Crowdfunding Student Loans

Crowdfunding is a popular way to build funds by letting individuals invest in causes, ideas, and people they care about. You’ve likely heard of crowdfunding for things like innovative projects, disaster relief, or medical bills – but what about for student loans?

The student debt crisis involves over 45 million student borrowers owing nearly $1.8 trillion in student loans. This is largely due to wages not keeping pace with the rising cost of education, meaning borrowers are taking on more debt and taking longer to pay it off.

Crowdfunding student loans allows donors to invest in students and education, alleviating some of the debt burden and allowing borrowers to reach their goals faster. It’s a community-focused way to fight the student debt crisis together.

Let’s get into crowdfunding student loans and things to consider as you get started.

Why Crowdfund Your Student Loans

Crowdfunding to pay off student debt gives people around you the opportunity to invest in your education.

Pursuing a degree is a deeply personal journey that can feel isolating at times. Letting others support you helps foster a connection between your dreams and your loved ones, allowing them to play a role in this important part of your life. Plus, each contribution brings you closer to achieving your goals and embarking on new ones.

There are many benefits to crowdfunding, especially when it comes to student loans:

• Less interest accrual. With help from your community, you can significantly lower the amount of interest you owe so you can focus on paying down the principal.
• Decreased payback time. Higher payments and less accrued interest means a shorter payback time. You could pay off your debt years sooner with outside support.
• Reaching life goals faster. When you can put fewer resources toward your student loans, you can move on to the next major goal, like homeownership, parenthood, or going back to school.
• Potential tax advantages. Depending on the crowdfunding platform you use and how you file, you may be able to reduce or eliminate tax on donations you receive toward your student loans.

With so many benefits, it seems like a no-brainer to seek community support to pay down debt. However, there are also things you should think about when deciding whether to crowdfund:

• Transparency about needing support. Having student debt is nothing to be ashamed of, but bringing it up can feel vulnerable at first. Make sure you’re ready to talk about student debt before you start crowdfunding.
• Willingness to share. The success of crowdfunding is dependent on getting the word out (more on how to do that later). Make sure you’re ready to ask for support and have a plan of where and how you’ll share your fundraiser.

How Crowdfunding Works

Crowdfunding has two main components: a fundraiser and a donor. Individuals create fundraisers to seek financial support and donors invest an amount they deem fit toward people they believe in.

The easiest way to fundraise is to use a crowdfunding platform. There are several components you should consider when choosing one:

• Fund use regulation. Some crowdfunding platforms work on an honor system, allowing wiggle room for fraudulent fund use. To give donors peace of mind, use a platform that will guarantee funds end up where they were promised.
• Donation windows. Another thing to consider is the length of time people have to donate. Use a platform that has a lengthy donation window – or better yet, an unlimited donation window – as paying back student loans is not a simple multi-month project.
• Security of financial information. It’s important to crowdfund on a trusted platform that protects donor financial information. Look into the security measures provided by the crowdfunding platform before you start using it.
• Ease of use. Some platforms require donors to create accounts or jump through hoops in order to donate. Make sure things are simple for donors to keep your fundraiser accessible.

Looking into these things before using a crowdfunding platform is critical to a successful fundraiser.

The Key to Successful Crowdfunding

Once you’re on-board with crowdfunding student loans, the most important piece is to make sure people know how to support you.

Here are some ideas on how to spread the word without coming across too strong:

• Make posts on social media about your fundraiser around birthdays and holidays
• Ask for donations in place of gifts during times of celebration
• Put the QR code to donate on graduation announcements and invites
• Put the link to donate in your social media bios and in your email signature
• Add the link to your personal website or LinkedIn profile
• Bring it up in conversation, making sure people know which crowdfunding platform you’re using and how to find you

Share widely during key moments and you’ll be receiving contributions to your student loans in no time.

Fight Student Debt With Your Community

Having student debt may feel like a weight you just can’t seem to lift. Asking for support and letting others lend a hand is not shameful – it allows your community to be there for you in a way that helps you most.

Crowdfunding student loans is a simple, community-based way to reach your goals faster. Still unsure or have questions? Reach out to [email protected].