Students are encouraged to provide as much information as possible about their college dreams to attract crowdfunding donors.
For some, the challenge of paying for college is tremendous. Students and their parents or guardians are required sometimes to pull out all of the stops to make it affordable, and when that doesn’t work, they go into debt, sometimes severely so.
In fact, according to Spectrem’s wealth segmentation series report Financial Behaviors and the Investor’s Mindset, 33 percent of investors with a net worth between $1 million and $5 million worry about financing the education of their children. And there are a great number of Americans trying to figure out how to pay for college who do not have a net worth of $1 million.
But for the students who are willing to put themselves out there (so to speak), there is a way to find at least a portion of the necessary funds without requiring monetary repayment.
Crowdfunding, a phenomenon that was relatively new and controversial just a few years ago, is now a tried and occasionally successful pathway to acquire the funds needed for a college education.
There are dozens of successful crowdfunding sites, but a few have a concentration on educational efforts. Sites like GoFundMe and StudentFunder all offer ways for students in need to reach those who are willing to help.
The practice of funding college through the kindness of strangers is growing. Recently, GoFundMe released information on its 2015 totals, with approximately 130,000 educational accounts opened this year and a total raised of more than $20 million. Don’t reach for your calculator: $20 million raised by 130,000 accounts is $15,000 per account on average, although there are obviously significant variations based on need.
GoFundMe said there were 140,000 accounts opened in 2014 raising $17.5 million and the 2014 total funding was an increase of 280 percent from 2013.
“It makes total sense,’’ said GoFundMe media director Kelsea Little. “College is becoming increasingly more difficult to pay for and scholarships are becoming more competitive, so crowdfunding offers a brand new and fresh alternative that anyone can take advantage of.”
For the student, a crowdfunding account can cost them absolutely nothing, depending on the site. To run a fund, students are more successful when they are open and honest about the reasons for their need, the efforts they have made to raise funds in other fashion (by working, for example), and clear about their educational objectives.
Advisors who understand the crowdfunding process encourage students to have an educational sponsor, a teacher as an example, who can appear on the crowdfunding site in video form, pitching the student’s credentials. Students are also encouraged not only to be personal about their financial needs but try to present a unique portrayal of themselves, with personal interests and hobbies, and anything else that makes them stand out.
Students are also encouraged to ask for the money before it is spent rather than using crowdfunding as a way to pay off student loans.
“Crowdfunding can be a very effective way to avoid going into debt while pursuing a degree," said Bruce McClary, vice president of public relations at the National Foundation for Credit Counseling. "With student loan debt reaching $1.2 trillion in the United States, students have plenty of incentive to become more resourceful as they explore different ways to pay for college."
Donors, meanwhile, are cautioned to do some investigative work on the student requesting funds if they don’t already have a personal connection. Most students can be found on social media, and crowdfunders are encouraged to allow donors to link with them on their Facebook or Twitter pages. Some crowdfunding sites actually have employees whose job it is to find imposter students.
The overall impact of crowdfunding as a way to pay for college is overwhelming. While a large percentage of donations come from friends and perhaps distance relatives, some of the money does come from citizens who can only be described as strangers.
“It’s really surprising to me that some people I have never met were willing to help me out and contribution to my education,’’ said Victor Sosa, 20, a student at Alma College in Michigan, in an interview with NBC.
Kent McDill is a staff writer for Millionaire Corner. McDill spent 30 years as a sports writer, working for United Press International and the Daily Herald of Arlington Heights, Ill. From 1988-1999, he covered the Chicago Bulls for the Daily Herald, traveling with them every day through the nine-month season. He also covered the Bulls for UPI from 1985-88, and currently covers the team for www.nba.com. He has written two books on the Bulls, including the new title “100 Things Bulls Fans Should Know And Do Before They Die’, published by Triumph Books. In August 2013, his new book “100 Things Bears Fans Should Know And Do Before They Die” gets published.
In 2008, he resigned from the Herald and became a freelance writer. The Herald hired him to write business features and speeches for the Daily Herald Business Conferences and Awards presentations.
McDill also writes a monthly parenting column for the Herald’s Suburban Parent magazine.
McDill is the father of four children, and an active fan of soccer, Jimmy Buffett and all things Disney.