Education

Student loans suck: EdAid is helping students crowdfund their education

By Oliver Smith 18 August 2016
Summary

On A-Level results day some entrepreneurial students are funding their education in innovative new ways.

On Sunday night Thao Vo was probably feeling a little disappointed.

Her £7,000 crowdfunding campaign to borrow the money she needed to enroll on a programming course with Makers Academy had fallen short of its goal.

Then at the 11th hour Daniel Becker, a person Vo didn’t even know, invested a whopping £4,810, securing her place and paving her path into a better career.

Vo is one of nearly 100 people who have crowdfunded their way onto training courses, internships and even through higher education at university with EdAid.

It isn’t free money, mind you.

Vo will have to pay it back over the next few years once she’s trained as a programmer, but without any interest and only paying back the loan plus the cost of inflation.

Meet EdAid

Tom Woolf came up with the idea for EdAid back in 2011 while working for JustGiving, the popular donation platform, in the Middle East and Africa.

“At that time student tuition fees went up to £9,000 a year, and we started getting students coming to us asking if they could use JustGiving to raise money for their tuition fees, which wasn’t possible,” Woolf told The Memo.

He realised that there was a huge need to rethink at the way education was being funded, not just tackling the upfront cost, but dealing with the total cost over time.

For example, if you were to borrow £10,000 from the Government’s Student Loan Company today and graduated in a year with a £25,000 starting salary, you’d end up paying back £15,148 over 15 years.

The figures get even worse if you borrow the £27,750 in tuition fees over three years that most universities are charging now.

The EdAid solution

That’s how Woolf devised EdAid, a community-based funding model that lets students of any age or background launch funding campaigns to raise the money they need to afford their education.

Today for the hundreds of thousands of A-Level students getting their results, one of the biggest questions they face is how to afford university.

As well as the enormous £9,250 in tuition fees that are being demanded every year, there’s  also living costs which can add another £12,000 a year on top.

With EdAid students can launch a 40 day crowdfunding campaigns to borrow up to £30,000 by appealing to family and friends, alumni, charitable trusts and the EdAid Foundation to invest in their education.

Unlike traditional lenders EdAid only takes an initial fee, rather than charging interest or fines, because of that Woolf and his team hold high standards about the students they let on the EdAid platform.

“If a student has maxed out every other credit card or method of borrowing, we simply won’t lend to them, because we don’t want to get them in more debt.”

It’s still early days for EdAid, the business was only given the green light by the financial regulator four months ago to start trading and only 98 students have successfully raised money through the platform so far.

But for students today who don’t want to pay back huge interest charges to lenders, but do need the money to invest in their future through education, EdAid might be their best bet.