‘Gift of College’ Review: Ways to Boost Your Student Loan Repayment

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Gift of College is a platform that, among other things, allows future students and their parents to crowdfund their 529 college savings plan.

It also allows student loan borrowers — as individuals or as employees of companies offering the benefit — to receive the “Gift of a Student Loan Payment.”

Consider these three ways to leverage Gift of College for your own loan balance:

  1. Crowdfund your monthly payment
  2. Earn credit card rewards while repaying your loans
  3. Encourage your employer to help out

1. Crowdfund your monthly payment

Matthew DeStefano, a chemist working in New York, has used Gift of College for over a year and has racked up nearly $12,900 in holiday gift cards from family and friends — a welcome figure, given the $11,000 still left on his original $40,000 student loan balance.

At last count, Gift of College works with 40-plus federal loan servicers and private lenders, all the big names from Navient and Nelnet to Earnest and Sallie Mae. Sharing a link to your account is easy as copying it off the Gift of College website and pasting it into a message addressed to mom, dad, a wealthy aunt or anyone else who might help — plus, the company doesn’t charge members for receiving gifts on the platform.

Supporters can then purchase a digital or hard-copy gift card worth $25 to $200 and apply it directly to your account. (They can also avoid nominal shipping fees on delivered cards by purchasing physical cards at grocery stores or large retailers like Target; at some of these retailers, purchasers may be able give as much as $500.)

Be wary of relying on handouts to meet your monthly payment, however — especially since it can take up to two weeks for contributions to get from Gift of College to your loan servicer or lender.

2. Earn credit card rewards while repaying your loans

DeStefano also employs Gift of College to make the most of his monthly payments. He simply buys the gift cards for himself using a credit card, which allows him to get reward points or other special perks.

It’s a savvy way to circumvent the fact that most federal loan servicers and private lenders don’t accept credit cards for loan payments.

For example, DeStefano said he used a credit card with a rewards program to purchase 10 $200 Gift of College cards. Counting the Gift of College processing fees — $5.95 per $200 card — he spent $2,059.50, or about two-thirds of the $3,000 required to receive the credit card’s bonus.

“So in the end, the benefit from doing this was paying down my student loan by $2,000,” he said, “and receiving 50,000 … [rewards] points.”

All told, DeStefano estimated his strategy had yielded $1,600 in credit card sign-up bonuses, as well as 110,000-plus airline miles.

“My goal is to pay off the rest of my student loans with the credit card rewards strategy in order to maximize my return on investment,” said DeStefano. “My only disclaimer is that you should do the math on whether or not you’ll be getting a good return on your investment if you pursue this strategy.”

If you buy a $200 gift card with a credit card offering 3% cash back, for example, you’ve already earned $6 to cover the fee. However, the fee could max out at $15 per transaction, depending on the number of cards you purchase.

Of course, you’ll also want to be sure you have the cash on hand to immediately zero your credit card balance. Otherwise, the strategy will do more harm than good, causing interest to accrue on your balance or, worse, wrecking your credit score.

3. Encourage your employer to help out

Gillian Murphy, who works at an online marketing company in Boston, said that her company awards points for performance using a tool called Achievers. Those points could be used on a variety of prizes, and Gift of College gift cards were recently added to the catalog. Murphy has already earned $200 to put toward her student loan debt.

Likewise, Peyton Wade, who works at a marketing agency in Tennessee, said her company’s similar points-based system netted her $50 of loan repayment assistance in her first month using the platform.

After leaving college $35,685 in the red, Wade knows that every little bit helps. “Coming out of college as a young adult,” she said, “you’re already defeated and behind, and you haven’t even really started adulthood yet.”

Wade reported having just over $13,727 left on her balance.

“Giving people a gift of becoming one step closer to becoming debt-free truly shows that employers and borrowers care,” she said.

Through Gift of College, employers can also offer a student loan payroll deduction, with or without matching. Other employers don’t partner with Gift of College formally but purchase gift cards in bulk and share them with their workforce.

If you’re not lucky enough to work for an employer with a ready-made student loan benefits program, you might contact your human resources department. If you can make a convincing case that loan repayment assistance belongs in your benefits package, you’ll be helping yourself and your colleagues shed college debt.

Is Gift of College worth a try?

If you thought Gift of College was only for saving up, now you know it could also help you pay down your debt.

The company could lead you to:

Just don’t rely on Gift of College to solve all your student loan woes — it’s a tool, not the whole toolbox. For example, DeStefano didn’t just use Gift of College as his only repayment tactic: he also reported lowering his interest rate by almost 3% through student loan refinancing with Citizens Bank. Murphy, for her part, has benefited from making extra payments, including by applying tax refunds to her debt.

So although it’s worthwhile to consider a Gift of College account, don’t forget about the other student loan repayment strategies out there.

Published in Review, Student Loan Repayment, Student Loans

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