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There’s nothing wrong with asking for help when you need it, and you might be surprised at how willing people are to lend a helping hand. In fact, Studies show that helping others is one of the best ways to improve your own happiness.
So why not use crowdfunding to apply for help with your student loans? You will give your friends and family members a chance to make a meaningful impact on your life, but without pressure or expectations.
If that sounds intriguing, read ahead for more information on how to make it happen.
What is crowdfunding?
Crowdfunding involves asking your circle of friends and family members, as well as the general public, to donate money for a particular goal. Start-ups crowdfund to raise money for a new business or product launch, while individuals can crowdfund to pay for funeral expenses, emergency medical bills, or student loans.
Individuals can use crowdfunding sites like GoFundMe and YouCaring, where the donors have to pay a small fee but the recipient does not. When you create a fundraising goal on one of these sites, you can collect the money as it arrives. You don’t have to meet the goal to withdraw the funds.
The money can be withdrawn at any time and it usually takes a few days to reach your bank account. The money is usually counted as a gift, but in some cases the recipient will have to record it as income on their taxes.
Besides using a traditional crowdfunding site, you can also set up a PayPal or Venmo link where people can donate to you directly.
How can crowdfunding help pay off my student loans?
It is possible to set up a crowdfunding site specifically to repay your student loans. Share the link on your social media feed and / or email it directly to your friends and family. They can also share the link with their own social circles in order to increase contributions.
Users can choose to donate the amount they want. When you have reached a certain goal or are ready to withdraw funds, you can transfer the money to your bank account and use it to pay off your student loans.
Unlike Kickstarter campaigns, which have strict deadlines and rules, personal goal crowdfunding is less restrictive. On GofundMe, you can leave campaigns indefinitely. You may need to withdraw money at certain times, but there is no limit to the length of a campaign. For example, you can start a crowdfunding site now and leave it there until your loans are paid off.
You can promote the site as often as you like. Donors can also share the page on their own social media platforms, which could result in more donations.
4 tips for crowdfunding
Starting a successful crowdfunding campaign is harder than it looks. Here are the top tips to make sure your campaign pays off.
1. Share your story
The most effective crowdfunding campaigns have high impact stories. Don’t just write about your student loan debt; talk about your education, how you worked hard in college, and how you tried to pay off the debt on your own. If you’ve encountered any obstacles that have affected your repayment schedule, such as medical issues or the need to care for a relative, sharing these anecdotes will provide context for your claim.
Focus on telling a clear story. Use specific images and details; maybe you’ll share how you spend most weekends working for another job, like driving for Uber or serving in a restaurant. While you want to show that you don’t expect contributions, having a full understanding of your situation will help contributors decide if they want to donate to your cause.
Before launching your site, share it with a few relatives and ask for their honest feedback. Proofread the page and try to read it through a lens before posting.
2. Ask for donations instead of gifts
If you start crowdfunding during the holidays or on your birthday, point out that you would prefer donations over physical gifts. For example, you can post something to your social media accounts in the weeks leading up to your birthday by requesting donations from your GoFundMe instead of birthday gifts.
If your family likes to give a lot of gifts for the holidays, you can send an email or text in early December saying you don’t want any freebies and prefer a donation on your crowdfunding page.
3. Thank donors regularly
Be grateful for all the money you get from crowdfunding. Consider sending handwritten or email thank you notes to your donors, or providing candid updates through the campaign site.
Expressing your gratitude to your current donors can make them more likely to share your campaign and encourage others to donate.
4. Promote your site
After launching your page, be sure to promote it multiple times on your social media. Due to how social media algorithms work, people may not see the post the first time. Please feel free to share the link regularly.
Advantages and disadvantages of crowdfunding
Here are the main advantages and disadvantages of crowdfunding for paying off your student loans.
- He has unconditional contributions. The most obvious benefit of crowdfunding your student loans is that you will receive free money to pay off your debt. This makes crowdfunding easier than starting a sideline or working overtime. But it’s wise to combine crowdfunding with other strategies, like earning other income and reducing your expenses.
- There is little effort required. Setting up a basic crowdfunding site is straightforward and you don’t need any web design experience to create it. These sites also make it easy to share your link with others and provide updates along the way.
- There is no guarantee of funding. While there are many success stories of borrowers who have paid off tens of thousands of debts through crowdfunding, these are likely exceptions to the rule. There is no guarantee that your campaign will go viral and be seen by the general public. Even if your friends and family express their support for your crowdfunding efforts, they may only contribute a few hundred dollars.
- There is no certainty. The outcome of a crowdfunding campaign is unpredictable. At the beginning you can see a first wave of donations. But over time, that pace is likely to slow down. For this reason, it is difficult to predict how much you will receive through a crowdfunding campaign and it means that you may not be able to reduce your debt.
- Asking for help can be uncomfortable. In a society where talking about money is uncomfortable for many people, asking loved ones for donations can be embarrassing. Some fear that if they crowdfund their student loans, they will attract financial criticism, especially if you take a vacation or show unnecessary spending. Make it clear to donors how much you need and how you will spend their contributions. But know that you don’t have to explain the rest of your financial choices.
- There are no tax benefits for donors. Money donated through a crowdfunding site is considered a personal gift and not a donation if it is not from a formal nonprofit organization, so donors cannot deduct the contribution from their taxes.