Paying off your student loan debt can be very frustrating. It can be tough to pay back student loans. It is estimated that average college fees for an in-state student is $10,000 and it is almost double for out-of-state students. At a private college, $35,676 is the average college fees that a student has to pay to graduate. So if the student tuition fees amount is that high, then the loans you take out to pay that fees always end up being much higher than that. Hence, some people get creative and build new ways for them to pay off their student loans. Some people approach their favorite celebrities, asking them to help them with their student loan debts.
Many stars like Beyonce, Nikki Minaj and many more have helped their fans who approached them, especially on social media. Some philanthropists like Robert F Smith offered to pay all the students’ student loan debt(For a graduating batch of 396 students, with a total student loan debt of around $40 million).
You might not be as lucky as the guys at Morehouse College or your favorite celebrities might not always hear your plight. Then you have to become much more creative. It is not bad to ask for help. In order to help you with your loan repayment, you can approach the public with Crowdfunding.
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Can you use crowdfunding to pay off student loan debt?
The answer is Yes and many students have been using this method to pay off their student loans as well. Crowdfunding is the process of collecting small amounts to multiple donors to accomplish a financial goal. Yes, Crowdfunding has not only been a supporter of tech industries and filmmaking, but people are also using it to pay off their student loan debts.
A person called Jack Legg and his wife, who were working in the nonprofit world, took the Crowdfunding approach to pay off their student loan debts of $80,000. There are numerous such examples that prove that your student loan debt burden can be reduced when you use crowdfunding. Crowdfunding can come off as a great help for people in low paying jobs such as public service, art, etc. Crowdfunding can also help you if you are having economic troubles due to medical emergencies, loss of a job, taking care of a parent, etc.
Crowdfunding is a popular option these days to help you clear your debt. More than 100,000 education-related fundraisers are happening annually, that are raising more than $70 million. But as a coin has two sides, crowdfunding too has positives and negatives.
Advantages and Disadvantages of Crowdfunding to pay your student loans
Here are some advantages of using crowdfunding to pay off your student loan debts.
Free money to fulfill your needs
Not enough money
No expectations from the donor
Publicizing your bad condition
Builds up connections and is a good marketing tool
Loss of time
Can make it easy for you to ask for money
Paying for your successful campaign
Advantages of using crowdfunding to clear your student loan debt
Here are the advantages of crowdfunding to clear your debts:
The money that you get in crowdfunding is free( with little exceptions for your campaign). People will hear your plight want to do their own bit in order to help you and you may see that your financial situation improves.
When you get money through a crowdfunding campaign, the only thing that the donors expect is for your financial condition to improve. And nothing else.
Builds up connections
Once you are up on the internet, conducting a crowdfunding campaign you automatically build connections with a lot of people, who may have gone through what you are going through now. Thereby your connections with these people also improve and who knows, they might end up giving you life-changing advice. Or better that if you are a blogger or a YouTuber, once you start marketing, your content starts marketing as well, which can turn out a huge advantage to you, perhaps even better than the money you are getting.
Can make it easier to ask for money
It becomes easy for you to ask for money because you are not doing it in person. Sometimes you don’t even have to talk to them, especially to your family and friends. All you need to do is to send a message with the campaign link and they can pay you through it. And it does not sound like begging as well.
Disadvantages of crowdfunding to clear your student loan debt
Here are some of the disadvantages of using crowdfunding that you might want to consider:
Not Enough Money
Not all campaigns are successful. And most campaigns provide you with only a part of your money and not all of it. And it becomes more of a supporter for you to pay your student loans and not all of it.
Publicizing your condition
If you are a person with a lot of pride, then crowdfunding can be a tough task for you. Going to your friends and family members and letting them know of all your student loan troubles can be tough on you. So if you are a person with a lot of pride, as mentioned, it can be tough for you to start a crowdfunding campaign.
Loss of time
Time means money. Crowdfunding can many times be a time-consuming affair and many times it can be not worth your time. Sometimes people after a bad campaign do feel that the return was not good for the time he spent on the campaign. Instead, you could have worked extra or found a new job, but now you do not get either of those.
Paying for your campaign
Most of the sites allowing for the crowdfunding on their websites levy a fee(though many times it is a small amount) on the money that you have raised on the website. If you have a very successful campaign and it has collected more than $14,000 only then you are required to pay something called a gift tax.
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Crowdfunding your Student loans: The Process
Setting a target amount
Picking a platform
Launching your campaign
Marketing your campaign
Setting up a goal
Make sure you set a not so high, but a reasonable amount. Set a reasonable goal. Make people understand that your necessity. Tell them your unique story. Make them feel and let them understand your reasons for your campaign.
Picking a platform
There are many online crowdfunding platforms, some, especially for student loan debts. Some of them are:
And many more
It is one of the biggest platforms for crowdfunding. GoFundMe does not have set deadlines or goal requirements and no penalties. GoFundMe users have received around $60 million for college-related expenses. Although there are no cuts from the website’s side, it does charge you with a 2.9% processing fee and around $0.30 per transaction.
This platform allows you to thank your donors such as offering a dinner party, etc and also will allow you to let your donors know how you are doing with a feature called success diary. has a lot of fundraisers who are not from the United States. But it is still possible to run a campaign if you are from the U.S for student loan debts. GoGetFunding also allows the users to use their Stripe account over their Paypal. This platform charges 4% and a processing fee of 2.9% and a fee of $0.25 or $0.30.
A crowdfunding platform specially designed for student loan debt. It connects directly to your loan payments, thereby making it easy for you and reducing fraud. The fees are a 3% cut plus a 2.9% processing fee. Per transaction, the charge is $0.30.
There are many other platforms such as FundRazr, YouCaring, etc.
Launch your campaign
Once you have picked up a suitable platform, prepare to create and launch your campaign.
Use a video to express yourself and attract people to your campaign. Use such incentives that will help you maximize the donors to check you out. You should consider putting a time limit for your campaign, to increase the urgency for donating for your campaign.
Make it clear with what you want to do with that money that you are about to receive. Making the points crystal clear will help you gain more confidence among donors and as a result will help you get more money for your crowdfunding campaign which will, in turn, help you to clear more of your student loan debt.
Market your campaign
This is the most important part. A proper marketing strategy is required for you to get a lot more donors’ attention. Start by sharing with your family and friends. Use your emails and social media to start propagating your campaign. Attract donors by providing them with a small thank you note. No matter what amount a donor has donated, make sure that he knows that you have acknowledged their donation.
Share your career progress. Let them know your current research work, your goals, and your achievements. Share your happy and sad moments with your donors.
You can also create a course, in which you can share your knowledge and expertise with your donors and letting them gain insight or help them in learning your skills.
Crowdfunding can often fail to provide your full student loan amount. But as you know, something is better than nothing, that amount can help you in paying off a significant principle in your student loan debt. If you are looking for other options, there are ways to deal with student loan debts, such as refinancing your student loans, applying for a forbearance or a deferment, or changing your student loan repayment options. Check out the best companies that refinance your student loans.
According to research, about 22 percent of US adults contribute to student loan crowdfunding campaigns. Though this percentage is less, it is guided with constant growth in the number of people contributing to student loan debt campaigns. Therefore, buckle up, and just launch the campaign that may probably change your future economic condition.