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How To Pay-As-You-Go and Graduate Debt Free

Debt Project, kenajah

“When I look at my future, I feel confident that I will be able to start enjoying my life sooner after college without worrying about student debt.”
Kenajah Upchurch, SO
Business Administration
Houston, Texas

By Michael Schneider, President
McPherson College

Roughly one out of every six Americans owe student debt. Even more alarming, about 20 percent of those in debt are over 50 – parents and grandparents spending their retirement nest egg to pay off their families’ college loans. Student debt permeates generations.

Kenajah Upchurch, a sophomore in business management from Houston, didn’t want to put a heavy burden of debt on her family. A self-described “budget person,” Kenajah recognized McPherson College’s Student Debt Project as a way to get through college on a pay-as-you-go plan. She joined the project this academic year because, she says, “It appeals to my business sense. I am willing to work now so I can relax later.”

The Student Debt Project combines financial literacy education, jobs, mentorships, and matching funds from the college to help students eliminate their need for loans. Kenajah is one of about 170 students currently participating in the program, all on a path to graduate with little – to zero – student debt.

And it’s working – even amidst a pandemic.

Despite COVID-19 cutting short their work schedules this spring, the students participating in the 2019-2020 Student Debt Project were able to reduce their projected student loan debt, on average, by $10,000 each. That’s more than a 30 percent reduction in anticipated debt at graduation in just a few months in the project.

Across the U.S., the average student loan debt at graduation is $29,076. It’s only slightly lower here in Kansas, where 58 percent 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 about $200 per month, it takes most Kansas college graduates – and/or their parents and grandparents – more than 11 years to pay off their student loans.

But it doesn’t have to be that way.

By the end of the 2020-2021 academic year, more than 200 McPherson College students will be participating in the Student Debt Project, each assigned to one of 40 mentors who offer monthly advice on building a budget, setting personal and financial goals, and staying on track to achieve them. Our Career Services office assists each student in finding paid internships or other part-time work to help them pay down their debt. And this year students have already reduced their average projected debt at graduation to 35 percent below the national average.

As an added incentive, McPherson College matches 25 cents for every dollar the students earn and apply toward their college debt.

Kenajah – who balances her studies while still playing women’s basketball and working part-time jobs as a campus orientation leader, volleyball line coach, and Wal-Mart clerk – says the extra 25-cent match gives her a little breathing room in her budget and means she doesn’t have to work as many hours or sacrifice study time for work.

“When I look at my future, I feel confident that I will be able to start enjoying my life sooner after college without worrying about student debt,” Kenajah told me.

Plugging the Student Loan Gap

In student loan lingo, the “gap” is the amount a student will owe at graduation after all scholarships and personal contributions are applied. The gap is where most colleges stop their financial aid, leaving students to apply for thousands of dollars in loans to pay off the balance. Sometimes students apply for more loans than they end up needing – which only further extends the vicious cycle of debt.

The Student Debt Project was designed by McPherson College to fill that loan gap, so students don’t end up graduating with a mountain of debt. We did it because we never take a student’s future well-being – or their future financial health – for granted.

There’s no “typical” student or “typical” amount of financial need in our program. Every student comes into the Student Debt Project from a different personal and financial perspective. Their family incomes stretch across the financial spectrum.

And that’s as it should be. Because this program is about more than just money.

The Student Debt Project is not simply a way to pay off college loan debt before graduation. It’s equally about embracing life skills like budget discipline, time management, goal setting, and the intrinsic value of mentorship – aspects of a college education that will serve students long into adulthood.

The American ideal of earning a college degree remains alive and well. But the prospect of grappling with years of student loan debt – piled on top of pandemic angst – should have prospective college students and their families thinking long and hard about their choices. It literally pays 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 – and debt-free – post-graduation life.