In 2017, borrowers have seemingly had more ways than ever to get free money to repay student loans. This year Public Service Loan Forgiveness finally started, and student loan repayment programs gained popularity among many employers.
However, these options’ footprint remains relatively small, considering 44 million Americans have student loans.
[Learn how to take ownership of student loan debt repayment.]
Fortunately, the Student Loan Ranger knows one place many borrowers can turn to for repayment help: their families. The gift-giving season is upon us, and it ‘ s the perfect time to ask loved ones for a student loan payment.
Practical presents like this aren’t necessarily fun to receive, but they offer undeniable short- and long-term benefits.
Unfortunately, not all student loan servicers are set up to process payments from individuals who aren’t the loan holder. And none are allowed to discuss or even acknowledge an individual’s debt with anyone outside of the borrower.
However, you can get around these obstacles to receive the gift you really want this holiday season: less debt. Here are three strategies to follow.
1. Ask for cash: The easiest way for loved ones to help reduce your student debt is to give you money directly via cash or check. This will allow you to pay your servicer on your own, cutting out any potential confusion or legal roadblocks on their part. If you want to use this extra money to pay down your principal balance, just make sure to tell your servicer that.
You may worry that by receiving cash, you’ll find it harder to use it for the loan payment as intended. This is understandable if you’ve had to forgo material things to deal with your debt.
[Read about how to talk to your student loan servicer.]
One way around this is to set up a crowdfunding page to collect money for your loans. Via crowdfunding, your family and friends can easily contribute to payment goals. Some crowdfunding services, such as LoanGifting, even cater directly to student loan borrowers in repayment.
Since crowdfunding transactions happen through an online account, you may feel less tempted to spend the money elsewhere. However, crowdfunding sites also typically keep a percentage of contributions in exchange for using their services.
LoanGifting, for instance, charges a flat fee of 4 percent. That means you won ‘ t receive the entire gift. Before using a crowdfunding site, understand what fees it may charge and do proper due diligence to ensure the service is legitimate.
2. Make family members authorized payers: If you or your family prefer to avoid cash gifts but you still want help with your loan payments, you ‘ll need to take steps to ensure your family can contribute directly to your student loan servicer.
First, reach out to your servicer and ask if it allows you to authorize additional payers for your account. Nelnet, for instance, has this option, but not all servicers are set up to receive payments in this fashion.
Adding an authorized payer to your account does not allow that individual to alter — or even view — your account information. Remember that servicers cannot share information about your debt with anyone but you. Note: You have the option to give a family member access to view your account information by asking your servicer about the process for authorizing the release of information to a third party.
If your servicer does not allow you to add authorized payers, you could grant the person a power of attorney. However, this could allow that individual to not only make payments but also manage all other aspects of your student loans — with or without your knowledge. This would be an extreme action to take in this instance.
[Discover 10 steps to develop a student loan repayment plan.]
3. Work together: If the two prior strategies don’t work, you’re not out of options. Your best bet then is to work together with the loved one to make the payment.
Have him or her sit with you when you access your online account and ask the family member to enter his or her bank account information for a one-time payment. We advise against sharing your login info with anyone — even loved ones.
Servicers also allow borrowers to make payments over the phone. You could call in a payment with your family member providing his or her banking information to you.
Keep in mind that family members cannot make this call themselves, since your servicer will need to confirm your identity to accept payment for your account.
A final option is to have a loved one send a personal check to the servicer on your behalf. The check should include your name and loan account number.
Most servicers will accept a payment in this fashion because it does not require them to acknowledge your debt with a third party. However, some may return the check. If you go this route, be sure to follow up with your servicer to confirm that it has received the payment and processed it accordingly.
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Give the Gift of a Student Loan Payment originally appeared on usnews.com
