What's New: P2P Loans for College
Many parents have traditionally tapped home-equity lines or pulled money from their retirement savings to help send kids to college.
Many parents have traditionally tapped home-equity lines or pulled money from their retirement savings to help send kids to college. But tightened credit has dried up the former, and the economy has people thinking seriously about the latter.
Enter two new sites hoping to alleviate the problem by tapping into social networks.
GreenNote.com allows students to create a pledge drive to solicit funds from friends and family. The lenders pledge money that is collected and formalized into a ten-year loan with a 6.8% rate.
Requests range from a grand to tens of thousands, but contributing a small part lessens the risk to the lender -- a good thing because there are no guarantees. Recently, the site added the GreenNote Network, which allows students to seek help from strangers.
Fynanz.com has a Prosper-like ethos with a twist. Loans are guaranteed 50% to 100%, depending on the grade assigned to each student, which takes both credit history and academics into account.
Lenders can bid as little as $50 on loans ranging from five to ten years. Rates range from 5% to 11%, depending on the grade of the borrower and the bids in the marketplace.
Neither site is a replacement for government programs, such as Stafford and Perkins loans. Tap Uncle Sam first and then make up any deficit with private loans. (For more visit our Paying for College Center.
Online Lending Sites