Student loans and also student debt levels have become something of an item lately. The debt level for university students and therefore graduates is exploding and most are looking at a multitude of options for financing their education. One choice some is probably not aware of is community-based school loans, which are a lot like crowd-funding.
Getting loans from the public
A recent Daily Finance article discussed a growing number of community associations springing up around the country, offering community-based student loans that are being made to students heading off to university, albeit without a lot of details. However, the MarketWatch article Daily Finance quoted did have a few more specifics.
The donors get solicited for funds with "crowd sourcing," and the program is very comparable to that. Loans are given with the cash people put to the communal pot.
MarketWatch pointed out that it is not even a new idea since the Canton Student Loan Organization in Ohio has been around since 1922. The organization has given over 5,000 students more than $27 million in loans.
However, just like crowd funded personal loans sites such as Lending Club or Prosper, those loans do have to be repaid with interest.
Less than public or private
From the info available on MarketWatch, Daily Finance and Bankrate, community-based school loans, or rather student loans from community student or university aid associations, fit somewhere between federal student loans and private loans cost-wise.
A loan from a community association, community bank or credit union is still a private loan, but it's generally lower-cost than going to Sallie Mae, which according to CBS accounted for 46 percent of all grievances made to the Consumer Financial Protection Bureau about student loans all on their lonesome.
Private loans could be as high as 16 percent interest, and federal Stafford loans almost always have the very best rates. Community-based loans usually are much harsher and require enormous forms of collateral, according to MarketWatch, but interest can range from no interest at all to around 8 percent.
Do some homework
The idea of the community-based student loans is to help students cover tuition and books. They are not enough to help pay for all other college expenses, according to Bankrate. The federal government has a lot more money than small organizations.
You might want to go to a credit union for their loan consolidation programs, and there are also programs similar to these ones that offer university financing, according to CBS. The terms are usually pretty good. Make sure parents and students are both doing the research to determine what is best.
Getting loans from the public
A recent Daily Finance article discussed a growing number of community associations springing up around the country, offering community-based student loans that are being made to students heading off to university, albeit without a lot of details. However, the MarketWatch article Daily Finance quoted did have a few more specifics.
The donors get solicited for funds with "crowd sourcing," and the program is very comparable to that. Loans are given with the cash people put to the communal pot.
MarketWatch pointed out that it is not even a new idea since the Canton Student Loan Organization in Ohio has been around since 1922. The organization has given over 5,000 students more than $27 million in loans.
However, just like crowd funded personal loans sites such as Lending Club or Prosper, those loans do have to be repaid with interest.
Less than public or private
From the info available on MarketWatch, Daily Finance and Bankrate, community-based school loans, or rather student loans from community student or university aid associations, fit somewhere between federal student loans and private loans cost-wise.
A loan from a community association, community bank or credit union is still a private loan, but it's generally lower-cost than going to Sallie Mae, which according to CBS accounted for 46 percent of all grievances made to the Consumer Financial Protection Bureau about student loans all on their lonesome.
Private loans could be as high as 16 percent interest, and federal Stafford loans almost always have the very best rates. Community-based loans usually are much harsher and require enormous forms of collateral, according to MarketWatch, but interest can range from no interest at all to around 8 percent.
Do some homework
The idea of the community-based student loans is to help students cover tuition and books. They are not enough to help pay for all other college expenses, according to Bankrate. The federal government has a lot more money than small organizations.
You might want to go to a credit union for their loan consolidation programs, and there are also programs similar to these ones that offer university financing, according to CBS. The terms are usually pretty good. Make sure parents and students are both doing the research to determine what is best.
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