Crowdfunding has been one of the defining features of the modern consumer economy in the 21st Century. A ton of successful ventures, films, inventions, and even charitable causes have been launched thanks to crowdfunding platforms like GoFundMe or Kickstarter – names that you’ve certainly heard before.
So what is crowdfunding, anyway? If you guessed it means funding from a crowd, then you’re right! Crowdfunding simply means that money is raised from a large pool of people, usually with a high amount of low-value contributions. Online platforms that help people publicize their crowdfunding campaigns have revolutionized the way businesses raise capital.
The power and popularity of crowdfunding has been growing, and even reaching into new types of areas – including the student loan market.
Crowdfunding Student Loans: How It Can Work?
It was only a matter of time until people started taking advantage of crowdfunding sites like GoFundMe in order to help them do things like:
- Gather money for their tuition.
- Pay down their existing student loan debt.
The main point of crowdfunding platforms was originally to help businesses and projects raise capital without traditional funding sources like banks. But then students started to realize there are generous people all over the world who would be willing to help them with their college costs.
In fact, there are already dozens of sites where people can set up a crowdfund to help with their student loan debt. Many graduates have raised thousands of dollars this way. Of course, it is never a guarantee that you will raise a substantial amount of money. But, apart from that, there are few downsides and costs involved with launching a crowdfund.
Is Crowdfunding Student Loans a Good Idea?
Some of the bigger sites charge a small fee, while other sites offer you their crowdfunding platform for free. Either way, there are a number of pros that come along with crowdfunding student loans:
- You don’t have to pay anything back in return.
- Little to lose – except possibly fees.
- It will help you with your marketing and planning skills.
- It can help you ease other financial burdens you are facing.
- It’s free money!
As for the downsides:
- You might not make enough money to cover even a small portion of your student loan costs.
- Time and money (not to mention a little bit of shame, in some cases) will have to be expended to properly plan a crowdfund campaign.
- Other options, like P2P lending, may attract you – which can end up worsening your financial circumstances.
When it comes to asking for money for college, crowdfunding could be one way to obtain free money. It often even takes less time than a scholarship or grant application.
There are few possible negatives, and the potential for how much money you could raise is sky-high.