How to Have Other People Pay Your Student Loans

May 8, 2020

Student loan debt is souring over $1 trillion and impacting 45 million borrowers. Those monthly student loan payments make it more difficult to make ends meet or to reach other financial goals, such as saving for retirement, buying a home and creating a solid emergency fund.

Getting other people to pay off your student loans would be sweet, wouldn’t it? It is actually possible. Here’s how to do it.

Get a Job That Offers Student Loan Forgiveness

Depending on your where you work and what you do, you could qualify to have your federal student loans forgiven.

Public Service Loan Forgiveness (PSLF) is a program that forgives the remaining balance on Direct Federal Loans if you are employed full time by a U.S. federal, state, county, local or tribal government, 501(c)(3) tax-exempt charitable organizations or certain not-for-profit organizations.

There are also other loan forgiveness programs for specific occupations.

Here is a list of professions and how you can qualify:

But there are some things to know about student loan forgiveness. In most cases, private student loans don’t qualify for forgiveness. Also, only about two-thirds of loan forgiveness applications get approved. For Public Service Loan Forgiveness, you still need to make 10 years of qualifying payments and regularly confirm that your current employer and role qualify.

Have Your Boss Make Student Loan Payments

More and more employers are offering student loan repayment assistance as a benefit to their employees. Thanks to the CARES Act, more employers may consider this benefit since it is now tax-free.

Chicago-based Abbott Labs allows employees to direct the 2% minimum they’d make to their company 401(k) plan into their student debt repayment plan. In turn, the employee would earn a 5% company match to be used as a 401(k) plan contribution.

Other companies that offer student loan repayment assistance programs, also known as LRAPs, include Aetna, Chegg, CommonBond, Estee Lauder, Fidelity Investments, PricewaterhouseCooper and SoFi.

Create a Crowdfunding Campaign

Crowdfunding, which is most associated with funding small businesses, has gained traction for helping people pay off student loans, too. A guide from GoFundMe found that between 2014 and 2017, over 130,000 campaigns raised $60 million on this site alone for student loan debt and related expenses.

Before you launch a campaign for crowdfunding student loan debt, understand there are pros and cons and sometimes fees associated with it.

GoFundMe – This site is known as “the leader in online education fundraising.” GoFundMe offers several education-based crowdfunding categories, including college tuition and student loan repayment.
LoanGifting – This is a student loan management resource that also offers crowdfunding. Unlike many other sites, the money raised goes directly into a student loan and isn’t handled by the recipient.
Indiegogo – Popular among small business startups, Indiegogo also helps fund education and learning.

Download the ChangEd App

The ChangEd App is a great tool for repaying your student loans. It rounds up every purchase you make and applies that amount directly to your student loans. Plus, you can earn points by referring friends and reaching milestones, and points are entered into a weekly raffle for a chance to win a student loan payment.

If you download the app, this is not technically someone else paying your loans, since the “spare change” is coming from your bank account. However, the app has a feature that allows family and friends to sign up and link their account to your student loans. If you are fortunate enough to have a parent, grandparent, or other family member who wants to help pay your student loans, talk to them about signing up.

Move to a City or State that Will Pay Your Loans

There are some states and cities that will pay a portion of your student loan debt if you move there. The motivation behind this is often to revitalize an area and increase the population.

The amount you are given towards your student loan varies by location, and often comes with a stipulation, such as living there for a certain amount of time or having a certain degree.

Some of these locations include:

Kansas
Maine
Maryland
St. Clair County, Michigan
New York (if you’re willing to operate a farm)
North Dakota
Hamilton, Ohio
Newburgh Heights, Ohio
Rhode Island

Sign Up for a Cash Back Credit Card

If you’re in the market for a credit card, a cash back credit card could help pay down student loan debt.

Sallie Mae’s Accelerate credit card gives 1.25% cash back on every purchase, plus, you get a 25% bonus on cash back when you use rewards to pay down any student loan debt.

But before you apply for a credit card, know how to use it to actually get the benefits of reducing student loan debt. Only charge what you are able to pay off every month. You can use your credit card to buy essential things you are buying anyways, such as gas and groceries. And then pay it off completely. It makes no sense to do this if you are paying interest on a credit card or racking up credit card debt. If you can’t use a credit card responsibly, don’t get one.

Volunteer for Student Loan Forgiveness

There are opportunities to have a portion of your student loan debt forgiven is you volunteer. Keep in mind that only certain loans qualify for forgiveness, and you need to complete whatever requirement is asked. There are pros and cons to going this route. For example, if you are volunteering mainly for the benefit of student loan repayment, you may have been better off getting a full-time job and earning more money. However, if you’re pursuing volunteering anyways, this is a nice bonus.

AmeriCorps NCCC, National, and State

The AmeriCorps National Civilian Community Corps (NCCC), a full-time residential program, focuses on disaster relief, environmental programs, public safety and youth development. Volunteers may serve two terms, and then must take a ten-month break before signing up again. AmeriCorps state and national programs partner with local community and nonprofit organizations. Volunteers may serve up to five terms.

At the end of 12 months of full-time service (1,700 hours), volunteers receive the Segal AmeriCorps Education Award, which may be put toward their student loans or toward further education. Only direct federal and state loans, and those granted under Titles VII or VIII of the Public Service Health Act are eligible for relief. Volunteers may receive a maximum of two awards.

The amount of the award is equivalent to that of the maximum Federal Pell Grant for the year ($6,095 in 2019-2020 and $6,345 in 2020-2021). Any interest accrued during the period of service is also paid. However, the award and the paid interest are considered taxable income to the recipient.

Volunteers should plan on applying for an income-driven repayment plan for the period during which they participate.

AmeriCorps VISTA

AmeriCorps Volunteers in Service to America (VISTA) is a program that focuses on the alleviation of poverty through partnerships with government agencies and nonprofit organizations. Participants must commit to at least one year of service and may serve for up to five years.

As with the state, national, and NCCC AmeriCorps programs, volunteers are eligible for the Segal AmeriCorps Education Award after one year of service. VISTA volunteers may also elect to take the award as a cash stipend rather than as a direct loan payment.

VISTA volunteers are eligible for 15% forgiveness of any Federal Perkins Loans for each of the first two years of service, and 20% cancellation of Federal Perkins Loans for the next two years of service, for a total of 70%.

The Federal Perkins Loan program ended on September 30, 2017, but borrowers remain eligible for the loan forgiveness programs.

As with other AmeriCorps Programs, participants should enroll in an income-driven repayment plan for their period of service.

Peace Corps

Like AmeriCorps, the Peace Corps is a government-run program. Peace Corps volunteers, however, are sent abroad to work on projects involving education, environmental advocacy, healthcare and economic development. Terms in the Peace Corps are generally limited to five years.

For each of the first two year-long terms of service, a Peace Corps volunteer can receive 15% cancellation of their Federal Perkins Loans. The next two years of service allow volunteers to cancel 20% of their Federal Perkins Loans for each year.

Participants should enroll in an income-driven repayment plan to allow for lower payments during the term of service.

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