Student loan repayments resumed in October after a three-year pause during the pandemic, and the Supreme Court dashed hopes for relief this summer by blocking President Biden's plan to erase up to $20,000 in debt for eligible borrowers.
With the resumption of payments causing financial hardship for many Americans, some people are turning to other ways to find money: asking for gifts.
Through October, the number of crowdfunding campaigns on GoFundMe related to college loans had grown nearly 40% over the past 12 months, with those trying to raise money coming from a variety of backgrounds and across all age groups, according to data the platform shared with CBS MoneyWatch. .
"GoFundMe is often a reflection of real-time need because it's the resource people turn to when they find themselves with unexpected expenses," Margaret Richardson, GoFundMe's director of corporate affairs, told CBS MoneyWatch.
Similarly, GoFundMe saw a fivefold increase in fundraising from schools trying to raise money when an emergency federal program offering free school meals ends in 2022.
More than half of federal student loan borrowers said they will have to choose between paying off their loans when pandemic forbearance ends and covering necessities like rent and groceries, an August survey by Credit Karma found. Food banks are also reporting an increase in requests for help since resuming student loan payments.
"When people realize they have obligations and are already at or outside of their budget, GoFundMe is often where people turn to support from their families and communities to meet their needs in ways they otherwise couldn't between their incomes and savings," Richardson said.
Among the GoFundMe campaigns related to student loans is a plea for help from Jevaughn Edwards, a senior at Drexel University studying economics. Edwards wrote that his grandparents, co-signers on his student loans, had recently died.
“As I enter the final year of my studies, I am looking for any support, help, etc. that may be available to me. I am currently not registered for the upcoming quarter due to a financial hold on my account in my situation. Edwards said, adding that he "has no other resources to rely on."
Edwards told CBS MoneyWatch that he turned to GoFundMe as a "last, last, last resort" to afford his senior year of college, earn his degree and hopefully land a high-paying job that would allow him to pay with. his student loan balance.
"Honestly, if I wasn't extremely desperate, I wouldn't have put the GoFundMe online. Asking for help publicly is embarrassing for me," Edwards said.
He has received job offers from several companies, but they are contingent on him getting his degree first, he said.
Edwards is seeking $40,000, which reflects what he would owe if he started school again. To date, more than 50 people have contributed a total of just over $3,000.
"A lot of people I don't know have donated. I have a really good profile on LinkedIn, so I've gotten donations from people I don't even know there," he said.
Another college student, Michael Paddleford, launched a campaign two weeks ago to pay off his remaining tuition balance so he can earn a bachelor's degree in criminal justice and human services.
"Unfortunately, I was recently notified of an outstanding balance on my account that will prevent me from receiving my degree until it is paid," he wrote. “I maxed out my student loans and financial aid covered all but $5,000 of my tuition costs.
Five donors contributed $270 toward his $5,000 goal.
Of course, anyone can make up a story, but GoFundMe said one of the reasons the fundraising model works is because "everything is public."
"So there's social proof. If someone says they have a medical condition and they post it on their networks, often the social proof is the networks' awareness of the medical condition," Richardson said.
GoFundMe also has a policy of refunding donors who contributed to campaigns started by people whose stories turned out to be fabricated. "We have a GoFundMe guarantee that we will reimburse donors for anything they don't feel is right with the campaign they contributed to," Richardson said.