Photo courtesy of the Associated Press.
Who's to say that college can't be free?
Some people have been able to repay their student loans through donors. They can be random, including celebrities, nonprofits, crowdfunding, and even through your job occupation. Professions such as dentistry, doctors, the military, lawyers, nurses, pharmacists, public service, teaching, veterinarians, and more qualify for student loan forgiveness. Some of these things bring ease to those who are doing monthly student loan repayments.
Student loan debt has reached an all-time high of $1.7 trillion nationwide. The average American has accumulated an average of $39,000 in student loan debt over the course of their four years in undergrad. Yet, a 1% tax on the richest in the country would erase student debt and eradicate all college associated fees for the next decade. The College for All Act was introduced by Senator Bernie Sanders (D-VT) in 2017. If enacted, it would’ve made tuition and fees at four-year public colleges and universities for families making up to $125,000 a year free. In many countries, a degree in higher education can be attained without racking up debt that will need to be repaid for the rest of your life.
So after the scholarships, grants, and you walk across the stage, grads have a few options on how to repay their loans. They are given a six-month grace period after graduation before repayment begins. On the Department of Education’s website, you can manage your loans, view your balance, find your loan servicer, choose a repayment plan, or even start paying back early. Although, it's difficult for some recent grads to find jobs directly out of college, and the stress that it ensues financially can be debilitating. But first, what kind of student loans are out there and which ones can be impacted by student loan forgiveness and the help of donors?
The Different Kinds of Student Loans
When looking to borrow for college, most people go through federal entrance and financial awareness counseling. There, you’ll be instructed on how to finance for college and estimate your potential payments. You apply for student loans through filling out the Free Application for Federal Student Aid (FAFSA). Each student’s different, and the amount of aid, including grants and some scholarships, are determined based on your parents cumulative income. Each institution will have a different way of rewarding students. Financial aid can help to cover the costs of tuition, fees, room, board, transportation, books, and supplies. Your aid package will include grants, scholarships, federal or private loans, work study programs, and a potential out of pocket cost. The difference, however, is that grants and scholarships don't need to be repaid, but loans do, including the accumulated interest.
It's best to get as many scholarships and grants as possible on top of your financial aid package to ensure that you have to repay less. A large number of students rely on federal loans to help with the costs associated with higher education. Federal loans are also called Stafford loans, which are determined by the student’s calculated financial need and must be repaid. Other than federal, you can opt for private loans, which are offered by private lenders.
Here’s our breakdown of the different kinds of loans and what they mean:
Direct Subsidized Federal Loans
The interest accumulated on subsidized loans is repaid by the federal government while you’re still a student in undergraduate or graduate school. This also includes during grace periods, and during any deferment periods. Only after the six month grace period post-grad is when the interest you need to repay starts to accumulate, and it increases until the loan is completely paid off.
Direct Unsubsidized Federal Loans
On unsubsidized loans, you’re responsible for paying for all the interest accumulated directly after taking out the first loan. This includes any interest racked up from while you were still a student. Interest will also continue to build up until the loan is paid in full.
Direct Parent PLUS Loan
A Parent PLUS Loan is still borrowed from the federal government, but the difference is that the individual student is not responsible for paying back the loan -- the parent is. Your credit will be checked and you cannot have an adverse credit history. Interest accumulates similarly to an unsubsidized loan with a 6.28% interest rate.
Private loans can be complicated, and depend on your credit or your co-signers credit. Not everyone is eligible for a private loan, and the interest accumulated on a private loan tends to be much higher than a Federal Loan. Private loans are often made by independently-owned organizations such as banks, credit unions, and other private organizations. The terms and conditions of those loans depend on who you are borrowing from. Popular private loans are from Discover Student Loans and Sallie Mae, for example. Post-grad jobs that offer student loan forgiveness don’t include private loans.
Have Other People Pay off Your Loans
Flash forward 4 years or more, and you tried your hardest to find all the grants and scholarships you could with taking out the least amount of loans possible. A lot of people are in that boat where they tried their hardest yet still had to take out loans to finish their education. There are still options to get those extra costs paid for by someone else. That way is most charitably known as donors. Here are some donor opportunities that we've researched for you:
Celebrities & the Wealthy
Individual donors might be more difficult to contact and receive from, but it’s not impossible. Some of them try to support their fans and peers in shouldering the costs of expensive loans through acts of charity. Most notably, American Businessman Robert F. Smith pledged to pay for the student loan debt of every graduating senior at Morehouse College in 2019. He also founded a new nonprofit, The Student Freedom Initiative, to help students who attend historically Black colleges and universities (HBCUs) pay off student loan debt. Oprah Winfrey has given $13 million to Morehouse. Taylor Swift sent $1,989 to a fan who made her a mashup video. Rihanna’s Clara Lionel Foundation has funded education initiatives and doubles as an emergency weather response fund. LeBron James funded a school in his hometown of Akron, Ohio for at risk kids through The LeBron James Family Foundation. Chrissy Teigen donated to a student’s crowdfunding campaign requesting for additional assistance in pursuing her education’s out of pocket costs. All of these are charitable acts, but truthfully, giving back to the fans who enabled your fame is the least you can do.
Charities & Non-Profits
Individual donors are harder to come by, but charities and nonprofits are helpful with paying off your student loans. A project of Strike Debt, Rolling Jubilee is a bailout fund and initiative to challenge access to funding and resources for the majority of people. They focus on debt, mutual support and aid, housing and medical care access. Their Debt Collective project is a union fighting to cancel debts and advocate for households.
The Shared Harvest Fund is made up of a network of volunteers, nonprofit members, and business member partners who invest in helping relieve student loan debt. In order to receive these funds, you must volunteer with one of their partners. If you have spare time to volunteer, you’re able to get some debt relief.
AmeriCorps, a government program dedicated to community service, offers federal Public Service Loan Forgiveness to those who qualify. When you volunteer for the organization you’re offered loan forbearance, and full-time volunteers are eligible for the Segal AmeriCorps Education Award. Each year the award varies based on the amount of the annual federal Pell Grant.
People often use crowdfunding sites to help pay for debts and emergency expenses. When you use a secure platform, it's an easy way to accept donations. After creating your campaign, you’ll generally share the link to several different social media platforms, making it easily accessible. Popular crowdfunding sites are GoFundMe, DonorsChoose, GiveCampus, Piggybackr, KickStarter, Chuffed.org, Fundrazr, IndieGoGo, GoGetFunding, and Patreon.
Finding ways to repay your loans post-grad is hard enough without help. Hopefully through these resources you can find ways to get the weight of that debt off your shoulders, at least partially.