You Can Now Give A Student Loan Repayment As A Christmas Gift
If your loved one doesn’t want a sweater, a chance to chill out, or a Baby Yoda this holiday season, now you can give them the gift of paying off some of their student loan debt.
Pillar, a new personal finance app that helps users manage student loan debt, has a limited-time offer where friends and family of users can send money to pay off school loans.
âPeople don’t necessarily need more freebies and giveaways, but a lot of people need help paying for their education,â said Michael Bloch, founder and CEO of Pillar, of the âBoostâ feature âof the app, which runs Tuesday through January. 6, 2020.
More than 44 million Americans have student loan debt, amounting to $ 1.5 trillion. Any little help will probably be appreciated. Student debt hinders career paths, prevents starting a family, and forces people to delay buying a home.
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The free app launched earlier this year. It links a user’s bank accounts to their student loan account and can automate loan payments. By analyzing cash flow, Pillar advises users when they have extra money to pay more than the minimum and when they should just pay the minimum.
Bloch declined to give user numbers, but said the users have a combined student debt of $ 250 million. The app has saved its users over $ 6,000 in avoided interest payments by letting people know when to make larger payments, he said.
To use the Boost feature, users create a crowdfunding page that they can share privately with friends or family, or post publicly on Facebook FB,
Instagram and Twitter TWTR,
Bloch said. Donations go directly to student loan balances, Bloch noted.
Both users and recipients will not be affected by the fees because Pillar pays the money transfer fees, Bloch said.
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And keep in mind that any demand for money, even if it’s for a valid reason to pay off debt, can offend some people the wrong way. People should assess their dynamics with friends and family before looking for donations, a gift tag expert said.
And there are other services outside of the Pillar feature that people can use to offer student debt payments or college money. They include:
â¢ Donation from the College. the website allows people to purchase gift cards for recipients that can be used for their student loans or college savings account, such as a tax-advantaged 529 plan. Cards are available in denominations of up to $ 200. Consumers can purchase the gift cards at stores, including Target TGT,
and Barnes & Noble. WMT from Walmart,
website sells $ 100 gift cards.
The purchase fee for the gift card giver ranges from $ 3.95 for the $ 25 gift card to $ 5.95 for the $ 100 card. Individuals who donate online to students who have created profiles on the site will be charged a 5% processing fee capped at $ 15.
â¢ Gifting loan. the site allows users to create pages explaining their debts, history and ambitions. Users can then invite their contacts to view their page. Donations go to the user’s student loan accounts. Opening accounts is free, but the site charges a 5% fee on each donation.
Another method is to help a student avoid – or at least minimize – his debts upfront by contributing to his savings account 529.
Friends and family can send money to tax-advantaged accounts that grow over time, based on contributions and market performance. The money can be used for school expenses like tuition, room and board without incurring federal income tax.