Get the most out of this unconventional way of repaying your loans.
With student debt ever on the rise, borrowers are turning to more creative ways to dig their way out. Crowdfunding your student loan repayments is one way to lessen your debt load and lower the risk of default. But to have a successful campaign, it’s going to take a little work. And it isn’t 100% free.
6 tips for crowdfunding to pay off student loans
Follow these tips to get the most out of your crowdfunding campaign and reach your fundraising goal.
1. Find the right site.
Different crowdfunding platforms have different sets of rules. Some charge a platform fee, while others charge a payment processing fee. And many have limits to how long your campaign can last. Consider how much you want to raise and if the site can support that amount.
Some sites can help you create your campaign, while others might be more hands off. Already have a substantial online presence? You might be able to fundraise successfully with a general site like GoFundMe. Otherwise, you might want to take advantage of assistance you might receive on a site like LoanGifting.
2. Be realistic about your goal.
Unless you’re already a public name or have a really compelling story, you might have a tough time raising $80,000 to pay off all of your student debt.
You might want to start small — some platforms don’t allow you to keep any of your funds if you fall short of your fundraising goal. You can always start another campaign if it’s not enough.
3. Tell your story.
Your friends and family already know who you are and what you’re doing. But strangers will need more information to compel them to donate. You might want to consider:
- Highlighting aspects of your career that are being held back by student loans. Demonstrate how you’ve used or plan on using your education to give back to the community or support a cause.
- Asking for donations instead of birthday presents, wedding gifts or even a graduation present. This can help you start a new chapter of your life with a clean slate.
Many people opt to make a short video about their campaign to make a case for themselves. Infographics or other visual aids can also capture someone’s attention when they’re scrolling on their phone.
4. Be specific.
Give the details about how you paid for school, how much debt you’re in and how long it’s going to take you to pay it off.
Did you apply and get rejected for Public Service Loan Forgiveness after altering your career? Mention that in your campaign. Showing that you aren’t just dependent on free help can strengthen your story.
5. Avoid long campaigns.
Shorter crowdfunding campaigns are typically more successful than longer ones. That’s because people often put off donating — and then never do — if they know they have a long time. Consider keeping your crowdfunding campaign around 30 to 40 days.
6. Begin with the people closest to you.
Tell your friends and family about your project and reach out to them individually to donate. Having money already in your campaign can make it more attractive for people you know less well to donate.
You might also want to consider asking friends and family to assist by reaching out to their social networks.
3 crowdfunding sites to consider
Not all crowdfunding sites were created equal — and some don’t allow you to fundraise for personal reasons at all. Compare these three favorites for paying off student loans:
1. GoFundMe
- Platform fee: 0%
- Payment processing fee: 2.9% + $0.30 per donation
- Time limit: None
GoFundMe is a one of the largest crowdfunding sites out there — users have raised over $5 billion through the platform as of March 2019. It even recently bought out popular crowdfunding site YouCaring.
There’s no time limit for fundraising, so you’re allowed to keep all of the money you raise and make withdrawals at any time. It takes two to five business days for funds to transfer to your bank account.
2. LoanGifting
- Platform fee: 3%
- Payment processing fee: 2.9% + $0.30 per donation
- Time limit: The life of your student loans
LoanGifting is a company that specializes in student debt and has a crowdfunding platform. It deposits the funds you raise directly into your student loan account, so reach out to your servicer to make sure it supports this method of repayment. You also can’t use it to pay off loans currently in deferment.
3. GoGetFunding
- Platform fee: 4%
- Payment processing fee: 2.9% plus $0.25 or $0.30 per donation
- Limits: Not required
GoGetFunding is a top crowdfunding site for personal expenses. It allows you to keep all of the funds you raise and start withdrawing from your campaign immediately. It offers more support than your typical fundraising site, including PayPal assistance, access to a public relations team and one-on-one help from a personal fundraising coach.
Compare student loan refinancing offers
Another way to speed up your student debt repayment is to refinance your loans. Refinancing to a shorter term would increase your monthly payments, but you could save on interest. Be sure the new monthly payments fit into your overall budget before refinancing.
More ways to pay off student debt fast
Not sure crowdfunding is for you? Here are four more ways to dig yourself out of student debt:
- Consider forgiveness. Got federal loans? If you’re a public servant, teacher or have a Perkins Loan, you could be eligible to have part or all of your student loans forgiven after up to 10 years of repayments.
- Apply for loan repayment assistance programs (LRAPs). Many state and private organizations offer repayment assistance programs for different careers — especially health care, law, education and the military.
- Use your tax refund. Put the extra money you get from the IRS each year toward your student loan debt load.
- Be strategic about extra repayments. Use popular debt repayment strategies like the snowball and avalanche methods to make sure your extra repayments are saving you the most time and money on interest.
Can I crowdfund the cost of my education?
You can. Crowdfunding sites like PeduL allow you to raise money to cover the cost of school and directly deliver the funds to your university or college.
However, PeduL charges a relatively high 5% platform fee. It’s also pretty new to the crowdfunding scene, so you might have a hard time raising funds from strangers. You can always use a more recognized personal crowdfunding site like GoFundMe to raise money for educational costs.
Bottom line
Crowdfunding is one way to lighten or completely eliminate your student debt load. But it’s not just free money — you’ll have to pay a fee on almost all sites and put in the time to create a successful campaign.
Learn more about how student loans work with our guide to student financing.
This article originally appeared on finder.com.
