How to Use Crowdfunding to Pay Off Student Loans - Forbes

You might be using an unsupported or outdated browser. To get the best possible experience please use the latest version of Chrome, Firefox, Safari, or Microsoft Edge to view this website.
Published: Jun 8, 2021, 10:22am
Takes Up To 3 Minutes
There’s nothing wrong with asking for help when you’re in need, and you might be surprised by just how willing people are to lend a hand. In fact, research shows that helping others is one of the best ways to improve your own happiness.
So why not use crowdfunding to ask for help with your student loans? You’ll be giving friends and family members a chance to significantly impact your life, but without pressure or expectations.
If that sounds intriguing, read ahead for more information on how to make it happen.
Crowdfunding means asking your circle of friends and family members, as well as the general public, to donate money toward a particular goal. Startup companies crowdfund to raise money for a new business or product launch, while individuals may crowdfund to pay for funeral expenses, emergency medical bills or student loans.
Individuals can use crowdfunding sites like GoFundMe and YouCaring, in which donors have to pay a small fee but the recipient does not. When you create a fundraising goal on one of these sites, you can collect the money as it comes in. You are not required to meet the goal in order to withdraw the funds.
Money can be withdrawn at any time, and it usually takes a few days to reach your bank account. The money is usually counted as a gift, but in some cases the recipient will have to record it as income on their taxes.
In addition to using a traditional crowdfunding site, you can also set up a PayPal or Venmo link where people can donate directly to you.
It’s possible to set up a crowdfunding site specifically to pay off your student loans. Share the link on your social media feed and/or email it directly to friends and family members. They can also share the link with their own social circles in order to increase contributions.
Users can choose to donate any amount they want. When you’ve reached a certain goal or you’re ready to withdraw funds, you can transfer the money to your bank account and use it to pay down your student loans.
Unlike Kickstarter campaigns, which have strict deadlines and rules, crowdfunding for a personal goal is less restrictive. On GofundMe, you can leave campaigns up indefinitely. You may be required to withdraw money at certain times, but there’s no limit on how long a campaign can run. For example, you can start a crowdfunding site now and leave it up until your loans are paid off.
You can promote the site as often as you want. Donors can also share the page on their own social media platforms, which could lead to more donations.
Launching a successful crowdfunding campaign is harder than it looks. Here are the best tips to make sure your campaign is profitable.
The most effective crowdfunding campaigns have high-impact stories. Don’t just write about your student loan debt; talk about your upbringing, how you worked hard in college and how you’ve tried to pay off the debt by yourself. If you experienced obstacles that have affected your payoff timeline, such as medical problems or the need to take care of a relative, sharing those anecdotes will provide context for your request.
Focus on telling a clear story. Use pictures and specific details; perhaps you’ll share how you spend most weekends working an additional gig, like driving for Uber or serving at a restaurant. While you’ll want to show that you don’t expect contributions, a full understanding of your situation will help contributors decide whether they’d like to donate to your cause.
Before launching your site, share it with a few loved ones and ask for their honest feedback. Proofread the page and try reading it through an objective lens before posting it.
If you’re starting to crowdfund around the holidays or your birthday, emphasize that you would prefer donations instead of physical gifts. For example, you can post something on your social media accounts in the weeks leading up to your birthday asking for donations to your GoFundMe instead of birthday presents.
If your family loves giving lots of holiday gifts, you can send an email or text in early December saying you don’t want any presents and would prefer a donation to your crowdfunding page.
Be grateful for any money you receive through crowdfunding. Consider sending handwritten or emailed thank-you notes to your donors, or providing heartfelt updates via the campaign site.
Expressing gratitude to your current donors can make them more likely to share your campaign and encourage others to donate.
After you launch your page, make sure to promote it on your social media channels several times. Because of the way social media algorithms work, people may not see the post the first time. Don’t be shy about sharing the link regularly.
Here are the main benefits and drawbacks to crowdfunding as a means of paying back your student loans.
Zina Kumok is a freelance personal finance writer based in Indianapolis. She paid off her own student loans in three years. She also offers one-on-one financial coaching sessions at ConsciousCoins.com.
Brianna McGurran is the Loans Analyst for Forbes Advisor. Most recently, she was a staff writer and spokesperson at NerdWallet, where she wrote “Ask Brianna,” a financial advice column syndicated by the Associated Press. As spokesperson, she also contributed her expertise to outlets including The New York Times, ABC World News Tonight and the Today Show.

source

Leave a Reply

Your email address will not be published.