All sorts of crowdfunding records were set and shattered, with some remarkable stories as a result. In the indie film world, for example, director Steve Taylor turned to Kickstarter in a last-ditch attempt to make his movie “Blue Like Jazz” after his financial backer pulled out. In the process, he raised $346,000 — a record for any film funded by Kickstarter.
Now it seems everyone wants to get into the crowdfunding act. Some time within days of this posting, the Securities and Exchange Commission could sign off on regulations that will open the door to crowdfunding that raises money for private companies. (It’s part of Jumpstart Our Business Startups, a.k.a. the JOBS Act, signed into law by President Obama in 2012.)
But is what’s good for artists, and for businesses trying to raise capital, also good for students in college or graduate school?
At first blush, crowdfunding presets tantalizing possibilities for those trying to defray the high costs of tuition. Though much of the economy has suffered from the doldrums since the Recession hit in 2008, that doesn’t explain why college costs have soared way above the level of inflation.
Just how much have they risen? According to a 2011 Pew Research Center report, “Is College Worth It?”, a four-year private college education tripled in price between 1980 and 2010 — and the study finds that fewer families think it’s worthwhile. A whopping 75 percent of Americans say college is too expensive for most to afford: student loan debt for a bachelor’s degree now averages more than $23,000 per student borrower, the Pew report finds.
Compare that to the mid-1980s (when students who graduated college with any student loan debt were the exception, not the rule) and it’s not surprising that a number of companies have leaped into the crowdfunding sphere to help students raise money for school. These include the following:
Ceed.me was started by Aruna Ekanayake, who as an undergraduate in the mid-2000s found himself debating whether to drop classes just to pay his rent. Now, his web site allows students with a verified “edu” email address to campaign for up to $5,000, even though they can keep amounts raised in excess of that ceiling. Campaigns last a maximum of 90 days, and students are encouraged to post their grades, for example, so that potential funders know their money is going to good use. Ceed.me takes a 5 percent fee from all funds raised if the goal is met.
GradSave was founded in 2011 using a crowdfunding model, and bills itself as an online college savings registry that works in conjunction with a 529 college savings plan. With more than 5,000 members nationwide, the site urges relatives and friends to give college students the gift of education for holidays and birthdays as opposed to, say, clothes or consumer electronics. GradSave fees typically average between $4 and $27 (for credit card contributions up to $500) and between $3 and $16 (for electronic checks up to $500), though the website says it is currently charging no fees.
Takeashine.org is a non-profit crowdfunding platform with the specific goal of helping underprivileged students. It launched successfully in New Orleans in 2012, and plans to begin regional expansions to three target cities per year over the next three years. Unlike the other crowdfunding platforms featured here, you must apply to Takeashine to be accepted as a fellow, at which point Takeashine begins crowdfunding efforts to build a bridge between “demonstrated” need and true financial need.
Odds are before 2013 is over, many more options will pop up offering to service undergrads and those returning to school. That’s good news to my niece Lauren DeVries, who just started her freshman year at North Park University in Chicago. She’s working really hard to pay her tuition and school expenses, as she has a part-time job on top of a full slate of classes.
Could crowdfunding help Lauren get over the hump? We plan to find out. Tune in to future columns as we walk you through Lauren’s College Crowdfunding Adventure, and learn from her as she sets a goal, takes to social media and sees whether she can hit her crowdfunding target for college.
Earn and save more with our free course:
What would you do with more money in your bank account? Join over 15,537 other young professionals receiving our best money hacks to get out of debt by 30, increase your income (starting this year) and invest for financial freedom.
100% free! I will NOT spam you and I will NOT share your email.