The United States is in the midst of a $1 trillion student loan crisis. Two-thirds of American college students graduate with some amount of debt, with the average student leaving school $26,600 in the red, according to the Institute for College Access and Success' Project on Student Debt.
So to help students try to reduce they amount they need to borrow to go to college, a Chicago startup has created a crowdfunding platform to assist in paying for tuition.
ScholarFlip, which launched last October and is one of the first 13 startups accepted into the UChicago CIE Business Incubator, allows students to set up crowdfunding pages to raise money from friends, family, and other interested donors. Like Kickstarter and other corwdfunding sites, ScholarFlip lets students create profiles, announce a fundraising goal, and generally explain why they are deserving of outside help for tuition.
Co-Founder Chris Riedel saw the student loan crisis combined with the rising cost of tuition as a "perfect storm" for launching ScholarFlip. And along with the continued popularity of crowdfunding, he believes ScholarFlip is the right resource for students at the right time.
"The cost of college continues to go up and up. It's bordering on the ridiculous," Riedel said. "We thought, how can we take advantage of crowdfunding to help students raise money for college?"
Around 300 (mostly high school) students have made pages so far on ScholarFlip, 50 of which are live and published. The biggest obstacle for students is creating thorough pages and promoting themselves, Riedel said, which is why the highest amount raised so far has been just a few hundred dollars. ScholarFlip is creating tools to help students more easily share their stories and get more eyeballs to their pages, Riedel added.
ScholarFlip gets a 6% cut of the transaction, which it takes from the donor, not from the student. Riedel said he expects friends and family to be the main sources for contributing to the crowdfunding pages, and sees students utilizing the site during high school graduation and other gift-giving holidays.
But there are donors out there who are interested in giving to students regardless if they're friends or family, Riedel said, and the challenge is assuring donors that the money will be spent appropriately. To do that, ScholarFlip wires the funds directly to the school, rather than the student, to ensure the money is spent on education.
Tuition funding is the obvious first step for ScholarFlip, but Riedel sees the platform eventually becoming an all-around resource for college students to connect with mentors, internship opportunities, and job hunting resources.
"It's not just about making money," he said. "We're building a platform that helps students understand the impact they want to make. We're hitting the crowdfunding out of the gate, but there's potential to become a more robust platform to connect students to resources they need to succeed in college."
