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It can be difficult to justify asking for seemingly frivolous items for the holidays when you know you have debt up to your ears that exists in your student loan account. Families and other loved ones may not want to give you cash because they may feel it’s boring, would prefer to see the tangible gift that their money purchases or a variety of other reasons.
But, there’s a new option on there for your holiday wish list that loved ones are sure to get behind: paying off your student debt.
LoanGifting, a new resource for students looking to downsize student debts, was created by design consulting firm RKS Design launched in the end of October of 2015.
Crowdfunding for college isn’t anything new. Students have been utilizing sites like GoFundMe, Indiegogo’s Generosity and plenty more of the same. For example, as of August 2015, the popular crowdfunding website GoFundMe helped people raise more than $20 million to put toward education funds.
But, what’s different about this service is that it’s exclusively dedicated to repaying student loan debt. Student borrowers are able to set up profile that connects their account to student loan account information. What’s neat is that the service bridges a student’s debt account and donations given are able to link payments directly toward the principal balance on a student borrower’s account.
This service gives, family members or any other holiday gift-givers the assurance that their financial gift goes directly towards paying off a student’s debt, without taking the risk that a student may use the money to party or whatever else a student may need money for - a common worry when gifting money to college students (no offense meant, students, WE trust you!).
This service opens worlds of possibility for students looking for help conquering their student loan debt. It’s important to remember that connecting with a student loan borrower can be extremely difficult for those looking to pay directly.
If student borrowers often struggle to get all or the correct account information from their own servicers (which, according to sources, they do), it’s clear that it’s seen as more of a hassle than it’s worth for donors to attempt to make a contribution directly into a student’s account. This is especially true when the contribution isn’t sizable enough to justify all of the effort.
LoanGifting combats this by becoming the middleman for these donors, taking on the task of connecting with student loan servicers so Great Aunt Gertrude (or whoever wants to help you with a donation to pay off your student debt) doesn’t have to worry about it.
While it’s free to set up both user and recipient accounts, LoanGifting does deduct a 3 percent fee from every gift. Then, an extra 2.9 percent fee is deducted by PayPal and up to $0.30 per transaction (based on whichever payment methods the donors use, such as a credit card). It’s important to keep in mind that LoanGifting is still new on the scene. The company says they’re working to offer other options on the site that will eliminate some of the fees but the fees don’t seem all that outrageous by comparison. In fact, they seem pretty reasonable.
For example, GoFundMe deducts a 5 percent fee (that’s compared to LoanGifting’s 3 percent fee) plus the 2.9 percent fee (the same as on LoanGifting) deducted by payment providers from each of the donations to the student debt accounts.
LoanGifting outlines the user terms on its site, “By using LoanGifting.com, you specifically authorize LoanGifting to retrieve your student loan data and to connect with and directly make payments to your lenders so as to only lower loan principal amounts (not in lieu of your required monthly or bi-monthly payment responsibilities).”
On the site, students with debt accounts simply create a profile, connect their student loan accounts and reach out to family and loved ones for support.
Those looking to donate are then able to search the database for a student’s account and send a financial gift to a chosen recipient.
Once the gifts are received, recipients are able to send a message thanking those who supported them with a donation.
If students aren’t quite sure how to ask for these donation-style gifts, the company offers pre-written messages that can be sent to parents, family members or whomever else they would like to gain financial help from.
Within a MarketWatch article, Sawhney, the CEO of RKS, discusses why he was prompted to begin the service.
According to the article, “The sheer magnitude of student debt - the U.S. has $1.2 trillion in outstanding student debt and about 70% of bachelor’s degree recipients graduate with loans - is what inspired [RKS], to start looking for ways to make a dent in the crisis.”
“Really, who is going to step in? It’s going to be the network of friends and family,” he said within the article.
So, if you've been good this year, why place your hopes in a fictitious red-suited, bearded man who travels the globe fulfilling everyone’s holiday wish lists? You’ll likely come up short. If you want to ensure your holiday wish list gets fulfilled (or at least, those in terms of getting student debt relief) you may want to look into LoanGifting’s straightforward system, which can help your loved ones to help you conquer that student debt more easily.
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