Student loans and also student debt levels have become something of an item lately. The debt level for college students and therefore graduates is overflowing and many are looking at a multitude of options for funding their education. One option some might not be aware of is community-based school loans, which are a lot like crowd-funding.
A crowd-sourcing opportunity
A recent Daily Finance article discussed a growing number of community organizations springing up around the country, offering community-based school loans that are being made to students heading off to university, albeit without a lot of specifics. However, the MarketWatch article Daily Finance quoted did have a few more specifics.
It is just like the recent "crowd sourcing" that has been going on. The funds are all put into one big pot and loans are made from it.
MarketWatch pointed out that it is not even a new idea since the Canton Student Loan Organization in Ohio has existed since 1922. The organization has given over 5,000 students more than $27 million in loans.
The loans are paid back with interest just like other crowd funded personal loans sites such as Prosper.
Certainly not government
Daily Finance, Bankrate and MarketWatch all made it clear that community-based student loans, with regards to cost, are someplace between federal student loans and private student loans.
The cost of going to a community bank or credit union for a private loan is higher than going to Sallie Mae normally. Sallie Mae accounted for 46 percent of all Consumer Financial Protection Bureau grievances made about school loans.
Typically, federal Stafford loans have the best rates. Private loans range dependent upon lender, but can be as high as 16 percent. Community-based student loans can range from zero-percent interest, from some organizations and generally top out, according to MarketWatch, at 8 percent from most institutions. However, they also typically come with harsher terms, as many have shorter repayment periods and some require collateral up to and such as the parent's home.
Just for tuition and books
The small organizations do not have a lot of cash on them, which is why the loans are typically pretty small. It is enough to cover tuition and books, but typically it is not much more than that, according to Bankrate.
A "personal loan for educational purposes" might be provided by credit unions in the same way, and the terms would be better than if you were to go to a private lender. Students and parents need to do the work to figure out which program will work best for them. According to CBS, there are loan consolidation programs at credit unions that could be worth checking out.
A crowd-sourcing opportunity
A recent Daily Finance article discussed a growing number of community organizations springing up around the country, offering community-based school loans that are being made to students heading off to university, albeit without a lot of specifics. However, the MarketWatch article Daily Finance quoted did have a few more specifics.
It is just like the recent "crowd sourcing" that has been going on. The funds are all put into one big pot and loans are made from it.
MarketWatch pointed out that it is not even a new idea since the Canton Student Loan Organization in Ohio has existed since 1922. The organization has given over 5,000 students more than $27 million in loans.
The loans are paid back with interest just like other crowd funded personal loans sites such as Prosper.
Certainly not government
Daily Finance, Bankrate and MarketWatch all made it clear that community-based student loans, with regards to cost, are someplace between federal student loans and private student loans.
The cost of going to a community bank or credit union for a private loan is higher than going to Sallie Mae normally. Sallie Mae accounted for 46 percent of all Consumer Financial Protection Bureau grievances made about school loans.
Typically, federal Stafford loans have the best rates. Private loans range dependent upon lender, but can be as high as 16 percent. Community-based student loans can range from zero-percent interest, from some organizations and generally top out, according to MarketWatch, at 8 percent from most institutions. However, they also typically come with harsher terms, as many have shorter repayment periods and some require collateral up to and such as the parent's home.
Just for tuition and books
The small organizations do not have a lot of cash on them, which is why the loans are typically pretty small. It is enough to cover tuition and books, but typically it is not much more than that, according to Bankrate.
A "personal loan for educational purposes" might be provided by credit unions in the same way, and the terms would be better than if you were to go to a private lender. Students and parents need to do the work to figure out which program will work best for them. According to CBS, there are loan consolidation programs at credit unions that could be worth checking out.
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