I just read online that two major colleges increased their Fall 2008 tuition by almost 10%. For many of us, paying for college is a struggle, especially in the midst of shaky economic times. Some options are financial aid and government loans, borrowing from family, or if you are like me, going into some major credit card debt; I highly recommend not using the last option…trust me.
Looking further into possible options I Stumbled Upon – pun intended – Fynanz.com. New York based Fynanz offers students an “open loan” process for financing their education. This “open loan” process is simply a peer-to-peer lending network that allows students to borrow money from friends, family, or alumni of a specific institution, along with major lenders.
To apply for a loan, students fill out an application and create a personal profile, including the amount and interest rate desired. Utilizing 15 years worth of loan data, Fynanz uses that information to give each student a grade and place them in one of six groups reflecting both their credit score and their academic characteristics. The individual lenders – friends, family, and alumni – are then given priority as they bid alongside lender networks to fund the loan. The more participants bid on the loan, the lower the winning rate is likely to be.
Servicing fees will be no more than what other market places charge according to Fynanz CEO Chirag Chaman. There will also be no application fees or hidden costs for the borrowers. For lenders, the attractiveness is in the high returns and performing social aid.
It is projected that these peer-to-peer markets could grow to between $5 Billion and $10 Billion in annual volume within 10 years according to OnlineBankingReport.com. Previously, taping into a homes equity was a top choice for college funding. Now this new form of borrowing could become the best option.
For more information visit Fynanz's website, blog, or get alerts and releases directly from their CEO on Twitter.
How are you planning to pay for your – or your children’s – education? Let us know by commenting below and be sure to check this post regularly; you may be surprised by some of the responses.