When there is pressure, it is time to infuse some creativity to ease the situation. Doing just that, another method has emerged to deal with the increasing student loan debt through the concept of crowdfunding.
By virtue of the magical power of the internet and the empathy and compassion of humanity, it has become possible to raise more than thousands of dollars via crowdfunding completely done online.
One amongst the many crowdfunding options available for students to access and make use of is WeFinance.
WeFinance is a platform connecting borrowers and lenders, with benefits entailing both the parties, hence making it a win-win situation.
You just have to follow a few steps, share your story and set up a campaign and voila, there’s a very bright chance that you could clear your entire student loan debt.
The primary mission at WeFinance is to empower people to use their full potential to attain the best possible financial outcomes.
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Brief Background - How was WeFinance formed?
Founded in 2014, WeFinance uses an otherwise healthy combination of technology and crowdfunding in order to offer borrowers favorable terms to tick off their student loan debt.
It is based on the belief that traditional credit data isn't always an accurate determinant to know if someone is at low risk, and that being in debt is not at all something to be ashamed of.
The idea for the website came from its co-founder and CEO, Eric Mayefsky, who, prior to his venture, had spent around 3 and a half years working as a product manager at Facebook, focusing on areas such as ads optimization, infrastructure, and stability.
Whilst at the company, Mayefsky used to informally loan amounts to his friends directly on good terms so as to save them from falling into the pit of exorbitant debt.
What he then noticed was that in spite of having good jobs in their past or even having good jobs lined up for themselves, their credit history portrayal was rather poor without reflecting much.
Those loans turned out to be favorable for both the borrower and the lender, with access to better terms of interest on the borrowers’ perspective, and the loan was a more productive way to put the money into use.
This entire experience sparked an epiphany which led Mayefsky to construct a portal to formalize this process. Hence came into the picture WeFinance who formally allows you to borrow from real people in your own community and from WeFinance's growing network of angel lenders.
By means of leveraging their own networks, borrowers finally get the interest rates they actually deserve from those who are better informed about their creditworthiness than banks.
Borrowers are helped for various purposes such as funding their educational expenses, tuition fees, boot camps, financial support during unpaid internships, and so on. It also aids those students who are fresh out of school, undergoing a phase of transition, making crucial decisions regarding their career, or personal life.
As of now, WeFinance is not charging fees of any kind to the borrower.
But speculations say that it may partner with either banks or other lending companies sometime in the future so that it can lend the rest of the uncovered amount of the loan if it is only partially funded, or it may even choose to become a source of capital itself.
How does WeFinance work?
The procedure is very simple and stepwise without any hidden hitches or much need for clarifications.
WeFinance allows borrowers to create their loan listings with details describing themselves and their borrowing needs in their own words and then connects those listings to the vast network of potential lenders with savings by marketing it to them. Transactions of both the parties thereon are handled with no additional work or having to remember repayment. In this case, borrowers save money, and on the other hand, lenders get a good return with low risk, which ends up with both sides feeling satisfied with helping people in their network to save money.
The co-founder, Willy Chu, who was previously working at Credit Karma and Kiva.org, has given borrowers brief instructions to write a brief loan application and link it to their Facebook account for the purpose of verification. It is preferable if the borrowers also link to their LinkedIn too, so lenders are able to access their educational background and employment history.
The submitted application is then scrutinized by the website and if there are any changes to be made, necessary feedback is offered and following the changes made, the application is finally approved. It is after this step that the campaign goes live.
The main reason why ReFinance stands out though is that the borrowers are more in control of the experience such that they have the liberty to decide the limits for their loan requests and also the terms based on which they are willing to pay.
The most common average interest rate on WeFinance is 4%, which is quite less compared to most alternative options, and obviously lesser than credit cards.
Moreover, another striking feature that distinguishes WeFinance from any other method is that the borrower first rallies support from its own network of friends and family, and then an extended crowd from the community of lenders who are supporting them.
Even though not every campaign in crowdfunding may be as successful in reaching out and fulfilling its required targets, in reality, this is not translated into it being a hopeless campaign. Taking on the right approach with the help of the right platform, your chances of paying off at least a certain portion of your student loans increase.
Steps to follow with WeFinance
The process is easy to follow and doesn't require much of an investment to start with. And in the positive case that you are successful with your campaign acquiring the estimated objective, the statistics of the results can be shown to a potential employer as proof of your business insight and marketing skills.
While you can't just launch a crowdfunding campaign and expect it to immediately go viral, there are certain steps that can be taken to ensure that it is successful.
Set a goal.
Decide your terms.
Create and launch your campaign.
Promote your campaign.
Thank your donors
The following are the elaborate steps to follow, and words of advice to maximize your odds for success.
1) Create and launch your campaign
Firstly, begin by telling your story to potential lenders in your very own words. You will be guided through the entire process, including the various terms needed to be decided regarding your loan. Once the goal has been set and a platform has been chosen, it is now time to plunge into campaign creation.
Use your creativity combined with smart marketing techniques such as coming up with a captivating name for your campaign.
The goal at the end of the day is to get as many contributions as possible.
