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With Funds Tight, College Students Get Creative

With Funds Tight, College Students Get Creative

Dan Macsai / BusinessWeek

After accepting admission to New York University for this past fall, Max Stephenson started searching for loans. Then living in rural Tewksbury, N.J., the 18-year-old had little savings, and his parents couldn’t afford NYU’s hefty tuition, which this year hovers around $50,000 when you include room and board.

The Stephensons met with several private lenders, since government aid was inadequate. But like many Americans in need, they couldn’t borrow enough: Loans were either unavailable, or they came with double-digit interest rates. As his freshman year loomed, Stephenson was short $25,000.

Unfazed, he hatched a plan. He’d get 10,000 strangers to donate $2.50, $3.50, or whatever they could afford. To thank them, he’d send a piece of his graduation cap or gown. Within weeks, Stephenson’s plea—which began as a mid-August e-mail to 250 acquaintances—had circled the globe: Donations poured in from the U.S, Nigeria, Spain, and many other countries. As of earlier this month, he has raised $11,000, more than enough to finance his first semester.

A SEVERE DISRUPTION

Several years ago, such a quest might have seemed absurd. Not so today. As lenders cope with turmoil in the financial markets and fallout from the subprime mortgage crisis, the student loan industry is more precarious than ever. Daring and driven, a small but growing number of students, like Stephenson, have embraced creative financing. But it’s not necessarily by choice.


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