For the last couple of years or even decades, the tuition costs for colleges have massively increased and a lot of people expect that these costs will get even higher as time goes forward. So, if you are unsure about what you should do about your children’s or your tuition expenses, consider crowdfunding.
A lot of families and students have started to turn to crowdfund so they can pay their tuition costs for college. Instead of finishing college and starting to work while there are hundreds of thousands of dollars college debt behind you, crowdfunding is an option where people can pay for your college fees by spreading the cost among various contributors from all over the planet.
You are probably wondering why should strangers invest in someone else’s education. In a lot of the cases of crowdfunding, you see that the donors are usually just family or friends of the student because they understand in what kind of situation is the student in and are willing to donate. The reason why people will be willing to pay for your college is that you will need to offer them a reward for their help or investment. That is the whole catch of crowdfunding.
If you are planning to extend the crowdfunding beyond your family or friends, you will have to use a “human capital contract”. With this contact, you are offering to everyone who invests in your college fund to pay a certain percentage of your future incomes for a couple of years. For example, you will have to pay at least 5% of your income over a certain amount of time.
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This is certainly a risk for people, however, what kind of investment does not come with a certain level of risk? If you manage to get a job with a nice and high income, your investors obviously will be happy, however, if you do not manage to get such a job, then obviously your investors will suffer too.
If you are wondering how good of an idea is to stick yourself with a contract to pay out a percentage of your income for the next five or even ten years, keep in mind that if you are planning to borrow money for college, you would have done that either way. The difference between these two situations is that the bank will have high-interest rates and you will have to pay out a huge sum at the time you have enough for your debts. With crowdfunding, there is no interest rate at all and you will have much more freedom paying out to multiple people than into a single institution that does not care about your financial situation.
A recent study has shown that there is a direct connection between crowdfunding and an increase in the rankings of a school. This means that not only the student and the investors will benefit, but a college can also see a positive side out of this situation.