Lori Meadows
Student loan debt is a significant burden, impacting millions of borrowers and making it difficult to achieve financial milestones such as saving for retirement or buying a home. While it may seem challenging to get someone else to pay off your student loans, there are several options available. These include loan forgiveness programs, employer-provided repayment assistance, crowdfunding, and even apps that allow family and friends to contribute. Understanding these options can help borrowers make informed decisions and explore alternatives to ease their student loan burden.
| Characteristics | Values |
|---|---|
| Crowdfunding | GoFundMe, LoanGifting, Indiegogo |
| Public Service Loan Forgiveness (PSLF) | For Direct Federal Loans; work for the government or a qualifying organization |
| Loan Forgiveness Programs | Specific to certain occupations |
| Employer Student Loan Repayment Assistance Programs (LRAPs) | Abbott Labs, Aetna, Chegg, CommonBond, Estee Lauder, Fidelity Investments, PricewaterhouseCooper, SoFi |
| Apps | ChangEd App |
| Family Members | Parents, grandparents |
| Relocation | Some states and cities offer to pay a portion of student loan debt to attract new residents |
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What You'll Learn
Public Service Loan Forgiveness (PSLF)
To be eligible for PSLF, individuals must be employed by organizations whose activities do not have a substantial illegal purpose. The definition of "public service" excludes organizations engaging in illegal activities, such as illegal immigration, human smuggling, child trafficking, public property damage, and disruption of public order.
If you are enrolled in the PSLF program, you can authorize a third party to make payments on your behalf. This requires verifying both your and the third party's identity, after which basic account information can be shared to facilitate payments. Payments can be made via check or electronic funds transfer, and the payment must include the client's full name and loan number.
It is important to note that the PSLF program has undergone revisions to ensure that it aligns with the national interest and security. The program aims to address worker shortages in necessary occupations and direct funds to organizations that serve the public interest.
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Crowdfunding
When creating a campaign, it is important to be transparent about how the funds are being used. Clearly communicate how the funds will be allocated and provide detailed reports on expenses and loan repayments. Share personal anecdotes, testimonials, and success stories that resonate with donors on an emotional level, inspiring them to support your cause. It is also important to maintain regular engagement with donors, providing updates on the campaign's progress and expressing gratitude for their support.
To increase the chances of a successful campaign, start by sharing your fundraiser with your network of friends and family, and ask them to share it on social media. Choose a creative and positive name for your campaign and include images and videos that help tell your story. You can also embed videos and livestream options to drive excitement. Additionally, consider collaborating with other crowdfunding campaigns, student organizations, or community groups to amplify your reach and fundraising efforts.
It is worth noting that the success of crowdfunding campaigns varies based on network size and donor generosity. There may also be tax implications for student loan donations, depending on the amount of the repayment, with potential gift taxes for donors. Additionally, some crowdfunding sites charge fees for transactions or processing, so it is important to choose a platform that allows you to keep as much of the money raised as possible.
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Loan management apps
Student loan apps are a great way to help manage student loan debt, which can be a significant burden for graduates. These apps can help you manage your money, budget, and save, as well as offering tips and advice on how to pay off your debt.
Firstly, it is important to note that someone else can make a payment towards your student loan. Most loan companies will allow a third party to make a payment on your behalf, but they will need to verify both the client's and their own identity. The third party will need to provide the routing and account number of a checking or savings account for the loan company to pull the payment from.
Now, here are some loan management apps that can help you pay off your student loans faster:
- Quicken is a well-known budgeting software that allows you to create a budget and track your spending. You can connect your accounts and automatically categorise your spending. It helps you manage your spending and identify areas where you can cut down to free up extra money to pay off your debt.
- Fidelity Spire is a free app designed to help young adults achieve their short- and long-term money goals. It allows users to track their progress after linking an account and access Fidelity's Student Debt Tool, which offers tips on paying down debt.
- EveryDollar is an app designed by financial expert Dave Ramsey. It allows you to create a monthly budget and ensure you save the money needed to reach your student loan financial goals. It helps you set a realistic budget and work towards paying off your student loans.
- Undebt.it offers easy-to-use calculators that keep track of your payments, debt balances, and due dates. It helps you define and obtain your savings goals and sends you reminders to streamline the process. It also has a premium version with additional features like bill management and a calendar to help you pay your bills.
- Debt Payoff Assistant is a simple iPhone app that lets you view all your debts in one place. It has a dashboard that breaks down your different types of debt and the total amount. You can then use the app to see how much you'll save using different payment strategies.
- ChangEd is an app that rounds up your purchases to the nearest dollar, and the "spare change" is put into an account for extra student loan payments. Once the balance reaches $100, the money is sent to your loan.
