Students Find College Aid in Micro-Loans and Small Donations
Online services offer a dollar here and there
His father was retired, so when his mother’s jewelry designing job was vaporized by the recession, Carmen Rondash (CAS’10) was open to any and all ideas for scrounging up money for school. The Rochester, N.Y., resident stumbled across SponsorMyDegree, a two-year-old Web site that matches students with businesses and individuals willing to donate — sometimes nominally — to their education.
How nominally? Rondash, an aspiring teacher, got about $30 from several donors, notably a former educator who willed a bequest to SponsorMyDegree for recipients whose profile information listed teaching as an interest.
Of course, 30 bucks wouldn’t buy you class time through the afternoon. Fortunately, the family’s financial setback was “just a little speed bump,” Rondash says, as he and his parents found jobs and the University helped with aid. As for SponsorMyDegree, “the money is not important at all,” he says, “but it amounts to finding a dollar on the street every now and again. It takes no effort, so I am not losing anything.”
Tweak the antipoverty strategy of micro-loans to businesses in the developing world and import it to American campuses, and you’ve got the idea behind “micro-sponsorships,” “peer-to-peer lending,” and other names slapped on the budding industry of online student loans and grants. Companies in this business — among them People Capital, Virgin Money, GreenNote, Fynanz, GradeFund, and Prosper — differ in their approach, but they share the mission of connecting student borrowers with lenders or donors in the Internet era.
SponsorMyDegree is unusual in that it arranges donations rather than loans. Calling itself a “listing service,” it allows students, and graduates paying off student loans, to hit up willing sponsors for small donations, as little as $5. Borrowers complete and post a profile on the site for free; individual donors and businesses read the profiles and decide whether to donate to the student, based on her interests, financial need, or other bits of bio.
The lure for companies is that they can aim donations at students whose profiles suggest they might make potential customers (donation offers require students to respond to a company ad). The site does not release money donated to borrowers until it has verified their enrollment at, or graduation from, the schools they claim.
GradeFund gives students’ friends and family the opportunity to donate to their education if they maintain good grades (donors define what constitutes “good” and make a promised contribution every time the student hits the mark). Students must upload their transcripts so GradeFund can verify their performance.
This Web-era source of education money remains sufficiently novel and little-used that “it’s not on the radar” of Christine McGuire, executive director of BU’s Financial Assistance Office. Other observers warn that while the sites can be useful — some students have procured thousands of dollars for their education — students should familiarize themselves with each company’s requirements, fees, and interest charges and confirm that it’s a legitimate lending site.
Rondash hasn’t tapped the money in his SponsorMyDegree account yet (the site requires you to accumulate $20 before making withdrawals). He’s waiting for it to grow before paying the site’s $5 processing fee. Meanwhile, he has an account with UPromise, a corporation founded by former BU trustee Michael Bronner (SMG’82) and owned by student lender Sallie Mae that allows students and their families to save small amounts of money every time they patronize participating stores and restaurants.
Rich Barlow can be reached at firstname.lastname@example.org.+ Comments