Crowdfunding college tuition

 

Crowdfunding is a form of fundraising sometimes used as an alternative to taking out a loan. Although crowdfunding sites are best known as a way to raise capital for an invention or project, college students have found another use: crowdfunding gaps when it comes to paying their college tuition and other school related expenses.

With a crowdfunding campaign, students can ask their friends, relatives, and their community to invest in their future without asking any one person for a large amount of cash. When the cost is spread out among dozens or more people, even small donations of $25 can add up.

How common is crowdfunding college tuition?

Crowdfunding is far from the most common way to pay for college tuition, but as more people recognize its potential, some people are exploring it.

Susan Dabbar,  founder and CEO of AdmissionSmarts, which helps families navigate the college admissions process, told USA Today: "There are lots of students using crowdfunding, some with amazing results.” She went on to discuss how one student she worked with was able to secure $8,000 this way, helping to close the gap between her merit aid and what she needed overall.

How does crowdfunding college tuition work?

These are some general steps to follow when crowdfunding college tuition and expenses.

• Decide how much you need to raise. Most students who start crowdfunding campaigns don’t expect others to foot their entire tuition bill. Instead, they use crowdfunding to fill in small gaps when paying for college, such as buying textbooks or paying for the last class they need to graduate.
• Choose a crowdfunding platform. Many well-known crowdfunding sites can be used to raise tuition money, including ones specifically designed to help students crowdfund their college education. As you’re choosing a platform, do your research to pick a reputable option that meets your needs and pay attention to the applicable fees each crowdfunding site charges.
• Set up a campaign. Most sites make setting up a campaign easy. Make sure you explain what you’ll use the money for and why it matters.
• Ask people to donate. Once your campaign is live, reach out to your friends and family and ask them to donate. This can be done in person or even on social media.

Pros and cons of crowdfunding college tuition

Before deciding to crowdfund your college tuition, take time to weigh the pros and cons.

Pros

• No debt or interest. Unlike student loans, the money you raise through crowdfunding doesn’t need to be paid back in most cases.
• Potential to go viral. If your personal story is particularly compelling, you may attract even more donations as word spreads.

Cons

• Unlikely to cover everything. Although there’s no hard limit to how much money you can raise, crowdfunding may be most effective for raising relatively small, limited amounts.
• Fees to watch for. Most sites charge a fee for fundraising, often a small percentage of the money raised, plus an additional deduction on each transaction.
• May need to account for taxes. While some funds from crowdfunding will count as “gifts,” some funds might be considered taxable. It’s essential to do your research fully here and consider reaching out to a tax professional.

Final thoughts

Crowdfunding is an interesting avenue that some students are now pursuing to plug gaps in paying for college. If this is something you want to pursue, research what platform to use, and be aware of the potential tax implications of doing this before you begin.