetings with clients, but the discussions are often short-lived-partly because colleges want to respect each student regardless of financial status.

"[They] try hard to make sure each student feels herself to be, and is seen as, a full member of the campus community, with aid status invisible except between the student and the aid office," Day wrote in an e-mail.

Additionally, universities usually do not base aid awards on individual narratives. For the sake of fairness and objectivity, they tend to examine financial need, academic preparation or talents instead. Although colleges do not want to prevent students from accessing outside scholarships, many wouldn't want to sponsor a website that matches individual alumni lenders with individual student borrowers.

Still, universities do tend to examine students' circumstances individually, and with great care.

"Every college I've ever encountered works really hard to help its students afford school and stay enrolled through degree," Day wrote. "Alumni-giving for student aid is always a focus of the development operation, though of course there may still not be enough money to address all circumstances or students."

Though colleges might not be ready yet, Elfering believes they will re-evaluate their financial aid strategies eventually.

"Students don't have to be wearing t-shirts that say 'I'm using a sponsor for financial aid,' " she said. "But I think colleges will have to meet students half-way."

Yet if colleges do create peer-to-peer giving websites, some experts question how much it will reduce student debt. Kamenetz said the public and private sectors should concentrate on lowering the cost of school, not just creating new ways for students to pay for it.

"The solution is not for us to funnel more taxpayer or private money to college education," she said. "The bigger issue is cost control. Your ability to access a college education shouldn't hinge on your ability to write a begging letter."
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