GoFundMe Student Loans: Pros and Cons of Crowdfunding Debt
Thinking of starting a GoFundMe student loans campaign? Learn more about the pros and cons of crowdfunding debt here first.
Student loan debt can be financially crippling for many college graduates, and some have gone to great lengths to find creative ways to pay theirs off. One way is to get assistance from an employer. Many government agencies and even private employers offer student loan repayment assistance as a benefit.
But what about asking strangers for help? Here's how crowdfunding student loans works and whether it's the right fit for you.
What does crowdfunding student loans mean?
Crowdfunding is a phenomenon that has many applications. With websites such as Kickstarter and Indiegogo, for instance, entrepreneurs can get investments in their business in exchange for early access to their product or service. GoFundMe, JustGiving and similar websites focus on charitable donations for good causes.
Now, it's also possible to crowdfund paying off your student loan debt. Essentially, you're asking family members, friends and even strangers to help you pay down some of your student loan debt. Depending on how successful you are, you could get help with hundreds or even thousands of dollars in student loan payments at once.
Pros of crowdfunding student loans
There are a few different advantages of using platforms such as GoFundMe for student loans:
- Access to people who want to help: Whether it's someone who's close to you or a complete stranger, there are people out there who might be willing to help you with your student loan debt. Even if you don't reach your fundraising goal, you can still make a significant dent in your debt.
- There's no quid pro quo: You don't have to provide anything in exchange for financial assistance through crowdfunding platforms. You may not even have to pay taxes on it, as any aid you receive is usually considered a gift.
- It can help you establish certain skills: Building a successful student loan crowdfunding campaign requires more than just adding your picture and a plea for help. You could develop some design skills by creating a video and marketing skills by leveraging social media and other platforms to spread the word.
- It can help with other financial struggles: If you manage to get a good amount of aid through crowdfunding your student loans, it could free up enough cash to help you in other areas of your budget. You may even be able to start working on other financial goals, such as paying off high-interest debt.
Cons of crowdfunding student loans
Although there are some clear benefits to using crowdfunding to pay off your student loans, there are also some potential pitfalls that can give you a reality check:
- You might not get much: You're not the only college graduate who's looking to get help with their student loans, so even if your GoFundMe student loans campaign looks perfect, you may not get enough to achieve your goal. In other words, don't put too much stock in this strategy.
- It can be time-consuming: Creating a strong campaign can be time-consuming, and you may end up disappointed if it doesn't pan out the way you want it to.
Tips for crowdfunding your student loan payments
If you're thinking about using GoFundMe for student loans or another platform to get help paying down your debt, here are some tips to help you stay on the right track:
- Opt for a low-fee platform: There are several platforms to choose from, including GoFundMe, Indiegogo, LoanGifting and GoGetFunding. Compare multiple options — and their fees — to determine which one will give you the most of the donations you receive.
- Start with your inner circle: While it's possible for strangers to donate to your campaign, you'll likely get the most assistance from your friends and family members. Utilize your social media platforms to maximize your reach.
- Be transparent: Don't be afraid to share your story. The more transparent you are, the likelier people will be to want to help.
- Set a realistic goal: In an ideal world, you'd be able to pay off all of your debt in one fell swoop. But if you ask for too much, it could turn off potential donors. Take a look at other campaigns that have been successful to help you determine the right amount. Remember, the goal is to pay down your debt, and even a few hundred dollars can make a big difference.
Other ways to pay down your student loan debt
It's unlikely that you'll be able to pay off all of your student loan debt through crowdfunding, so it's important to avoid putting all your eggs in one basket. Look for other opportunities to pay off your student loan debt and put yourself in a better position financially.
For example, if your credit is in good shape or you have a creditworthy co-signer who's willing to apply with you, consider refinancing your student loans. At Juno, for instance, we can help you by negotiating with lenders to secure lower interest rates than you might get on your own.
In the right situation, refinancing could result in a lower interest rate and lower monthly payments. If you can afford to pay more, you also could shorten your repayment term to pay down your debt faster and save interest in the process.
Other potential approaches can include:
- Applying for a federal student loan forgiveness program
- Getting on an income-driven repayment plan
- Getting a job with an employer that provides student loan repayment assistance
- Making extra payments to eliminate your loans more quickly
- If you're a parent who took out student loans to help a child, ask if you can transfer the debt to them through refinancing
Whatever you decide to do, what's important is that you be proactive and take the time to research crowdfunding and other options to pay down your student loan debt. There's no guarantee that crowdfunding will help, but it's worth a shot, and it could help you gain and maintain your motivation to pay down the debt in other ways too.
Work to limit student debt while you're in school
If you're researching future help to pay down student loans while you're still in school, consider other steps now to limit your overall costs. For example, scholarships and grants can be an excellent way to get free money to pay for school. And if you need student loans, federal loans often offer lower interest rates and better benefits than private student loans.
However, the federal government does cap how much you can borrow with most federal loan programs, so if you still need money, Juno can help you find the best undergraduate loans and graduate loans. More specifically, Juno negotiates exclusive discounts and rates for its members that they may not be able to get on their own. And if you end up finding a better deal elsewhere, we'll give you enough cash to make up the difference.
Ben Luthi is a personal finance and travel writer based in Salt Lake City, UT. He loves helping people better understand their finances. When he's not traveling, Ben enjoys spending time with his kids, hiking, and watching films. His work has been featured in U.S. News & World Report, The New York Times, MarketWatch, Fox Business, and many other publications.
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