Is Student Loan Debt the New Philanthropy?
The student loan crisis has gotten a lot of attention in the last few years. Given the extent of the crisis, this isn’t necessarily surprising. With an estimated $1.5 trillion in outstanding federal student loans, the problem effects many Americans every day.
During the run up to the 2020 Presidential election, a few prominent Democratic candidates proposed debt relief programs for student loans. Senator Elizabeth Warren, a Massachusetts Democrat, said she would introduce legislation to cancel up to $50,000 in student loan debt for 42 million borrowers, mirroring details she outlined in a presidential campaign proposal estimated to cost about $640 billion. Senator Bernie Sanders, a Vermont independent, also endorsed a non-specific plan to forgive “massive amounts student debt.”
And now, after Robert Smith announced that he would pay the student loan debt of all 396 graduates at the Morehouse College of 2019 commencement ceremony on Sunday, May 19th, 2019, student loan debt is becoming the center of a potentially new philanthropic trend.
In May of 2017, Nicki Minaj offered to pay off student loans for her fans who got straight As. Reportedly, Minaj ended up only paying off $18,000 of her fans’ loans but in the process brought attention to the student debt crisis. She also announced she would be setting up a charity to help students pay for college and get rid of their debt.
Then there are organizations like Rolling Jubilee that purchase the delinquent debt of students (and others) and then “make it go away” through donations and LoanGifting where donors can help directly pay the principal on loans of students.
Granted, these are only a few examples, and in our research there aren’t many more out there. But with student loans only increasing over time as college tuition continues to increase at an extra inflationary rate, it seems likely this issue will only get more attention from potential donors. Additionally, with phenomenons like the Ben Franklin effect, once donors give, they want to keep giving.
What do you think? Is the student loan crisis going to increasingly compete for higher education donors?