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Today’s entrepreneurs want to find markets of opportunity that give them the freedom and success to develop and grow their businesses. That’s why so many are pursuing solutions for complex problems, particularly ones for which traditional approaches haven’t worked.
Without solutions, many of these issues continue to grow, making them ideal candidates for a startup to tackle. One of the most pressing financial problems in our country right now — for both employees and employers — is the mountain of student debt that’s approaching Everest-like proportions. In fact, recent figures put student debt at $1.5 trillion, with 44 million people in the U.S. struggling to come to terms with their financial burdens.
Some innovative companies and organizations are already hard at work with unique approaches to student debt, providing a benchmark for other entrepreneurs to follow:
1. Employer-Assisted Student Loan Benefits
Employers are looking for ways to attract and keep their talent, but they’re finding that traditional benefits aren’t always the key. How useful is a learning stipend when an employee’s struggling to make rent each month? Talented employees want to work for companies that understand their needs, but they’re also keenly aware that their student loans have come due. Some companies have found a way to address both problems.
For example, FutureFuel.io’s Student Debt FinHealth platform is directed at small- and medium-sized businesses, Fortune 500 companies, and platform partners that supply benefits to various organizations. The platform enables employers to add the benefit of contributing directly to their employees’ student loan payments. This includes offering a way to apply unused vacation days, bonuses, and other financial perks to the student loan balance. The platform now has more than 10 million users and has raised millions in funding.
2. New Student Loan and Refinancing Options
Other companies are addressing the student loan dilemma by changing the student loan process. They understand the importance of offering better loan and refinancing options that reduce the amount owed through lower rates, as well as shortened repayment periods.
13th Avenue Funding aims to do just that. The brand is testing an educational lending program that lets a student borrow funds to pay for her higher education and then repay it based on a fixed percentage of her income once she’s employed. The percentage is based on an income of at least $18,000 annually. The lending program uses community-based financial services to fund student loans. A pilot program at Allen Hancock College in Santa Clara, California, proved successful and offers a glimpse of what’s possible on a larger scale.
3. Crowdfunding and Business-Backed Scholarships
Another innovative approach is to apply the crowdfunding model to higher education lending. WeFinance gives students a chance to share their story as part of their crowdfunding project and locate lenders who are interested in partially or fully funding their college dream. When a student finds her funding, she signs a contract and receives the funds in her bank account. Those investing in the student profit in the form of interest on the funding.
Likewise, Purdue University’s Back a Boiler Program is geared toward junior and senior Purdue University students. It offers funding from the Purdue Research Foundation in exchange for signing an income share agreement (ISA). Participants pay back a fixed percentage of their income for a specified number of years once they get a job. They see it as investing in their students’ future earning potential.
Other companies and organizations are taking another approach by creating their own branded scholarship programs to do some social good, give back to their communities, invest in future talent, and contribute toward the student debt problem. Participants range from large companies like Chase, FedEx, and Starbucks to local businesses and organizations like car dealerships, rotary clubs, and small companies. Be sure to check all the rules and regulations with establishing a scholarship before getting started to maximize the value of what you’re doing to conquer student debt.
4. High School Dual-Enrollment Partnerships
In looking to reduce student debt, some approaches have involved cutting the cost of getting a degree by offering high school dual-enrollment partnerships. In these partnerships, high school students can take college credit classes while in high school for free.
Students can earn enough credits before graduating high school to reduce their time at college by as much as two years. The result is that many students don’t have to take out as many loans, reducing the amount they have to pay back and helping them enter the workforce at a much faster rate.
To help expand such partnerships, an entrepreneur can get involved by volunteering and joining organizations like The National Alliance of Concurrent Enrollment Partnerships. Here, entrepreneurs can apply their business acumen and experience to creating more opportunities for access to higher learning while forgoing the high costs that lead to student loans.
5. Alternative Higher Education Platforms
With significant talent gaps in the workforce, businesses can also help alleviate this issue while addressing the student loan problem by establishing alternative learning platforms that provide technical certificates, trade school options, and other career opportunities.
For example, one company is working with colleges and universities to take existing courses and educational content and transform this information into certificates and digital credentials. Known as Course Market, this innovative company is helping to provide an affordable alternative to get students career-ready.
As an entrepreneur, you can also provide an apprenticeship program to help develop the skills you need from employees while tapping a pool of potential talent that you can mold. This program might also include some paid courses that an entrepreneur can fund as a tax-deductible business expense to further an apprentice’s development.
Additionally, more trade skills and online universities could help conquer student debt by providing alternative learning platforms that target skill gaps in today’s workforce and better prepare future generations for a relevant, sustainable career.
By helping employees — and future employees — tackle their debt load, employers can gain focused and talented team members who know the payoff of hard work.
March 6, 2019 at 10:54AM
Forbes – Entrepreneurs