How to Use Crowdfunding to Cover College Costs
Crowdfunding is a means of raising money online from a large number of people. Crowdfunding has been used to raise money to provide relief for hurricane victims and financial aid for starving people in Africa, to get capital for start-up companies, to pay for medical treatment, and to achieve other worthwhile goals. Some students also use crowdfunding to pay a portion of their college costs or to repay student loans.
Crowdfunding as a means of paying for college expenses is increasing in popularity, but too often students expect that crowdfunding will provide funds to pay for everything, including tuition. As a result, many students set their monetary goals higher than the amounts donors are willing to pay. Donors have soft hearts when it comes to disaster victims, but paying for college for strangers is a much harder sell.
This discrepancy between students’ monetary expectations and donors’ intentions frequently leads to disappointment when the students fail to meet their goals. Students should first turn to traditional forms of aid, such as grants, loans and scholarships and, if necessary, use crowdfunding to fill in the gaps.
College Costs that Crowdfunding May Cover
Crowdfunding may be used to raise money for any legal purpose. Students have used crowdfunding to try to raise money for a variety of college costs, including:
- To visit college campuses before making a choice
- To study abroad (may be restricted to certain countries)
- To pay off previous student loans
- To pay tuition (including for graduate school)
For example, a college graduate successfully raised more than $20,000 to repay her student loans so she could enter a convent and become a nun.
Crowdfunding for Funds to Pay College Tuition
Crowdfunding isn’t at the top of the list as a way to pay for college tuition, but its use is growing. Tuition outstrips all other college expenses by a wide margin. It’s a fixed cost, and donors will know exactly where their money is going. If there is a good donor response, that will also boost the reputation of the crowdfunding platform.
One of the most popular crowdfunding platforms, GoFundMe, reports that college crowdfunding campaigns for tuition raise a total of upwards of $1.5 million per month, on average. The average take per campaign is $2,000. These figures suggest that thousands of people are using crowdfunding campaigns to help pay their tuition costs.
How to Develop a Crowdfunding Campaign
Donors want to be touched by an applicant’s campaign and to sense a real need, so crowdfunding seekers should keep that in mind when developing the campaign. There are a few important steps in developing a successful fundraising campaign.
- Set a reasonable funding goal. The student should decide how much money he or she needs to raise. Students are unlikely to cover all their costs through crowdfunding. Asking for too much money sends up a red flag to potential donors, and they will be less – not more – likely to contribute. Campaigns that seek a small amount of funding are more likely to be funded.
- Choose a crowdfunding platform. The next step is to choose a crowdfunding platform on which to make the pitch. GoFundMe.com and Indiegogo.com are very well-known, but there are others, such as AngelDorm.com and YouCaring.com that the student may want to check out.
- Develop a campaign. With the platform chosen, it’s time to develop the campaign. The top sites make this relatively easy to do. GoFundMe even provides a guidebook that offers tips on ways to raise funds for educational needs. Though the platforms offer plenty of help, this is the most important part of the process, so the student should devote whatever time is necessary to develop an effective campaign. Campaigns should discuss the steps the student has taken to pay the costs and how the student will give back to society. Why should a stranger give you money?
- Publicize the campaign. Don’t expect money to magically appear with no effort on your part. Once the campaign is live, you should ask friends and family to donate to get the campaign off to a good start. Then, promote the campaign on social media and news media. Asking for contributions in person is also effective.
- Monitor the campaign. Lastly, the student should check the platform frequently to see how the campaign is progressing. Respond to questions. If donations are slow, experts from the platform can offer advice on how to spruce it up.
Advantages to Crowdfunding
With crowdfunding, no money will have to be paid back, so the student will incur no debt. Nor will he or she have to pay any interest. With a student loan, the student would incur debt and have to pay interest too. Also, with crowdfunding, there is the potential that if the campaign is particularly compelling, it could go viral, which would likely ensure its success.
Disadvantages of Crowdfunding
Even on top-flight platforms like GoFundMe, the potential for raising a substantial sum of money is relatively low. Donors will ante up bigtime for disaster relief or aid to starving children, but helping a person they do not know to pay for college is much lower on their priority lists.
To be successful, there must be compelling reasons – such as blindness or physical disability or to right an injustice – for people to want to help.
Many campaigns do not reach their goals because the goals are set too high. The typical college student should not expect the crowdfunding campaign to pay for everything. Crowdfunding works best in small, limited amounts. Students who need more aid should start by applying for grants, loans, or scholarships and then supplement with a crowdfunding campaign if necessary.
While the student won’t have to pay interest as he or she would with a loan, there are fees. Most crowdfunding sites charge fees for fundraising. Typically, there is a small transaction fee plus a payment processing fee that is small percentage of the contribution.