Do you remember the story from last year about the guy with a crowdfunding campaign that was raising money to make potato salad? It sounds crazy, almost 7,000 people participated in his Kickstarter project, raising more than $55,000.
While crowdfunding sites still have their fair share of (ahem) unique fundraising requests, some twentysomethings are using them to ask for help in repaying their student loans — a plea that isn’t all that surprising, considering that 69 percent of graduates have debt, owing an average of $28,400 per borrower according to The Project on Student Debt. Even more disturbing? The fact that a 2013 study from One Wisconsin Institute found that those with a bachelor’s degree, on average, need 19.7 years to pay back their loans; for those with graduate degrees, the repayment period jumps to 23 years. Because of this, it’s no wonder that graduates are searching for new ways to reduce the hefty burden.
Asking a bunch of strangers to help pay for your education through a crowdfunding campaign can work — provided that you go about it the right way. Here’s where to start.
Know How Crowdfunding Sites Work
Several sites allow student debt postings, but they all differ in how they function and their rules and fees. That’s why it’s important to do your research and find the one that best aligns with your individual situation.
Piglt allows “dreamers” to create video campaigns in order to entice “believers” to give a donation towards current or future schooling costs or school debt that has already been accumulated.
Fees: Piglt charges dreamers a 5 percent fee for loan and tuition projects that are fully funded. There’s also an additional 3 percent charge for “third party transaction fees.” For loan campaigns that don’t reach their target, the dreamer can keep any money that’s raised, but it’s subject to an 8 percent fee.
One of the more popular crowdfunding sites out there, GoFundMe hosts educational fundraising (among other types). Users keep all donated funds, even if their goal isn’t met.
Fees: Signing up is free, but 5 percent is deducted from each donation. Additionally, 3 percent will be subtracted for processing.
ZeroBound encourages community involvement by providing financial assistance in exchange for volunteering. Money raised is transferred directly to a student’s loan provider.
Fees: Campaigns that reach their fundraising goals are charged a 5 percent fee. Those that are unsuccessful keep any money earned, but will pay an 8 percent charge. There’s also 2.9 percent processing fee and a $0.30 transaction charge for each donation.
Indiegogo was one of the first crowdfunding sites. Now, its off-shoot Indiegogo Life enables users to gather funds for some of life’s biggest challenges, like college tuition.
Fees: Indiegogo Life only accepts donations via debit or credit card, so there’s a transaction fee of 3 percent, plus $0.30 that goes to third-party processors.
Maximize Your Contributions
Choosing which crowdfunding site to use is just the beginning. Now, you’ve got to create an engaging campaign and get the word out. But how do you do that?
- Make a video or write-up providing details about why you need help with your student loan. Provide details, but don’t make your story so long and tedious that potential donors check out before they reach the end.
- Come up with a hashtag and use it any time you post about your campaign on social media.
- Write a blog to stay in touch with your donors. Perhaps it gives details about your experience in college. Or maybe it shares recent news articles about the struggles of student loan debt.
- Set a realistic goal. Ask for too much money, and you could sound greedy. Or, donors might feel like they can’t make a difference and will be less inclined to give.
- Provide updates. People want to hear about how things are going, so use your crowdfunding page and social media accounts to keep people up-to-date on how your campaign is doing.
- Keep it brief. The most successful crowdfunders have campaigns that last just four to six weeks.
While still a new practice, crowdfunding your student loan can be a fairly easy way to eliminate some (or all) of your debt.