There’s no doubt that GoFundMe and sites of its ilk are the new student loan outfits. Just see this little bit from a recent WCMH report:

According to a GoFundMe spokesperson college bound kids are now turning to crowdfunding sites to call on their family, friends and other peers to provide financial support.

This fact is great for GoFundMe, as they and their payment partner WePay take around 8% out of every single donation made to a GoFundMe page.

GoFundMe fees

Now, let’s talk about student loans. The current interest rate on direct subsidized and unsubsidized federal student loans is 4.29%. These loans are also subject to a 1.068% loan fee which is deducted proportionately from each loan disbursement a student receives.

Of course, interest on federal student loans is accrued, so the total loan payment is often going to be significantly higher than the amount of the loan, whereas with GoFundMe any fees are taken up front and not perpetually until the day you die via student loan interest.

But let’s say you, like Brittany Wallace in the WCMH story above, need just $5,000 to take a few extra classes. Brittany doesn’t qualify for financial aid and is using GoFundMe to raise the money. “I’ve always kind of seen GoFundMe as a way to to help victims of like horrible car accidents and trauma and things like that ,” she told WCMH. “A girl wanted to go back to medical school and she’s raised tons of money for it.”

If she raises the full $5000, GoFundMe and WePay’s cut will be around $400.

Alternatively, the base interest and loan fee on $5000 in federal student loans would be $267.90.

OK, we realize this example is painfully simple and not necessarily accurate as there’s the issue of differences between subsidized and unsubsidized loans, daily interest, and Brittany’s claim that she doesn’t qualify for financial aid. Plus, ugh math. But we use this as an example to show just how much GoFundMe is taking off the top.

In theory, someone could receive a subsidized federal student loan, work through the semester, and pay the entire thing off at completion of the term for less than GoFundMe skims off a crowdfunded tuition page. Think about that for a moment.

Brittany says she could also max out her credit cards, which again wouldn’t be that terrible of an idea if she has decent credit and is able to make more than minimum payments for the next 30 years. Seeing as she’s A) already $60,000 in debt B) aspiring to be a teacher, maxing out her cards probably isn’t the best idea.

Is crowdfunding for college a good idea? Well that depends on how many people you know willing to give you money. And whether or not you’re comfortable potentially being the subject of both local and international ire, like Emily Stutz of Massachusetts who used GoFundMe in concert with an old hobo trick to collect over $26,000 toward college. Remember: opinions are like assholes, everyone has one. But that’s the risk you take when you literally put yourself out there.

If you really know that many generous people, why not just ask them directly to invest in your education? Remember, GoFundMe warns potential donors that they “should only contribute payments to GoFundMe users they personally know and trust.” So you’re probably not going to be like Emily, as the odds of appearing in the Daily Mail are about equal to GoFundMe’s alleged rate of fraud (“less than 1% of campaigns”).

As for Brittany? She’s up to $315 on her GoFundMe page. We — and I’m sure GoFundMe — wish her good luck getting to goal.