Crowdfunding for Education Can Give You a Boost
Crowdfunding for education is growing in availability and popularity. The difference between education crowdfunding and peer-to-peer lending (or the closely related Human Capital Contracts) is that the latter has a fixed payoff schedule regardless of how the student performs during and after their education.
The students who turn to the crowd for crowdfunding for education are usually those who have high potential. Yet, they either do not qualify for traditional educational loans, or for whom the conventional choices will not cover the amount they need.
Investing in education crowdfunding can be fruitful if investors have realistic expectations and do their homework well.
Education Crowdfunding Process
Crowdfunding for education might be a simple investment in a person’s education where some payback is expected, just like traditional educational funding. However, the difference is usually that the student must go much further with a pitch that proves to the crowd that they will be successful after graduation. A resume or academic transcript to date might be presented, and the crowd must decide whether the student will likely be successful. With a limited number of investors who must choose wisely, the crowd must evaluate student’s grades and other aspects of their future potential.
Graduate School Education Crowdfunding
Crowdfunding for education that involves graduate school is a bit simpler. You already have your undergraduate success and maybe even some work experience behind you, so the education crowdfunding group can see how you generally perform academically and perhaps even how you translate that into the real world. In addition, your choice of graduate school paths gives the potential lending group information. If you are planning to go to medical school, they know what doctors usually make in the specialty you are pursuing.
Crowdfunding for Vocational Skills
While in most cases, crowdfunding for education is for formal undergraduate or graduate school funding, it can also help a person gain specific experience or skills for their job, even if there is no formal degree after that education and training. Examples of these education crowdfunding opportunities include paying a stipend during an otherwise non-paying internship or paying for specific training or retraining courses. These skill or training loans are also not very risky for the investor and are usually inexpensive.
Advantages and Disadvantages of Education Crowdfunding
So, what should you expect if you pursue crowdfunding for education? Here are some advantages and disadvantages of education crowdfunding.
Disadvantages of crowdfunding for education
First, be aware that this will be a bit more work. Of course, the added payoff for crowdfunding for education will make it worthwhile. Still, in the short-term, the application process will be more intensive and is, therefore, a short-term disadvantage. While traditional student loans only require you to prove creditworthiness and college acceptance (or for public loans only the latter), crowdfunding student loans will need you to confirm that you will likely turn your education into later occupational success.
You may be asked for a bio, a detailed account of how you plan to use your education, and maybe even some samples. The other disadvantages of education crowdfunding for the student include potential differences in interest rates, non-deferment of interest while you are in school, and the need to keep the crowd updated about your progress actively. The disadvantages of crowdfunding for education for the investor have to do with the potential for default and the fact that interest rates must be kept low as opposed to other forms of peer-to-peer lending.
Advantages of education crowdfunding
The advantages of crowdfunding for education are evident. First, you only pay them back as your income grows after graduation. Other benefits include allowing a prospective student to get funding where there is no traditional financing and less apparent, perhaps, the motivation that can be derived from knowing that a group of investors has confidence in you. For investors, crowdfunding student loans are a relatively safe (especially when aggregated) way to get a reasonable return from an investment that truly helps.
Traditional financing
Keep in mind when looking for crowdfunding for education that you should also look into more traditional options. Ensure you know what loans you qualify for, what the payback would be, and what potential tax advantages of each. Also, know details such as when the lenders will begin to charge interest and what possible programs are out there to lower interest. As exciting as education crowdfunding is, there may be other options for at least your initial funding that make more sense. Crowdfunding for education may only be the best choice if you are turned down for traditional educational financing or if the amount you qualify for is insufficient.
Applying for Education Crowdfunding
Suppose you are a prospective student looking into crowdfunding for education. It would be best to look for the best educational crowdfunding sites. Look for a site with funding for education investors, which can be challenging because education crowdfunding is relatively new to the marketplace.
There are many good sites available though, and 
starting with a simple search of something like “crowdfunding for college” may be helpful. Of course, you want to dig deeply into the sites you find – how many have students like yourself who tend to attract this funding successfully, and are there any independent reviews of your chosen sites anywhere?
Applying for crowdfunding education loans is fairly straightforward, but a lot of time is necessary. You may find that crowdfunding for education is a viable option for you for various advantages we discuss elsewhere. The main reasons why people turn to crowdfunding for education usually have to do with not qualifying for traditional school loans, though increasingly, students are seeing the advantages that can be had with education crowdfunding even if they do allow it because the crowd gives an even better package, or because traditional loans do not cover the entire cost.
Where to Find Crowdfunding for Education Investors
The best way to find crowdfunding for education investors is to look for a person or group who seems to specialize in your area or at least has recently funded your type of education. Some education crowdfunding investors will fund a variety of areas as long as the student appears to have great potential, but others specialize in specific areas or occupations.
There are two specific ways to find these types of funders:
1. Existing platforms that provide opportunities for many students or prospective students to apply for education crowdfunding and attract many potential investors who sift through the applications.
2. White-label crowdfunding for education, where you build your independent website and hope to drive traffic to it that will attract investors who may be interested.
Each method has drawbacks and advantages, but in either case, you must put significant effort into it.
Crowdfunding for Education Conclusion
Crowdfunding for education is more readily available than ever before. As secondary education costs rise and subsidized options with low rates increasingly do not cover the total cost, they may become a viable option for many. That said, as you can see from the above, the process of getting crowdfunding for education is more involved and in many ways from more traditional loans, and you need to be fully prepared and fully understand the process.
We will likely see things expand in the coming years, and we will stay on top of innovations and ideas in education crowdfunding. If you are an investor, please contact us so we can connect you with opportunities.
