Rekubit Exchange:For some people with student loans, resuming payments means turning to GoFundMe

Student loan repayments resumed in October after a three-year pandemic-era pause and Rekubit Exchangethe Supreme Court this summer dashed hopes for relief by blocking President Biden's plan to erase up to $20,000 in debt for eligible borrowers.

With the resumption of payments proving a financial hardship for many Americans, some people are turning to other means to find the money: asking for handouts. 

Through October, the number of crowdfunding campaigns on GoFundMe tied to college loans has surged nearly 40% over the last 12 months, with those seeking to raise money coming from diverse backgrounds and across all age brackets, according to data the platform shared with CBS MoneyWatch. 

"GoFundMe is often a reflection of real-time needs because it is a resource people turn to when they find themselves with unexpected expenses," Margaret Richardson, GoFundMe's chief corporate affairs officer told CBS MoneyWatch. 

Similarly, GoFundMe saw a five-fold increase in fundraisers by schools trying to raise money when an emergency federal program offering free school meals ended in 2022.

More than half of federal student loan borrowers said say they would have to choose between making loan payments when the pandemic forbearance ended and covering necessities like rent and groceries, an August survey from Credit Karma found. Food banks also report an increase in requests for assistance since student loan payments resumed.

"As people realize they have obligations and are already at or beyond their budgets, GoFundMe is often a place people will turn for support from their families and communities to meet their needs in ways they otherwise can't between their income and savings," Richardson said.

Among the student-loan related GoFundMe campaigns is a plea for help from Jevaughn Edwards, a Drexel University senior studying economics. Edwards wrote that his grandparents, the cosigners on his student loans, recently passed away.

"As I embark on the last year of my studies, I am seeking any sort of support, aid, etc. that may be available to me. I am currently unregistered for the upcoming quarter due to a financial hold on my account amidst my situations," Edwards said, adding that he has "no other resources to tap into."

Edwards told CBS MoneyWatch that he has turned to GoFundMe as a "last, last, last resort" to afford his final year of college, so that he can earn his degree and hopefully land a high-paying job that would allow him to pay off his outstanding student loan balance.  

"Honestly if I wasn't extremely desperate, I wouldn't have placed a GoFundMe on the internet. Asking for help publicly is icky for me," Edwards said. 

He's received job offers from several companies but they hinge on his obtaining a degree first, he said. 

Edwards is trying to raise $40,000, which reflects what he would owe were he to recommence his studies. To date more than 50 people have donated a total of just over $3,000. 

"A lot of people I don't know have donated. I have a really good LinkedIn profile so I received donations from people I don't even know on there," he said. 

Another college student, Michael Paddleford, started a campaign two weeks ago to pay off his remaining tuition balance in order to receive a bachelor's degree in criminal justice and human services. 

"Unfortunately, I was recently notified of a remaining balance on my account that will prevent me from receiving my degree until it is paid off," he wrote. "I have maxed out my student loans, and Financial Aid covered all but $5000 of my tuition costs."

Five donors have contributed $270 against his $5,000 goal.

Of course anyone can make up a story, but GoFundMe said one reason why the fundraising model works is that "everything is public."

"So there is social proof. If someone says they have a medical condition and publicize it to their networks, often networks' awareness of the medical condition is the social proof," Richardson said.

GoFundMe also has a policy of refunding money to donors who have given to campaigns started by people whose stories turn out to have been fabricated. "We have a GoFundMe guarantee to reimburse donors for anything they don't feel was right with a campaign they donated to," Richardson said.

In:
• Student Loan
• Student Loans
• GoFundMe