News Column

Students turn to crowdfunding to pay tuition

August 11, 2014

By Koran Addo, St. Louis Post-Dispatch



Aug. 11--As hard luck stories go, Andrew Wagner's fortunes turned around pretty quickly.

About 10 months ago, he was a broke Webster University freshman estranged from his family back home in South Carolina. They'd cut him off financially the year before after he'd come out as gay.

After moving to the St. Louis area, Wagner found himself enrolled in school paying his way through freshman year with loans, grants and scholarships.

But when those dollars began to dry up, putting him in danger of missing his sophomore year, Wagner, 20, stayed true to his generation. He turned to social media. He put his education in the hands of online donors and asked for the money on the crowdfunding website GoFundMe.

He needed $800 in tuition. But he raised less than $100 during the first several weeks. Then a friend of his, Christian author Rachel Held Evans, posted his story on Facebook where it became available to her large social media following.

"It blew up," Wagner said. "I couldn't believe it. I was at work and (new donations) kept popping up on my phone."

In all, Wagner reached his $800 goal in 30 minutes. Most of the donations came from people he didn't know. Donors left messages on the Facebook page thanking the author for the chance to donate and asking if Wagner needed additional money for future semesters.

As of last week, Wagner had doubled his crowdfunding request and raised $1,600, with one donor encouraging him to use the extra cash to pamper himself.

As Wagner's story shows, crowdfunding has progressed beyond entrepreneurs looking to start businesses and artists looking to fund creative projects.

While industry watchers haven't yet devised a way to calculate how many students are turning to crowdfunding to pay tuition, or how much money they've raised, experts agree that the practice is on the rise.

GoFundMe, the site Wagner used, reports that the number of education-based donations have risen to 153,388 this year, compared to 212 when the company started in 2010. The company also reports that total donation amounts have risen to $16 million, up from $16,000 in the same time period.

GoFundMe charges all donors 5 percent and payment processing fees.

Besides traditional crowdfunding platforms, other websites also have begun reaching out to students, including sites such as Pave, where students who crowdfund agree to pay portions of their future earnings to donors.

Other sites, such as GradSave and GiveCollege.com, are set up as online savings accounts where extended family can contribute to a child's future college costs, sometimes taking advantage of tax benefits reserved for donations.

Mamie Voight is the director of policy research at the Institute for Higher Education Policy. She said students turning to social media for tuition is a consequence of the country's wavering financial support of higher education.

"Over the past several decades, we've seen tuition increase four-and-a-half times as much as inflation, two times as much as health care costs," Voight said. "And it's important to note that income is not keeping up. In fact, it's declining among people with lower incomes."

While tuition has been increasing nationwide, states and the federal government have scaled back the amount of financial aid they are making available.

A common belief in higher education circles is that when 60 percent of a student's financial need is taken care of, that student has a much higher probability of graduating.

But in-state tuition at Missouri's public four-year universities has risen across the board since 2007.

Meanwhile, the federal Pell Grant program for needy students has decreased in value. The grants used to cover 75 percent of a student's financial need, but are now sufficient for only about a third of costs.

Voight said states that are serious about economic growth need to extend opportunities to make college accessible to moderate- and low-income students, and not just the students who are already likely to go to college and get a degree.

"There really is a core public purpose to investing in higher education," she said.

In the meantime, it's conceivable that students will use whatever means available to gain access to college, regardless of government policy.

Tayler Hammersmith, 20, of St. Louis, ran into financial trouble after her sophomore year at the University of Kansas.

After struggling to get qualified for a loan, Hammersmith posted her story on GoFundMe and raised $750 toward the $2,000 she was looking for, before a family member saw her on the site and paid the difference.

Crowdfunding "really was my last resort," Hammersmith said. "I told myself that I might as well go for it. It was just one of those things where you just have to put your pride aside."

Koran Addo is the higher education reporter for the St. Louis Post-Dispatch. Follow him on Twitter at @KoranAddo

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(c)2014 the St. Louis Post-Dispatch

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Source: St. Louis Post-Dispatch (MO)


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