Burdened by student loan debt, some Gen Z-ers are finding creative ways to pay it back

Many Gen Z-ers are feeling the pressure of student loans and looking for creative ways to pay them back.

The average Gen Z-er owes just under $25,000, Bankrate reports from a study by credit reporting agency TransUnion. While this is less than other generations, the weight of debt has caused a few setbacks for young borrowers.

“Gen Z-ers with significant student loan debt have a potentially difficult road ahead,” David Straughan, MarketWatch Guides personal finance writer, told Yahoo News in an email. “With limited room in their budgets, Gen Z-ers may have to delay financial milestones like purchasing a home, starting a family or investing in retirement. ... This puts younger people at a serious disadvantage.”

They aren’t alone when it comes to the debt itself. Americans across generations have over $1.7 trillion in student loan debt, and how the country will deal with it is a massive talking point in Washington right now. President Biden announced on March 21 that the U.S. will forgive over $5.8 billion of debt for public sector workers. This comes on the heels of Biden saying he wanted to make student loan forgiveness tax-free permanently — which first became a provision during the COVID-19 pandemic.

How Gen Z-ers are using the internet and social media to pay down debt

With tens of thousands of dollars in need of repayment, some Gen Zers have found creative ways to save and make that money back. While some are user-testing websites and apps, others are editing YouTube videos or creating group chats to help keep themselves and others accountable in their debt journeys.

“I don’t really have anyone around me encouraging me or keeping me on track,” Kari Karanikos (@kari.karanikos), who owes more than $100,000 in student debt, said in a TikTok post.

One option that’s appealing to social media users on a larger scale is TikTok Live, which allows viewers to send the livestream creator virtual gifts on the platform. These gifts can be items such as animated diamonds, roses or hearts. Each of these virtual gifts can amount to as little as one cent or more than $500 in real money after it’s redeemed by the TikTok creator.

Allison McCarthy (@abmccarthy5757) and Taylor DeBerry (@tayyylormadeit) are two creators who utilized TikTok Live and tried to raise money for their student loan payments by streaming. After announcing their plans, they set up their Lives and began to interact with their followers and viewers, hoping they’d send the roses necessary to lower their debt.

McCarthy claimed to have made nearly $3,000 from TikTok Lives in "just four days," while DeBerry said she made just over $400 after three days.

Neither McCarthy nor DeBerry responded to Yahoo News' request for comment.

Who started the trend?

While this strategy has become popular in recent months, it originally started in 2022 with a professional Etch A Sketch artist. Jane Labowitch (@princessetch) decided in 2022 that she wanted to test the TikTok Live feature and see if she could pay off the more than $13,000 of remaining student loan debt she had through donations.

“I think on day one I made $750. That was when I realized, ‘Holy cow. This is going on fire. I need to keep striking while the iron’s hot,’” Labowitch told Yahoo News in an interview. “Nobody had done anything like this before on TikTok Live, and so I didn’t have an expectation of immediate success. I just thought it was a radical way to communicate with my audience.”

Labowitch originally thought it would take her a year to raise the money to pay off her loans, but it only took 30 days. Since then, she’s used TikTok Live streams to raise money for a new computer setup, a new phone and to raise money for others’ student loans.

“There were people back in 2022 who also took on similar debt-raising journeys and were successful at it,” Labowitch said. “And then it was quiet for a while.”

Why some users think twice about donating to creators

While there are plenty of social media users donating and trying to help the creators reach their goals, others are hesitant to donate to the streamers.

“Job ... no where to be seen,” replied @al.oak on DeBerry's post.

“What is this go fund me?” commented @nurcalbay on the same video.

Labowitch said comments like these are why she makes it a point to provide some form of entertainment in order to differentiate herself from someone simply asking for donations.

“I feel like the current trend is people who are streaming for the first time and don’t really have any interest or inclination toward trying to provide entertainment in return,” she said. “For me, it was of paramount importance to make live art and try to make it like a challenge.”

Regardless of how they choose to pay down student loans, Gen Z-ers continue to show openness when it comes to their finances and debt. Posting on TikTok about their student loan issues is yet another example of creative way Gen Z-ers approach money matters.