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Updated on Friday, April 30, 2021
You might have heard of crowdfunding to raise money for a new company, but did you know some savvy graduates are using crowdfunding platforms to tackle their student debt? With a platform like GoFundMe or LoanGifting, you could try crowdfunding your student loans to pay them off faster.
With this approach, you rely on the generosity of friends, family or even strangers to contribute to your campaign and help you conquer your student loan debt. To find out more, let’s look at the following topics:
- Crowdfunding student loans: How does it work?
- Popular crowdfunding platforms for student loan debt
- Tips for successfully crowdfunding student loan debt
- Crowdfunding: Final thoughts
Crowdfunding student loans: How does it work?
Crowdfunding is the practice of financing a project or cause through contributions, often small, from a large number of people. Typically, funds are raised through online platforms, giving individuals the opportunity to reach a wide audience and connect with those beyond their immediate network.
While crowdfunding initially gained popularity funding entrepreneurial and artistic endeavors, offshoots have come to specialize in backing everything from charitable causes to personal goals to education.
Crowdfunding platforms specific to student loan debt are still fairly new, but the practice of asking for outside assistance in reducing personal education costs is on the rise. It should be noted however, that not all crowdfunding platforms operate using the same model.
Just like choosing an investment platform or a bank account, it’s important to fully understand the fine print before signing up.
Popular crowdfunding platforms for student loan debt
GoFundMe, founded in 2010, is a general crowdfunding site, but popular in funding personal education costs.
Fees: GoFundMe charges a fee of 2.9% and $0.30 per donation.
LoanGifting is a site that acts like a gift registry for student loan borrowers. You sign up and can invite others to contribute toward your student loan fund.
Fees: LoanGifting charges a flat fee of 5%.
Indiegogo is a platform that allows users to raise money for their student loans or education.
Fees: Indiegogo charges 5% platform fee on any funds you raise and a transaction fee (typically 2.9% + $0.30).
Tips for successfully crowdfunding student loan debt
After choosing a platform and launching a campaign, grads should be prepared to follow up with marketing and outreach efforts to build interest and circulate their campaign page beyond their immediate circles of friends and family.
To enjoy the benefit of a successful campaign, grads can implement the following strategies.
Develop a platform
Create an online presence beyond your campaign page. A blog, videos or hashtag associated with your fundraising efforts can draw increased interest, engage the community and increase your chances of getting funded.
Set a realistic goal
It might seem counterintuitive, but if your goal seems too far out of reach, people may be less inclined to contribute. Having a strong support group of core donors ready to give in the first week of the campaign can illustrate early success, breeding subsequent success.
Consistency is key. Track progress of the campaign and share updates often. The more reason you give people to return to your page, the more chances you get to have them contribute while they’re there.
Create a sense of urgency
Too long of a timeline will give people an excuse to hold off on contributing, which too often results in not contributing at all. Limit your campaign to four to six weeks.
Crowdfunding: Final thoughts
Whatever your opinions on crowdfunding, it is an attractive alternative to 10 or more years of student loan payments. Not only does crowdfunding student loans give grads the opportunity to start their careers in a better place, it also gives community members a chance to give back to the causes and individuals they believe in, too.
Not everyone may be on board with crowdfunding just yet, but using generosity and community support to help grads escape student debt could soon become as common as wedding registries.