The cost of college is seeing a huge increase. Indeed, college costs more and more every year. And, at the same time, the available resources for college funding are diminishing. Federal aid — especially aid to middle class families — is falling off. And, with the current mortgage market mess, getting a home equity loan or line of credit to help with the college funding is difficult.
This means that, in many cases, it becomes necessary for some students to borrow using private student loans in order fill the college funding gap. But those have higher interest, and can be a paid to pay back.
The good news is that some are seeing a need and fulfilling it for a reasonable cost. Creative college financing is on the way:
- Virgin Money allows students to borrow money for Student Payback loan, documenting the private loan process between parents and children, or college students and others. The idea is that you can set up a doable payment plan for very little. This is an interesting idea that could help fill the Funding Gap.
- GreenNote is another option. This loan takes the principles behind microfinance and applies them to student loans. The student sets up a profile, and friends, family and strangers can contribute $100 or more. The student pays it back at a low interest rate (GreenNote uses the Stafford loan rate as guidance), friends and family can help — and earn a small return.
So, before you turn to private student loans, look into your other options. They are out there, and there are more of them.