GoFundMe has become a go-to place to raise money for charity, or to give financial aid to a friend, relative or even a complete stranger. A year ago, many people turned to it to help pay for groceries and baby formula because of high inflation. But now, the crowdfunding site is seeing a spike in users trying to collect cash to help pay off their student loans.
In fact, GoFundMe accounts dedicated to fundraising for student-loan debt spiked 40% in October 2023 compared with the previous year, the platform recently revealed. And this jump in student aid-related fundraisers has coincided with the COVID-era federal student-loan payment pause that ended in October.
Interest began accruing on these loans again Sept. 1, after more than three years on pause, and payments resumed in October. So amid the restart, many of the more than 44 million student loan borrowers owing over $1.7 trillion are looking for help in lessening their debt load.
The average U.S. student-loan borrower is carrying about $37,000 in federal loans. Among them is April Faith, a 30 year-old truck driver living in Chicago, who owes nearly four times that amount. So she turned to GoFundMe to help pay off some of her $150,000 in student loan debt from earning an undergraduate degree in fashion, as well as getting a coding boot camp certification.
“My entire career-life, I have been focused on paying off these student loans,” Faith told MarketWatch.
She is one of the hundreds of GoFundMe users who have created accounts dedicated to getting help to pay some of their student debt. Faith launched a GoFundMe page a couple of weeks ago to try chipping away at her debt, asking for $10,000 of her $150,000 total debt burden.
“The $10,000 is just trying to be a bit generous,” she added.
And she’s not alone. GoFundMe said hundreds of student loan-related fundraisers have launched on its platform since just this past October. The site facilitates donations for a 2.9% fee per payment, and has facilitated a total of $25 billion in donations since it was founded in 2010.
Crowdfunding sites have already become popular ways for people struggling with medical debt to ask for help. Even Olympic gymnast and gold medal winner Mary Lou Retton turned to the fundraising platform Spotfund in October for help paying her bill after a lengthy hospital stay.
So it makes sense that people with education-related debt would also turn to crowdsourcing platforms for help. Earlier this year, GoFundMe reported that fundraisers for college tuition were up by more than 50% over last year.
“While governmental leaders and local officials are exploring policy solutions to address the student loan crisis, GoFundMe serves as a resource for people to receive the support they need from their friends, families, and communities in real-time,” Margaret Richardson, the chief corporate affairs officer at GoFundMe, told MarketWatch.
So how successful is this approach for crowdsourcing student loan payments? It’s very hit-or-miss. In fact, a 2021 research paper looking at almost 165,000 pandemic-related fundraising campaigns on GoFundMe found that more than four in 10 received no donations at all, and the average fundraiser collected $65.
GoFundMe told MarketWatch that some best practices for meeting a fundraising goal on the platform is to tell a clear story, share links frequently, and post regular updates.
The donations haven’t been pouring in for Faith yet. Just $55 of her $10,000 goal has been raised since she created the fundraiser a couple of weeks ago. But she hasn’t been broadcasting her fundraiser, either.
“I’m not really promoting it too much, because I’d rather take things into my own hands,” Faith said. But she had figured a fundraiser was just worth a shot. “Let me just make it … let me put myself out there, to kind of lessen the amount of student loans I have,” she said.
Among the many GoFundMe fundraisers looking to raise money for their student debt is Elijah Aragonez, who posted that he finished culinary school in March, but has been having a hard time paying his housing bills and student loans. Aragonez has raised $210 of his $15,000 goal so far. “I never thought I’d have to make a GoFundMe, but I’ve run out of options,” he wrote on his page.
Alanna Toland from Clifton Heights, Pa., has raised $340 as part of her $8,000 goal to pay for the cost of college after not getting any of the scholarships she applied for. “Every little bit helps,” she wrote on her GoFundMe.
But there is at least one fundraiser who has met their goal. Deanna Greif, a casting assistant in Hollywood, fell on hard financial times this year when student loan repayments resumed during the actors strike. She has received the full $2,000 she asked for to “stay afloat” thanks to 31 donations, many of which were from anonymous donors.
Since the GoFundMe approach hasn’t cleared Faith’s student loan debt, however, she’s also been making financial sacrifices to pay it down herself. She has changed careers multiple times — including working in fashion and as a software engineer — in an attempt to make more money. The truck driver also moved back in with her parents to save money on her biggest expense: rent.
Changing careers and moving in with your parents are just some of the sacrifices that people are making to help ease their student debt burden.
According to the latest MassMutual consumer spending survey, 80% of Americans with student loan debt have had to trim their spending, and the most common area people say they’re cutting back on is going out to eat (51%).
Many student-loan borrowers say they’ve been feeling financially stressed since payments resumed, too. Some 76% of those with student-loan debt say the resumption of payments “has had a negative impact on their day-to-day financial health,” according to the MassMutual survey, which was conducted from Oct. 19 to Nov. 2.
President Biden has been trying to help. The Biden administration has been pursuing a forgiveness plan to cancel up to $20,000 in federal student debt for millions of borrowers, but that was struck down by the Supreme Court in June.
The President has made several debt cancellation announcements since then, including one for 125,000 borrowers who have been working in government, and another for 804,000 borrowers who have been paying their loans for decades.
More recently, Biden canceled $5 billion in student debt on Wednesday for over 80,000 public servants who have been in repayment for at least 10 years.
Zoe Han contributed.