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.
What is Crowdfunding?
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Money can be withdrawn at any time, and it usually takes a few days to reach your bank account.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.
How Can Crowdfunding Help Pay Off My Student Loans?
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.
4 Tips for Crowdfunding Money
Launching a successful crowdfunding campaign is harder than it looks. Here are the best tips to make sure your campaign is profitable.
1. Share Your Story
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.
2. Ask for Donations in Lieu of Gifts
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.
3. Thank Donors Regularly
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.
4. Promote Your Site
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.
Pros and Cons of Crowdfunding
Here are the main benefits and drawbacks to crowdfunding as a means of paying back your student loans.
- It has no-strings-attached contributions. The most obvious perk to crowdfunding your student loans is that you’ll receive free money to pay your debt. This makes crowdfunding easier than starting a side hustle or working overtime. But it’s wise to combine crowdfunding with other strategies, like earning other income and cutting back on your expenses.
- There is low effort required. Setting up a basic crowdfunding site is simple, and you don’t need any web design experience to create it. These sites also make it easy to share your link with others and provide updates along the way.
- There’s no guarantee of funding. While there are plenty of success stories highlighting borrowers who paid off tens of thousands in debt through crowdfunding, these are likely exceptions to the rule. There’s no guarantee that your campaign will go viral and be seen by the general public. Even if your friends and family express support for your crowdfunding efforts, they may only contribute a few hundred dollars.
- There’s no certainty. The outcome of a crowdfunding campaign is unpredictable. At the start, you may see an initial rush of donations. But as time goes on, that pace will likely slow down. Because of this, predicting how much you’ll receive through a crowdfunding campaign is difficult, and means you may not be able to make a big dent in your debt.
- Asking for help can be uncomfortable. In a society where talking about money is uncomfortable for many people, asking loved ones for donations can feel embarrassing. Some worry that if they crowdfund their student loans, they’re inviting financial criticism, especially if you take a vacation or show unnecessary spending. Make it clear to donors how much you need and how you’ll spend their contributions. But know that you’re not obligated to explain the rest of your financial choices.
- There are no tax perks for donors. The money given through a crowdfunding site is considered a personal gift and not a donation if it’s not through a formal nonprofit organization, so donors can’t deduct the contribution on their taxes.