In response to the specter of tens, even hundreds, of thousands of dollars of student loan debt facing their children as their children prepare for college, four mothers have started Lilyslist.com, a website that helps relatives, friends, and even anonymous donors pay down students’ and graduates’ student loans “one birthday, holiday, or graduation gift at a time.”
The idea behind Lily’s List is that if, as a parent, grandparent, godparent, good neighbor, etc., you’re going to be giving money as a gift to a student or recent graduate, the smart and progressive thing to do would be to help your student pay off his or her student loans rather than giving a potentially impulsive twenty-something the opportunity to perhaps make a poor decision and spend the money on, say, clothes, video games, or a new iPad.
“Rather than simply giving cash to the student — and most graduates I’ve met don’t know where their graduation money went — people can make a contribution toward their loans,” says Beverly Gordon, the marketing director for Lily’s List and one of its founders (“Lily’s List Seeks to Help Students Repay Loans,” Riverside-Brookfield Landmark, March 30, 2010).
Although the “now taking donations” format may come across to some as students essentially begging for money, the creators of Lily’s List regard the website as another financial tool to help the ever-growing pool of students struggling to pay off their college loans. The average college graduate now leaves school owing over $23,000, and, in the current recession, facing the grimmest job market in over 25 years.
“It’s not just for college kids,” Gordon notes. “We’ll be appealing to graduate students who are in the dilemma of pursuing a career and paying loans at the same time.”
How Lily’s List Works
The whole operation is kept pretty simple for members and donors alike. Members — anyone currently holding a student loan — pay $15 a year to register with Lily’s List and include their profile in the Lily’s List database. Donors can make payments without registering, although registration is free.
Lily’s List acts as a middleman and processes direct credit card payments from donors to the member’s student loan lender via MasterCard, Visa, or Discover. Each donation incurs a $2.75 fee to cover the bank fees for depositing directly from the donor’s credit card to the member’s student loan account.
Two caveats, though: Donations do not count toward a member’s minimum monthly student loan payments (donations are credited in addition to the required minimum payments) and are considered to be gifts, not tax-deductible contributions.
Lily’s List offers donors the ability to search for students and graduates by name, school, state, year of graduation, hometown, and interests. The website also spotlights individual members — selected at random — in a Student of the Week section.
The company has plans to eventually sell ad space on the Lily’s List website and use revenue generated from the ads to increase donations to members.
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