- PocketSmith is a personal finance software program that helps you manage your student loans and other bills. It helps with budgeting, cash flow, and overall money management. It automatically pulls information from your banks, making it easier to input information.
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Employer repayment assistance
If you're looking for ways to get someone else to pay your student loans, one option to consider is employer repayment assistance. Some employers offer student loan repayment assistance programs, which can provide up to $5,250 in tax-free student loan repayment benefits annually per employee. This option is available for payments made between March 27, 2020, and December 31, 2025.
If your current employer doesn't offer student loan repayment benefits, you could consider finding a new job with a company that does. Some employers that offer student loan repayment benefits include firms like Ally Financial, Chegg, Google, and Fidelity. You could also suggest it to your current employer, highlighting the benefits such as improved recruitment, engagement, and retention of employees.
There are also government-based repayment assistance programs that you may be able to access through federal or state government agencies, depending on your career choice. For example, health professionals, public defenders, military members, and STEM workers may be eligible for certain programs. These programs may offer annual payments or a lump-sum payment after you've provided the required service and met other program requirements.
Additionally, some employers may offer signing bonuses or allow you to trade unused vacation time to put towards your student loans. It's important to research the specific requirements and conditions of these programs, as some may have timeline restrictions or other eligibility criteria.
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Gifts from friends or family
Friends or family can help pay off your student loans, and this is considered a gift under U.S. tax regulations. The giver is responsible for paying any gift taxes, not the recipient. For 2022, the gift tax exclusion is $16,000, so it is possible for someone to give up to this amount to another individual without paying taxes. The exclusion applies to individuals, so a married couple could potentially give up to $32,000 to one person without paying taxes.
If someone wants to pay off your student loans beyond the annual exclusion amount, it is possible to use a process known as unified credit. This allows larger gifts to be made now by reducing the credit later upon death. For example, if you have $26,000 left on your student loans, and a relative decides to pay that off for you, $16,000 of it won't be taxed. However, your relative will owe money on the remaining $10,000. They can file to use the unified tax credit now and avoid that tax bill, and then the credit will be reduced, and any tax owed will be paid by their estate later.
It is also possible to simply give someone money as a gift, which they can then apply to their student loans. This can be done by giving cash or a check to the borrower, which requires trust that the funds will be used for the loan repayment. It is important to be clear with the student loan servicer about how to attribute the funds. A letter can be written to the servicer, detailing how the overpayment should be attributed, and the borrower should check their monthly statements to ensure the payment was attributed correctly.
Another option is to make a one-time online payment together with a friend or family member. Websites such as loangifting.com or tuition.io, or other apps, can make the payment directly to the loan servicing company.
It is worth noting that if a family member or friend pays off your student loans, it is generally considered a gift and is not taxable to you, provided it does not exceed the annual gift tax exclusion limit. This limit was $15,000 in 2022, $16,000 in 2023, and $19,000 in 2025. If the gift exceeds this limit, the excess amount is added to the lifetime exclusion, which is currently set at $13.99 million. As long as the benefactor's total lifetime gifts are below that amount, they don't have to worry about paying a gift tax.
It is important to be aware of the different tax rules that apply when making a tuition payment versus a student loan payment. Direct tuition payments do not count as gifts, so it is possible to make tuition payments directly to a school that are in excess of the annual gift exclusion amount.
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Frequently asked questions
There are several ways to get help with paying off your student loans:
- Depending on your occupation, you may qualify for a loan forgiveness program. For example, Public Service Loan Forgiveness (PSLF) forgives the remaining balance on Direct Federal Loans if you work full-time for the government or a non-profit organization.
- You can use crowdfunding sites such as GoFundMe, LoanGifting, or Indiegogo to raise money for your student loans.
- You can use an app like ChangEd, which rounds up your purchases and applies that amount to your student loans. The app also allows family and friends to sign up and link their accounts to your student loans.
- Ask family members or other third parties to make a payment toward your loan on your behalf.
Public Service Loan Forgiveness (PSLF) is a program that forgives the remaining balance on Direct Federal Loans if you are employed full-time by the U.S. federal, state, county, local, or tribal government, 501(c)(3) tax-exempt charitable organizations, or certain not-for-profit organizations.
Some companies that offer student loan repayment assistance programs, also known as LRAPs, include Abbott Labs, Aetna, Chegg, CommonBond, Estee Lauder, Fidelity Investments, PricewaterhouseCooper, and SoFi.
In most cases, private student loans do not qualify for forgiveness.
Some crowdfunding sites that can help with student loan repayment include GoFundMe, LoanGifting, and Indiegogo. GoFundMe offers several education-based crowdfunding categories, including college tuition and student loan repayment. LoanGifting is a student loan management resource that also offers crowdfunding, with funds going directly into a student loan. Indiegogo is popular among small business startups and also helps fund education and learning.
