Stumped on a Christmas gift? How about a student loan payment

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An app’s new feature lets the friends and family of users contribute money directly to the user’s student loans.

If your loved one doesn’t want a sweater, a chance to unwind or a Baby Yoda this holiday season, you can now give the gift of wiping out some of their student loan debt.

Pillar, a new personal finance app that helps users manage student loan debts, has a limited-time offer where users’ friends and family can send in money earmarked to pay down school loans.

“People don’t need more gifts and more presents necessarily, but a lot of folks need help paying for their education,” Michael Bloch, Pillar’s founder and CEO, said of the app’s “Boost” feature, which runs from Tuesday to Jan. 6, 2020.

More than 44 million Americans have student loan debt, amounting to $1.5 trillion. Any little leg up will probably be appreciated. Student debts are crimping career plans, standing in the way of starting families and forcing people to delay buying homes.

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The free app launched earlier this year. It links a user’s bank accounts with their student loan account and can automate loan payments. By analyzing cash flow, Pillar advises users when they have extra money to pay more than the minimum and when they should just pay the minimum.

Bloch declined to give user numbers, but said users have a combined $250 million in student debt. The app has saved its users more than $6,000 in averted interest payments by telling people when to make larger payments, he said.

To use the Boost feature, users create a crowdfunding page that they can share privately with friends or family, or post publicly on Facebook FB, +0.35%, Instagram and Twitter TWTR, -0.82%, Bloch said. Donations go directly to student loan balances, Bloch noted.

Users and recipients won’t get hit with fees, because Pillar is paying for the money transfer fees, Bloch said.

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Before using any kind of money-related app, especially a free one, it’s a good idea to check out the the privacy policy.

And bear in mind that any sort of money ask, even if it’s for the valid reason of paying debts, may rub some folks the wrong way. People need to weigh their dynamics with friends and family before they seek donations, one gift etiquette expert said.

And there are other services apart from Pillar’s feature that people can use to gift student debt payments or money for college. They include:

• Gift of College. The website lets people buy gift cards for recipients that can go towards their student loans or their college savings account, like a tax-advantaged 529 plan. The cards come in denominations of up to $200. Consumers can buy the gift cards in stores including Target TGT, +1.96%   and Barnes & Noble. Walmart’s WMT, +0.64% website sells $100 gift cards.

Purchase charges for the gift card giver range from $3.95 for the $25 gift card to $5.95 for the $100 card. People who donate online to students who have created profiles on the site will be charged a 5% processing fee capped at $15.

• LoanGifting. The site lets users create pages explaining their debts, their backstory and their ambitions. The users can then invite their contacts to view their page. The donations are transmitted to the user’s student loans accounts. Accounts are free to open, but the site deducts a 5% fee from each donation.

Another method is helping a student avoid — or at least minimize — debt from the start with a contribution to their 529 savings account.

Friends and family can send in money to the tax-advantaged accounts that grow over time, depending on contributions and market performance. The money can be used for school expenses like tuition, room and board without incurring federal income tax.

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