A Santa bells bail-out.

Millennials are writing "student loan payments" on their Christmas list this year, and new service LoanGifting is stepping in as Santa, says MarketWatch reporter Jillian Berman. The new service, launched in October 2015 by design consulting firm RKS Design, allows relatives and friends to make payments directly toward someone's student loans. The platform differs from existing online fundraising sites like GoFundMe or Generosity in that it is dedicated solely to student debt, and donors’ gifts go directly to the recipient’s student loan servicer.

So far, about 200 people have created accounts with LoanGifting. The service deducts a 3% fee from every gift, and a 2.9% fee is deducted by PayPal or the other payment methods donors use.

Grandparents can be sure their money is going directly to their grandchild’s student loan instead of to their beer fund, Ravi Sawhney, the chief executive of RKS, says. The gift is applied to the principal of their student loan. “To connect with the servicer is incredibly daunting,” he said. Indeed, the Consumer Financial Protection Bureau noted in a report earlier this year that student loan borrowers often struggle to get all or the right information from their servicers. Given those difficulties, it’s likely not worth a donor’s time to try to connect with their recipient’s servicer to make a small gift. LoanGifting acts as a middleman for these transactions.
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