Crowdfunding student loans is a great way to get a modest return on investment if you choose carefully. That said, investing in student loan crowdfunding does not tend to have a huge payoff, given that the terms are usually comparable to more traditional student loans.Â
Crowdfunding Student Loans: For InvestorsÂ
Choosing your investment(s) wisely is the most critical decision when considering crowdfunding student loans. The first step toward this goal is to decide whether you will help fund the education of just one person, a small number, or many prospective students. The approach to investing in education crowdfunding might differ depending on this choice. For example, if you fund just one person, you need to know a lot about them and decide that investing in one person is no more risky because there is a low chance of default.
To narrow your choices as far as your education crowdfunding investment, you may want to look into the following factors roughly in order:
Student loan crowdfunding and majors
Do you want to think about crowdfunding for education expenses for just one particular educational pursuit, such as people studying medicine, public health, law, or a trade? You may practice that trade yourself, have a high regard for it, or perhaps feel that those who pursue it are more likely to pay back your education crowdfunding investment.
Crowdfunding student loans and types of students
Do you want to fund a particular type of student? Perhaps there is a specific minority group that you would like to support with your investment, or maybe people from a particular background (adopted, first-generation immigrant, student-athlete, etc.)Â This may be your primary choice in deciding where to put your education crowdfunding investment, or it may be secondary to #1.
Crowdfunding student loan criteria
It would be best if you also decided what criteria to use for your measures of likely occupational success before investing in education crowdfunding expenses. How will you assess whether the person is expected to pay back your investment as far as the path they choose – The most straightforward example would be if you decide to invest in education crowdfunding for those pursuing advanced degrees in medicine and law where salaries are high. But how will you assess things if the path to financial success is not as clear?
Crowdfunding student loans and quality
You need to assess the person’s likelihood of success before investing in education crowdfunding. Regardless of the chosen path, what makes this individual more likely to repay your investment? Their history of meeting financial obligations and past academic success is an excellent place to start.
Choosing a Student Loans Crowdfunding Platform
Once you have decided which type of education crowdfunding you are hoping to invest in, you now want to find the best crowdfunding sites for education where you can make your actual investments. There are many choices, the most common of which are peer-to-peer lending sites like Prosper and Lending Club. You may also be able to find education crowdfunding pitches at the usual crowdsourcing websites as well. Look for a website that offers the most choices and the best information.
Another choice might be to look for a “white label crowdfunding for education” pitch – in other words, someone who started their independent website to make their case. This can be an impressive way to go – you’ll likely find more information there, and you may also be impressed by the work and time it took to create a whole website – it shows additional motivation and maybe talent. One way or another, you want to find the best educational crowdfunding sites before investing.
Crowdfunding Student Loans: For Students
The primary ways to get crowdfunding student loans involve proving three things to investors:
Crowdfunding student loans and your potential
First, you must prove your educational potential. Will you finish your degree as expected? This part of the education crowdfunding application involves filling in information about past academic pursuits and may also include essays that try to get at your motivation and interest. This step is vital – education crowdfunding relies on your peers knowing what kind of risk you are. Spend time making the case that you will be financially successful after your education is complete, and give clear and concise steps you will take to be successful. As best you can, include qualitative – how motivated you are, for example – and quantitative – what your grades have been – information.
Student loan crowdfunding and your motivation
Describe your motivation: Now, you need to make your pitch. Concentrate on those attributes that are provable and clear. Remember, those investors looking into education crowdfunding have a ton of choices as far as which prospective students they fund. What makes you truly unique, and how can you back that up? For example, anyone can describe themselves as “motivated.” Still, you can prove your point by describing all the extracurricular pursuits and showing your interest in learning and growing.
Make sure your pitch is well written and solid – the crowdfunding for education investors reading it is not just for content but also for the quality of your writing because that shows the effort you will likely put into your assignments. Make sure any potential investors come away impressed with what you’ve done and how it suggests you will be successful in the future.
Crowdfunding student loans and your future
Next, you have to describe what the occupational future will be after you meet your goals. You will be paying back your crowdfunding student loans with money earned in your post-schooling career, so you’ll need to help the crowd understand your career path and how their funding will get you there.
Providing any statistics you can find from your field of interest can be beneficial. E.g., if you plan to become a college professor, you should give your peers information about the job market, salaries, and salary trajectories of college professors. You can also mix in your reason for pursuing this field – what motivated you to make that choice – you want those interested in helping you with crowdfunding student loans to know you will not change your mind.
You may need to give “what if” scenarios to the crowd. How will you pay off the crowdfunding student loans should you not get the dream job you hope for? Are you willing to move anywhere in the country if necessary? Would you take a second job if your primary job does not pay enough? The crowd knows that some things may get in your way, even temporarily, and they will want to see how you handle and, more importantly, proactively assess possible barriers.
Crowdfunding Student Loans: The Actual Application
Often, the process might be as simple as that, and at the end of those three steps (or something like them), you get crowdfunding student loans for your education. The smaller the loan, the more likely it might be that simple. However, the process will likely be a bit more complicated for larger loans and extended educational pursuits. In these cases, you might expect your crowdfunding student loan journey to include the following:
Crowdfunding for education essays
Essays and other more traditional means of prospective crowdfunding student loans lenders learn about your abilities and potential as a student, as well as your motivation for learning and willingness to put time in to ensure you get this funding. They will want to know how much time and energy you will be willing to put into your education and also the quality of your work that will result.
Crowdfunding student loan interviews
Some sort of interview, ranging from a detailed questionnaire to an in-person interview, gives the person-to-person lender a chance to meet you, get to know you, and take a more holistic view of your application and potential. Otherwise, This process is very impersonal, so the funders may want to step back and see who you are.
Student loan crowdfunding samples of schoolwork
Samples of past school work and academic pursuits while working to show how you’ve performed naturally on intellectual tasks. This helps crowdfunding student loan funders see how you’ve performed on natural functions without getting potential proofreaders.
Suppose your crowdfunding student loans request involves funding beyond one disbursement, such as a need extending over several years. In that case, you will likely have to produce grades, progress reports, and updates about your plans for post-graduation and career. The crowdfunding student loan investors will undoubtedly want to keep in touch.
Final steps for students
The final step is to be responsive to potential investors. This likely includes active responsiveness – if anyone asks a question or wants more information, provide it quickly and clearly and offer examples. Give them reasons why investing in you will pay off, including being clear and concise about your plans, past accomplishments, and hopes for the future. Ensure you have specific materials ready – transcripts from past learning, resumes, listings of references, etc. The crowd must think you are very well-organized and responsive, which predicts that you will be the same in your actual learning.
If you are a veteran, we provide information about veteran crowdfunding separately.Â
Crowdfunding Education Loans Summary
Student loan crowdfunding is an excellent option for the investor and the student, given how often top students going in do successfully finish and at least meet with moderate success later on. You can even look into “Human Capital Contracts,” which we cover elsewhere. There are no guarantees with crowdfunding student loans, but they help students reduce their financial burden, potentially leading to a solid payback for investors. We’d be happy to connect investors to the platforms where these loans are funded, and we can help students with the process. Contact us for more information.
