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Money Matters Blog

Tuesday, August 9, 2016

Paying for College with Crowdfunding

There are some people out there who keep insisting that the college bubble is eventually going to burst. And while that very well be the case one day, for now, the cost of higher education seems to be going nowhere but up. For the 2015-2016 school year, tuition costs average $9,410 for a public four-year in-state college, $23,893 for a public four-year out-of-state college and $32,405 for a private four-year college.

Oh and here’s the best part: These figures don’t even include room and board. And as we all know, students are typically charged thousands of dollars each year to share a dorm room with another human. Now in the absence of wealthy parents or winning the lottery, most college hopefuls have no choice but to borrow money to pay those high tuition costs. The problem, however, is that paying off student loans is easier said than done.

The Project on Student Debt, which was created by The Institute for College Access and Success, reported that 69 percent of 2014 graduates took out loans to pay for college, racking up an average debt load of $28,950. That's a large sum to chip away at on an entry-level salary. If the idea of racking up debt to finance a college education sounds unappealing to you, fear not. There may be another avenue to consider if you’e willing to swallow your pride and appeal to the masses: Crowdfunding.

Why Borrow When You Can Beg? 
You’re probably familiar with the concept of crowdfunding. Plenty of people use online websites to raise money for charity or new business ideas. But these days, some college students are taking the trend one step further by asking complete strangers to help fund their education. According to GoFundMe, a well-known fundraising site, tuition campaigns rose 4,547 percent between 2011 and 2014. And in 2013, students were able to collect a combined $4.63 million for education costs.

There’s Even an App for That 
Using crowdfunding to pay for college has become so mainstream that there’s now a dedicated app you can use to make the process easier. Launched in 2014, GoPYT, which stands for Go Pay Your Tuition, works like a traditional crowdfunding platform, only its scope is limited to raising money to cover education costs and reduce student loan debt. All you need to do is complete a profile to sign up, and once your account is verified as legit, you’re free to set up your own personalized campaign.

The Awkwardness Factor 
Of course, not everyone is comfortable with the idea of asking strangers for money. But consider your options: banking on the kindness of strangers, or racking up a pile of debt so high you’ll be buried under it before you can even utter the word diploma. It makes the whole idea of crowdfunding seem savvier than you thought.

Be Realistic 
If you do decide to move forward with a crowdfunding campaign for college, don’t go into it thinking you’ll somehow manage to plead your way toward a free ride. Despite your most earnest pleas, you may only succeed in shaving a few thousand dollars, or even a few hundred, off your total education costs. But when it comes to paying for college, every little bit helps. So remember: any money you raise via crowdfunding is money you don’t have to pay back, with interest, down the line. And while setting up and publicizing your campaign might take some work, it’s a small price to pay for what could potentially be free money coming your way.

 *Community Financial does not endorse the information, content, presentation or accuracy, nor make any warranty, expressed or implied, regarding the websites and/or apps mentioned above.

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