Managing Your Money
Return to Article
How to Crowdfund Your College Costs
08/24/12 - 08:00 A M EDT
NEW YORK (MainStreet) -- It's 21st century equivalent of getting a $25 savings bond from grandma for college. A handful of start-up companies are aiming to help parents and students employ "crowdfunding" -- the hot new technique that involves using the Web to raise small donations from large numbers of people -- to save for college. "Relatives and friends have been giving loved ones cash and checks for college since time immemorial," says Ed Thomas of FiPath.com, one such site that's gotten about $1 million in angel funding from Atlanta-based Imlay Investments. "What we're trying to do is just bring that system forward and make the transaction easier for everyone." Sites such as FiPath help parents and kids calculate how much they'll need to save for college, then offer automated ways to hit up relatives and friends for donations using email and social media. In FiPath's case, loved ones can donate money automatically to a child's 529 plan or other savings vehicle using PayPal, spending about $2 per transaction in PayPal fees. (FiPath doesn't charge users anything, instead making its money by selling client leads to financial advisers.) Thomas, who holds a Stanford University MBA, is using the site to help raise the roughly $800,000 that FiPath's database estimates he'll eventually need to send his 2- and 5-year-old children to top schools. "The average financially responsible parent will put away a few hundred dollars a month toward their kids' educations -- but the cost of college is rising so fast that that's not going to have the impact they're hoping for," he says. "But if you apply a version of crowdfunding to college savings by asking family and friends for help, suddenly you can hit those savings targets." In Canada, crowdfunding site Scolaris helps high-school and college kids in asking family, friends, co-workers and even strangers for small donations to raise 500 to 1,000 Canadian dollars toward their next tuition bill. Founder Mark Mauleesan, a 29-year-old who recently graduated medical school with some 60,000 Canadian dollars in student loans, launched Scolaris after seeing people use crowdfunding to raise money for seemingly unimportant things such as buying laptops. "I thought, 'If donors are giving people money to buy a watch or finance a movie production, why wouldn't they help someone go through school?'" he says. Scolaris helps students build Facebook(FB)-like profiles that show what they're studying and why -- complete with photos, videos and blogs. Donors typically give 5 or 10 Canadian dollars at a time via PayPal, paying about an 8% fee (half to Scolaris and half to PayPal). Scolaris later remits the money to the student's school help cover the coming semester's tuition. "We're basically helping students ask [loved ones] to put their money where their mouths are and help a young person go to school," Mauleesan said. Market watcher Carl Esposti of Crowdsourcing.org says such sites aren't true crowdfunding efforts because they appeal to
www.thestreet.com/print/story /11674178.html 1/3
families and friends rather than the "crowd" -- the broad public -- for money. But he says sites that "facilitate making small payments [for college] and allow you to track and monitor donations are still a nice use of the [crowdfunding] concept. I think helping students fund their educations will certainly hit a chord with many people."
Visit TheStreet for more great features
THESTREET PREMIUM SERVICES
From the action-oriented investing ideas of Action Alerts PLUS by Jim Cramer to the expert technical trading strategies of Helene Meisler's Top Stocks, TheStreet.com offers a range of premium services to help boost your portfolio's performance. View now.
Get an edge on the market with the help of free email newsletters like Jim Cramer's Daily Booyah!. Learn about the day's major market events, companies that sizzled or fizzled and lots more that can help you make more profitable investing decisions. Sign up.
EXPERT ADVISORS ALERTS DELIVERED TO YOUR INBOX
Action Alerts PLUS: Cramer's personal portfolio, emails before he acts. RealMoney: 70+ experts share their top investing ideas and analysis. Stocks Under $10: Alerts identify undervalued stocks with profit potential.
Today’s Stock Pick QUAN
Investors React to Recent Price & Vol Excitement - Buy Shares Now!
w w w .QuantumInnovators.com
Top Stock GTSO
New Regulations Could Mean Big Opportunity - Invest Now!
w w w .GTSOResources.com
Could This Stock Triple?
Why investing in water can lead to massive profits
Stock Market Authority
All Winning Picks During Past 3 Yrs. Stock Gains from 83.9% to 1,175%
w w w .stockmauthority.com
IDC calculates the Mark et Cap for the basic sy mbol to include common shares only . Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.
© 2012 TheStreet, Inc. A ll rights reserv ed. Made in NYC
A handful of start-up companies are aiming to help parents and students employ "crowdfunding" -- the hot new technique that involves using the Web to raise small donations from large numbers of people -- to save for college.
In Canada, crowdfunding site Scolaris helps high-school and college kids in asking family, friends, co-workers and even strangers for small donations to raise 500 to 1,000 Canadian dollars toward their next tuition bill.
Founder Mark Mauleesan, a 29-year-old who recently graduated medical school with some 60,000 Canadian dollars in student loans, launched Scolaris after seeing people use crowdfunding to raise money for seemingly unimportant things such as buying laptops.