I don’t know about you, but getting a student loan payment from someone would be the perfect gift, whether it’s for my birthday or Christmas or just because. After all, it seems that more and more people value experiences these days — versus material possessions — and whittling down debt is definitely an experience that many people would probably appreciate.
“If I were still paying off my loans, I would definitely appreciate receiving a student loan payment as a gift,” Daniel J. Mendelson, owner and CEO of BYE Student Debt LLC and author of BYE Student Loan Debt: Learn How to Empower Yourself by Eliminating Your Student Loans, tells Pillar. “Any extra money that can be allocated to a loan saves the borrower in interest payments and time they have to live with their debt, so this is a no-brainer from my perspective.” He says although a person could put cash gifts toward their student loans, people probably don’t think about doing so. “I think the receiver is usually thinking about something they can buy with the money, rather than paying down debt,” he says. “But by receiving a gift in the form of a loan payment, it makes sure the receiver gets the most bang for their buck — it’s not just the payment they are receiving, it’s also the reduction in interest.”
Paige, 24, tells Pillar that receiving a student loan payment as a gift would not only mean a lot to her, but would really impact her way of living for a month. Currently, she owes $70,000 in student loan debt. “I started out with $87,000 — and thanks to some careful investing which brought in extra income, I have been able to get it down to about $70,000 in one year,” she says. “The minimum is $800, but I put about $1300 a month on it.” However, some months, she can only afford the minimum.
“With my student loan payment being the biggest stressor in my financial life, it would take a weight off my shoulders and allow me to relax during the holidays,” says Paige. “My savings account would be able to grow substantially more than a normal month and I would be able to be more generous with my holiday gifts to my loved ones.” She says she would not ask her family members to do something so big for her — like making a student loan payment — but if they did, it would be a gift she would never forget.
Joe Hendrix, 35, had about $145,000 in student loan debt as of January 2017 and has about $45,000 remaining. He, too, would love to receive a student loan payment as a Christmas gift, he tells Pillar. “Who wouldn’t?” he says. “It’s essentially just a gift of cash — and I would put the cash toward my student loan balance anyway.”
At the moment, he owes around $239 per month for three loans, but usually pays more than the minimum amount due. “The interest rates on my student loans are currently 4.06%, 4.25%, and 4.84%, though any extra money I get — often through side hustles, which I also write about on my blog, JoeHx Blog — goes toward my highest debt,” he says. “This is largely how I’ve reduced my balance over $100,000 since the beginning of 2017.”
Mendelson also recommends doing a side hustle in order to reduce your overall student loan debt. First, he recommends paying loans off early by contributing more than the minimum payment due. “I would also recommend a side hustle job to find an extra $100-$200 a month,” he tells Pillar. “However, that is not possible in every scenario, so any little bit will help reduce payments.”
Natasha Nunez, 33, a former classroom teacher turned blogger at The Artisan Life, had almost $40,000 in student loan debt from graduate school. She finished her master’s in December 2013 and had a 10-year repayment plan — but finished paying off her student loan debt in early 2019. “I married in 2014 and my husband agreed to put our tax returns each year toward paying off my loans early,” she tells Pillar. “When I still had all four loans, my payment was close to $500 a month. My master’s is in teaching and the monthly loan payment would have been a challenge for me, especially as a new teacher.”
All that said, Nunez says she would have absolutely loved to have received a student loan payment as a gift. “I would have much rather had a payment taken care of for me than received material items I didn’t really need,” she says. “I was always bitter about the cost of my graduate school and that my parents didn’t help me. I had to cover the full cost of grad school with student loans and work full-time while earning my master’s.”
Logan Allec, CPA, personal finance expert, and owner of Money Done Right, tells Pillar that he, too, would have loved to receive such a gift if he were still paying back his student loans. “Maybe it’s my background as a financial professional, but I’ve always favored giving and receiving practical gifts,” he says. “In fact, I typically give my family stock or some other kind of investment for holidays and birthdays.”
While you may think that receiving such a pragmatic gift — like a student loan payment — is not what you had in mind when you wrote your list to Santa, so to speak, think again. “I definitely think this should be a trend,” says Allec. “I think it’s unfortunate that giving financial gifts for holidays and other special occasions is viewed by some as lacking thought or meaning. Are you kidding me? Helping someone chip away at the burden of student loans is a lot more meaningful gift than a pair of slippers.”
Allec had about $36,000 in student loan debt when he graduated from college in 2009 and ended up refinancing his loans along the way, which dropped his monthly payment of $400 to $285. In the summer of 2019, he finished paying them off. When it comes to doing so, he says he’d definitely recommend putting any extra money you can toward your loans — especially if they have high interest rates. “With the effect of compounding interest, an extra $10 here and $15 there could mean big savings in the long run,” says Allec.
Jill Gonzalez, analyst at WalletHub, tells Pillar that the gift of a student loan payment makes perfect sense for those who are struggling to pay. “Student loans are definitely an issue for a lot of the population, especially considering that more than 10% of them are either delinquent or in default,” she says. “This is why gifting someone a student loan payment, or otherwise helping them with that debt, could turn out to be a very thoughtful gift for many people.”
In any case, Gonzalez says that the most important thing is to keep your loan payments current. “Paying your debt is important, but it’s equally important to have an emergency fund or to start saving for retirement,” she says. Mendelson adds that the key to reducing, and paying off, student loan debt is to have a repayment plan — and stick to it. “Do your research, come up with the best plan based on your personal needs, and diligently stick to it,” he says.