From investing in tech-based startups to a diversified real estate portfolio, pooling money for the greater good is the way of the future across industries. Student loans are no exception.
In 2014, the crowdfunding site GoFundMe had 140,000 education-related accounts which raised $17.5M, a 280% increase from 2013. In the first seven months of 2015, the site raised more than $20M for education funds.
Those numbers pale in comparison to the 70% of bachelor degree recipients who have student loans. In total, there is $1.2 trillion in outstanding student loan debt in the U.S.
Taking its lead from crowdfunding, LoanGifting has a solution. Conceived in 2013 as an in-house exploration by Thousand Oaks-based RKS, a design and innovation firm, LoanGifting was imagined as a resource to aid current students, and college graduates – young and old – with the burden of student debt. By 2014 RKS CEO Ravi Sawhney and wife Amalia, RKS’ CFO, partnered with Yakin Patel to bring LoanGifting to life and in October 2015 LoanGifting.com officially launched.
LoanGifting works by connecting borrowers (current or former students) directly with their student loan accounts allowing grandparents (or anyone) to ensure their money is going directly to the principal of the student loans and not a beer fund.
Eliminating the middleman, LoanGifting takes the stress of connecting with the servicer, a process Sawhney considers “incredibly daunting.”
The LoanGifting platform deducts a 3% fee from every gift and a 2.9% fee is deducted by PayPal or other payment methods donors use. While 3% may raise eyebrows on initial glance, that is a lower fee than the 5% GoFundMe charges (on top of the 2.9% PayPal will also charge).