College students desperate to raise money for college are coming up with innovative ways to get funds. Scholarship building sites such as GreenNote.com, ScholarMatch.org and SponsorMyDegree.com are avenues that some students have resorted to in an effort to attract donors who want to fund their education for the next four years. (In addition to this article, be sure to check out The 6 Worst Student Loan Mistakes You Can Make.)
IN PICTURES: Digging Out Of Debt In 8 Steps
GreenNote.com, based in Mather, California, is an online platform where students connect with friends, family, community lenders, friends of family and others to ask for financial support to finish their education.
Students register at GreenNote.com, create a profile and build their custom "micro-donor fundraising campaign" where they market themselves to donors. There are no credit checks, co-signers or citizenship requirements. After the profile and campaign is set-up, the student notifies friends, family, their community and social networks. Students then receive donations these contacts submit via the site. Funds are then tracked in the student's borrower profile. Pledges start at a minimum of $20.
None of these sites are lenders, but they do charge either the student or the donor to facilitate the process. GreenNote.com charges a membership fee to maintain the student's online profile and deducts a processing fee from each payment that is distributed.
Sponsor My Degree
SponsorMyDegree.com, based in Denver, Colorado, also facilitates donations for students. Through the site, students receive sponsorships for their college education from philanthropists, organizations or companies. Founded by Henner and Lilac Mohr in 2008, the site originated under a different name and re-launched in 2010 as SponsorMyDegree.com.
This service pays college tuition and student loans directly to the schools, giving sponsors the confidence that the funds are going towards the students' education. The site allows micro-sponsorships for a minimum of $5 for individual sponsors and $1 for large volume corporations. Membership to the site is free. Students are not allowed to collect funds until the site verifies enrollment or graduation from the selected school.
According to the site, the sponsor pays a 5% credit processing fee and the cost of maintaining the service, but 100% of the funds go to the student specified by the sponsor. As stated on the site, funds received by students must specifically go towards paying tuition, paying student loans or purchasing school supplies.
ScholarMatch.org was launched in April, 2010. It was initiated by 826 Valencia, a nonprofit writing and tutoring center in San Francisco, when it was realized that the amount of scholarships that could be given out through their organization was very limited, in comparison to the amount of need that existed. The organization also realized that donors were more likely to fund the college aspirations of students if they got to know more about the students requesting the scholarships, and if there was a way to stay connected to those students once they're enrolled.
IN PICTURES: 20 Lazy Ways To Save Money
ScholarMatch directs funds to the applicable colleges and universities. It hold funds until the student is enrolled in college or university and has received a student ID number. When a student provides registration and ID number to the organizers of the site, the organizers write the donation check directly to that college or university for tuition or university housing. Books are paid only if they are bought through a university and appear on a tuition bill. ScholarMatch's committee assesses each student's financial need based on the information reported on the FAFSA, the cost of tuition and the other financial options students provide.
Unlike GreenNote.com and SponsorMyDegree.com, ScholarMatch.org is limited to only accepting students from the immediate San Francisco Bay area in California who are either seniors in high school or are undergraduates enrolled in a two- to four-year college or university. The company plans to expand in the future.
What About Taxes?
Sponsors do not get a tax deduction when they donate to SponsorMyDegree because they are not classified as a nonprofit. Donations to individual students at ScholarMatch.org are not tax-deductible because the IRS expressly prohibits donors from "earmarking" donations for specific individuals. Donations to GreenNote.com are also not tax-deductible because these are considered gifts.
The Bottom Line
In essence, students are building their scholarships by becoming more proactive and taking the initiative to promote their educational cause and market themselves to donors. This relatively new and creative way of getting the funds they need provides an added alternative to financial aid.
Donors should investigate the sites they would like to use to donate funds to students. Keeping track of the students to which they donate, reading updates submitted by the site organizers, checking updates on the site's blogs and calling and asking questions are all ways to make sure donations are going towards the intended goal of helping students advance their education. (For related reading, take a look at 6 Sources Of Student Money You May Have Missed.)
For the latest financial news, see Water Cooler Finance: Mergers, Hostile Bids And SEC Probes.