As this website has previously discussed, paying off student loans consumes considerable financial resources. Indeed, student debt borrowers oftentimes have little money to devote to anything else, like saving for retirement, purchasing a home, or accomplishing other life goals. As a result, donating to charities while paying off student loans can be difficult for numerous student debt borrowers. However, many individuals with student loans would like to contribute to charities, and there are some things you should keep in mind when donating to charities while paying off student loans.
I owe a lot to many nonprofits that have positively affected my life. As mentioned in a few prior articles, I paid very little to earn my B.A. and M.A. degrees at Brandeis University. It is true that I received substantial outside scholarships while attending college, which helped me pay for my degrees. However, I received sizable financial aid from Brandies University as well.
After I was accepted to Brandeis in my senior year of high school, my father and I made a trip to the college to meet with the track coach, tour the campus, and talk with my financial aid officer. I vividly remember my father and I discussing finances with my financial aid officer, and receiving assurances that my needs would be met at Brandeis. This guarantee and the financial aid that followed put me at ease during a formative period in my life. I always hoped that I would be able to financially contribute to Brandeis when I got older so that I could in some small way pay back the institution for providing me with invaluable financial assistance.
I also received generous need-based financial aid from Georgetown Law while earning my law degree. Most law schools do not have need-based financial aid programs, and those that do rarely provide financial aid to transfer students. However, Georgetown Law generously gave me financial aid equal to about forty percent the cost of attendance. I also always told myself that I would contribute to my alma mater when I was financially able, so that I could in some small way pay back Georgetown Law for the assistance they provided me.
Of course, there have been other charities and nonprofits that have helped me throughout my life. For instance, I am a fellow of a citizen-leadership fellowship program that has provided me with mentoring and other resources for over a decade. In addition, I worked at a local nonprofit during my summers in college teaching teenagers at a summer enrichment program. I of course wanted to contribute to these organizations during my student debt repayment saga, since they do great work and had an impact on my life.
However, while I was paying off my student loans, I had little money to contribute to charity. I devoted almost all of my money toward repaying student debt, and didn’t even save money for retirement or purchasing a home until much later. In the beginning of my student debt repayment saga, interest accrued on my debt at an insane rate, and I wanted to pay down my student loans as aggressively as possible so that I would reduce the total interest I paid. In addition, I frequently helped out family, which consumed money that I could have spent donating to charities while paying off student loans.
It was not until I paid off all of my high-interest student loans that I felt comfortable donating to the nonprofits that had an impact on my life. Like most people, I receive phone calls from my college and law school asking for money, and I can usually tell when my college and law school are looking for donations by the area code of the numbers that call. I used to just ignore these calls, but once when I was on the train commuting home one evening after I paid off my high-interest student loans, I finally picked up the phone.
While speaking to a current student at the college I attended, I thought about all of the financial assistance my alma mater gave to me. To be honest, I felt a little ashamed that I hadn’t donated much to my school before, even though I had massive amounts of student debt. After speaking with someone from my college, I contributed a few hundred dollars to my alma mater, and shortly thereafter, I finally began contributing money to a few meaningful nonprofits that were important to me.
I think there are a few things you should keep in mind when donating to charities while paying off student loans. For one, you should generally not place yourself in a financially-precarious position in order to do contribute money to charities. Furthermore, it might not make sense to contribute to nonprofits while you are trying to pay off high-interest student loans. Ultimately, high-interest student debt will have the biggest effect on how long you will be repaying student loans, and the longer you have student debt, the less likely you will be to make meaningful contributions to charities.
However, once you pay off high-interest student debt, you should feel more comfortable donating to nonprofits. There is less of a financial emergency once high-interest student loans are paid off, and as many people are already aware, you can deduct donations to most charities from your taxes. Of course, one has more disposable income and flexibility once high-interest debt is paid off, and this give someone greater financial freedom to contribute to charities.
In the end, it can be hard to devote extra money to anything other than debt repayment while paying off student debt. However, under the right circumstances, you should feel comfortable donating to charities while paying off student loans.