Why Students Need Extra Help
For many families, paying for a child’s college education entirely on their own is out of the question. Here are a few very big reasons students need all the extra help they can get:
College can be expensive
According to Department of Education statistics, after adjusting for inflation, the average cost (tuition, fees, room and board) for a full-time undergraduate student at a four-year college in the U.S. in 1985-86 was $12,052 ($5,504 in 1985-86’s dollars). In 2015-16, the cost was $26,120. That can be a lot to come up with, especially for students who may not have much financial support at home.
The money students can raise from traditional sources often isn’t not enough
For many students, a traditional student loan package doesn’t quite cover all their expenses. They may have their tuition covered but still struggle to pay for books or meals. Or they may not be eligible for enough financial aid to cover their dream school.
Graduating from college often means high student debt
Almost 40% of adults under the age of 30 are currently carrying some amount of student loan debt, with the amount of debt for the median borrower in 2016 coming in at around $17,000. That’s a lot of debt to handle when you’re just starting out after college graduation.
You’ve probably at least heard of crowdfunding, which has become a multi-billion-dollar global financial force. But what exactly is it? How are students using it to pay for college? And how can you use it to support a student?
What is crowdfunding?
Crowdfunding is a method of funding a cause or project by raising money from a large number of individual contributors, most commonly through online crowdfunding platforms.
Crowdfunding can be used to fund practically any project or cause: from a new website or business; to the development of a new, innovative product; to the creation and distribution of a work of music, art or literature.
How can crowdfunding help college students?
College students seek money through crowdfunding to pay their tuition, college fees and any other education-related costs, like food and housing or books and supplies. Many graduates also initiate crowdfunding campaigns to help pay off their student loan debt.
There are many types of crowdfunding, including reward-based, peer-to-peer crowdfunding (also called crowdlending), and equity-based crowdfunding. But the one students most often use to pay for college expenses is:
Contributors donate funds without any requirement or expectation of a reward or re-payment. Donation-based crowdfunding is commonly used to raise money for charitable causes, like building a school in an underdeveloped country or paying someone’s medical bills.
Students should be wary of peer-to-peer crowdfunding as they will be obligated to pay back the amount of money earned, plus interest. Peer-to-peer loans often have higher interest rates than traditional loans.
How can you choose a crowdfunding platform to support?
If your intent is to give to a student you know, like a family member or close friend, then your platform choice has been made for you. You’ll simply visit the crowdfunding site where his or her campaign is located and make your contribution.
If that’s not the case, however, there are several factors you can consider when looking for the right place to put your money. Here are a few:
Some platforms charge a fee of five to ten percent of all funds raised for its services, while others are essentially fee-free. Fee-free platforms mean more money in the funds seeker’s pocket, and that may be a determining factor for you.
Are you looking to help pay a single student’s college expenses, or to help out a program that advocates for a larger group of students by meeting a broader need? There are sites that focus on either one or both of these options.
Check sites for information and statistics on the success of their campaigns. If you see lots of students bringing in the bucks, for example, you may have found the site for you.