God and crowdfunders help those who help themselves.
Alida Taylor of Clifton, N.J., couldn't join the Sisters of Life, a Roman Catholic religious community in the Bronx, until she paid off her student loan debt. Under Roman Catholic canon law, a person should not be admitted to a religious institute who has a debt that cannot be repaid.
So she started a GoFundMe campaign on June 29 to raise $12,000 to pay down her student loans. As the news spread, donations poured in, including an anonymous one for $4,505. She surpassed her goal on July 14. Now her campaign has raised more than $14,500.
Crowdfunding student loans
It appears crowdfunders are sending Taylor, who could not be reached for comment, to the convent. It is not uncommon for student loan borrowers, even those with less religious callings, to ask friends, family and strangers for assistance online and otherwise.
The average college graduate had $37,000 in student loan debt as of 2016, according to estimates by Mark Kantrowitz, publisher and vice president of strategy for Cappex.com, a college and scholarship search site.
Taylor is not the first to turn to crowdfunding to reduce their student debts. For example, in 2012, Kelli Space, who graduated from Northeastern University in 2009 with an undergraduate sociology degree and more than $200,000 in debt, used her website to solicit donations to pay down her loans. She received $10,000.
"The most effective crowdfunding is to ask friends and family," Kantrowitz said. In his experience, borrowers may have more success asking face-to-face than by email or Facebook.
Tax implications
As long as crowdfunders donate less than $14,000 this year, they pay no tax on it. However, the tax implications for people who receive the money are murky, depending on how they use the funds.
Crowdfunding campaigns for student loans may have the IRS asking questions about the money and how it was used.
Accounting professors Cheryl Metrejean and Britton McKay at Georgia Southern University in Statesboro, Ga., who have studied the tax implications of crowdfunding, recommend people who use fundraising sites, such as GoFundMe, Indiegogo and Kickstarter, keep extensive records to show that the money generated by the campaigns are gifts, not income. Campaigners collecting gifts also should be careful not to offer any goods or services in exchange for donations.
Money raised on crowdfunding platforms doesn't come for free. Many sites, including GoFundMe that Taylor used, charge fees. For example, GoFundMe automatically deducts 5 percent from every donation.
The church and debt
Not even the Roman Catholic Church is immune from the high costs of student loan debt.
Nine in 10 Catholic religious orders asked at least one person to delay his or her application because of student loans and 70 percent have turned away at least one person because of student debt, according to a 2013 study by the National Religious Vocation Conference, an organization that studies religious orders in the U.S.
Some religious orders provide stipends - typically $15,000 to $20,000 - to prospective members pay off student loan debt if the orders can afford it, said Paul Bednarczyk, the National Religious Vocation Conference's executive director. Religious orders are independent from the Vatican and are responsible for their own finances.
"There is not some big checkbook in the sky we can use to pay off this debt," Bednarczyk said.