08:15:00
School loans and also student debt amounts have become something of an item lately. The debt level for university students and therefore graduates is overflowing and most are looking at a multitude of options for financing their education. One choice some may not be conscious of is community-based school loans, which are a lot like crowd-funding.
Community-based student loans might be the answer
A recent Daily Finance article discussed a growing number of community organizations springing up around the country, offering community-based student loans that are being made to students heading off to university, albeit without a ton of details. However, the MarketWatch article Daily Finance quoted did have a few more details.
It's not dissimilar to the more recent phenomenon of "crowd funding" or "crowd sourcing," in that donors are solicited for funds. They throw a certain amount into a communal pot, from which loans are made.
According to MarketWatch, it isn't even new; one such organization, the Canton Student Loan Organization of Canton, Ohio, has been around since 1922 and has lent $27 million to more than 5,000 students.
The loans are paid back with interest just like other crowd funded personal loans online websites such as Prosper.
Between federal and private
Daily Finance, Bankrate and MarketWatch all made it clear that community-based student loans, when it comes to cost, are someplace between federal school loans and private student loans.
A loan from a community association, community bank or credit union is still a private loan, but it's usually lower-cost than going to Sallie Mae, which according to CBS accounted for 46 percent of all complaints made to the CFPB about student loans all on their lonesome.
Depending on the community-based student loan organization, interest can be anywhere from nothing to eight percent, according to MarketWatch. The catch is that the loans usually require a massive piece of collateral, such as a parent's home, and have much harsher terms. Federal Stafford loans have the best rates and Private loan rates can be as high as 16 percent.
May not cover university
According to Bankrate, community-based student loans is probably not enough to pay for the total cost of college, but just enough to cover tuition and books. Many of these organizations just do not have the money to lend the federal government or big banks do.
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 college funding, according to CBS. The terms are usually pretty good. Make sure parents and students are both doing the research to determine what is best.
Community-based student loans might be the answer
A recent Daily Finance article discussed a growing number of community organizations springing up around the country, offering community-based student loans that are being made to students heading off to university, albeit without a ton of details. However, the MarketWatch article Daily Finance quoted did have a few more details.
It's not dissimilar to the more recent phenomenon of "crowd funding" or "crowd sourcing," in that donors are solicited for funds. They throw a certain amount into a communal pot, from which loans are made.
According to MarketWatch, it isn't even new; one such organization, the Canton Student Loan Organization of Canton, Ohio, has been around since 1922 and has lent $27 million to more than 5,000 students.
The loans are paid back with interest just like other crowd funded personal loans online websites such as Prosper.
Between federal and private
Daily Finance, Bankrate and MarketWatch all made it clear that community-based student loans, when it comes to cost, are someplace between federal school loans and private student loans.
A loan from a community association, community bank or credit union is still a private loan, but it's usually lower-cost than going to Sallie Mae, which according to CBS accounted for 46 percent of all complaints made to the CFPB about student loans all on their lonesome.
Depending on the community-based student loan organization, interest can be anywhere from nothing to eight percent, according to MarketWatch. The catch is that the loans usually require a massive piece of collateral, such as a parent's home, and have much harsher terms. Federal Stafford loans have the best rates and Private loan rates can be as high as 16 percent.
May not cover university
According to Bankrate, community-based student loans is probably not enough to pay for the total cost of college, but just enough to cover tuition and books. Many of these organizations just do not have the money to lend the federal government or big banks do.
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 college funding, 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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