Be real with the people in the community of lenders, the ones who will most probably resonate or understand your cause and will generously be willing to be a lender. In order to be more real, you can connect by creating a video and reveal your hopes and aspirations and the dreams that you wish to fulfill with the help of the loan. If nothing it will at least give you more time to give back to your community or focus on what you're truly passionate about.
You can also put a time limit on your campaign which creates a target time and a target amount making the urgency seem authentic.
2) Share it far and wide to promote
Once you are done with setting up the campaign and are ready to enter the next phase, it is time to promote it as much as possible, especially taking the help of the online platform that is available to you. You can use social media which hardly ever fails to make anything go viral.
Your family and friends can assist you in sharing your campaign in their networks as well.
Do a timely update and share how much of the goal you have attained so that people who are skeptical to help will realize the need not to feel so.
Making your posts unique with a motive to attract the right of people to lend to you. To make that happen, you could combine the latest news or article about the student loan debt crisis and how the government is aiding in bettering the situation, and what big companies and lenders intend to play their part in evading the crisis.
Real people in the community read what you write and hear what you say and then make their own decisions. It is your story and choice, so decide what you wish to share with the world.
Emphasizing again, share your campaign with your community as their pledges and endorsements help you attract lenders you may not personally know.
3) Get funded
Finally, after the hard work of creating and rigorously promoting the cause and your campaign, the time comes to receive payments. The payments to and from your lenders are automatic and free of any extra fees for both the parties involved.
If followed stepwise and done right, WeFinance is one of the best contemporary mediums to help raise financial aid to erode off student loan debt. But do not entirely rely on this method. If you have federal student loans, make sure to do your research in order to find a suitable repayment plan for yourself.
Worried about your college tuition? Learn more about student loans
How are payments made?
After the campaign, the loan account is directly transferred to your bank account. Repayments are automatically drawn from the same account.
The entire process, as mentioned is completely automated and it doesn't matter whether the number of lenders you have is two or twenty-two.
A star aspect of WeFinance is that you earn a return while helping real people which is clearly a win-win situation.. When you lend on WeFinance, you can strengthen existing relationships or build new ones by securely lending money to responsible people at rates that are good for you and good for them as well.
Benefits of WeFinance
WeFinance is very hands-on with the support it offers borrowers – reading applications, making suggestions on terms, and even organizing groups of similar borrowers (e.g. those looking to fund a code boot camp, those attending the same school, etc.) into “batches.”
1) Fastest and simplest way to crowdfund personal loans
With no forms or credit checks—you only need to explain your lending need well in English language on a simple and straightforward form which is then shared with your network. The rest is done by WeFinance. The choice to let your campaign be private or public rests solely with you.
2) The best interest rates
My life, my rules - in the millennial dictionary followed suit into WeFinance being rephrased into - Your loan, your rules. Here, there is no bank involved. Consequently, the money that you are borrowing is from real people and you pay interest to them. You get the cash you need; your lenders help you out and get a favourable return.
3) Borrowing is made easy
You can borrow money in any stage, be it for the purpose of repayment or in need of a deferral period or to just rearrange your finances. You have the liberty to make the rules. Payment comes directly to your bank account, and repayments are completely automated.
4) Lend to real people
Empower people to achieve their best financial outcomes. Lend to people with a variety of needs, ranging from refinancing student loans to attend vocational education programs.
5) Better than a savings account
Interest rates typically range from 3% to 10%. You can help people and grow your network, all while earning a better return than your savings account or CD.
6) It's safe
Lend with peace of mind. Borrowers are vetted by their personal networks, contracts are legally binding, and payments are securely processed using 256-bit industry-strength encryption.
7) It may build your marketing/outreach presence
Businesses use crowdfunding to their advantage all the time. By leveraging your platform to include social media, a blog, YouTube testimonials/videos and more, you’ll drum up publicity for your campaign and garner more interest (and money) from the public.
If you’re a recent grad seeking employment, this may help your chances at becoming more visible to employers as someone with entrepreneurial business acumen, especially if your crowdfunding venture was successful.
Student loans can be expensive and time-consuming, and they put borrowers at the risk of going deeper into debt if they don’t stay on top of their payments. But there is a way to potentially shave years off of your repayment: By raising money on crowdfunding sites like GoFundMe, student loans can be knocked out much more quickly.
Think about it: Crowdfunding sites have become a popular platform for financing commercial ventures. By the same token, crowdfunding student loans by sharing your story online may well be a way to pay off your debt.
Some borrowers may feel they’ve got nothing to lose. According to the Consumer Financial Protection Bureau, about 26% struggled to pay off their loans, as of 2017. And in 2019, more than 5.1 million borrowers have landed in student loan defaults. As with anything financial, there are some pros and cons you should consider first.
Be proactive yet realistic when setting your crowdfunding goals. Depending on your total student loan debt, your ideal donation goal may differ from someone else’s — so don’t worry about competition or comparison. You may be surprised at how much you’ll raise.
You can also explore other ways of freeing up cash to put toward your monthly payments: Eat out less, take on roommates to split the rent, find frugal/free ways to socialize, take advantage of coupon codes and online deals, or get a second part-time job or side hustle.
In the end, what matters is setting a goal — paying off your debt — and sticking with it.