The cost of higher educution and nonprofits

One of the concerns I have about nonprofits recruiting and retaining the best and brightest is the cost of higher education which, as a percentage of average family income, is an enormous barrier. Not only does it stress out current nonprofit staff who have kids and are trying to figure out how to pay for college, but for someone coming out of undergraduate or grad school with a $20k, $30k, even $90k debt, the ability to work in a low-paying nonprofit is severely limited.

The recent federal bill to "fix" this problem is a start, but a poor one. Basically, a 22-year-old has to go to work for a nonprofit, work ten years, and then she sees some minimal help. Ten years? Ten YEARS? Ten years for a 22 year old is half their life so far, at least the part they can recall. Not much of an incentive, particularly for the average 22 or 23 year old who is still figuring out their place in the world, where they want to live and work, and what their real passion is.

We've always used financial incentives to push people toward desired outcomes. Whether its the ability to deduct interest costs on your mortgage to encourage home ownership, had rapid depreciation allowances to encourage businesses to build, or drill for oil. Let's put together a real program that helps both students and parents.

More and more families are taking out loans, rates for loans are rising: student loans now cost 6.8% and parent loans 8.2%. Rates went up last year to help cut the deficit. And, private lenders have stepped back from lending given the mortgage crisis....

Here's my suggestion:

A student with a federal debt (in his/her own name or that of his or her family) goes to work for a nonprofit. During the year, the debtor pays only interest on the loan. After one year, if he or she does the job, 5% is cut off the principle. This continues moving forward for as long as the individual works for a (any) nonprofit. The second year, the forgiveness is 10%, where it stays for each of years 3-5 and then it moves up again to 15% per year until the loan is retired with one last 10% forgiveness in year 9.

Thus, the student receives immediate help (interest only) and a reduction in one year, not 10.
Will congress change the law? Unlikely.

So, what can communities do? Set up the same program locally with some variation. I'd love to see community foundations put money aside for debt reduction for employees at nonprofits, corporations and service organizations like Rotary and Lions set up scholarships for graduated students who work for nonprofits. Local governments could offer property tax relief to nonprofit workers buy homes in the community they work for, and state governments could target the areas where the most workers are needed and offer incentives as well.

We want well educated employees. We know we can't pay our employees salaries that are competitive with the for-profit sector, and we know that our mission-satisfaction makes up for that to a point. But mission-satisfaction can't help here: we have to come up with a better way if we want the best people.