Scholarship News

Alternatives to Alternative Loans


December 2, 2008
by Scholarships.com Staff
As you've probably noticed, the current student loan market is not so great.  Between lenders backing out of the Federal Family Education Loan Program and temporarily or permanently suspending private loan operations, finding a loan has gotten tougher.  Family financial troubles and lenders' increased credit requirements for private student loans have made qualifying for a loan more challenging, as well.  While scholarship opportunities remain available, and many colleges and universities are even implementing new plans to help students cover college costs, many students and families are still coming up short on their tuition bills.New models for student lending have surfaced in recent years, but have gained media attention as the troubles with student loans have continued throughout 2008.  One idea, which we've blogged about previously, is peer-to-peer lending, where students set up deals with friends, family members, or other interested parties to borrow money for college.  These deals are brokered through a lending company, and since the parties involved typically know each other, interest rates and default rates are expected to be low.Another lending model that has succeeded in other countries and is now being tested in the United States, is more akin to investing than lending.  Investors, such as individuals or companies, agree to pay for a student's college education.  In return, the student agrees to repay a portion of their income to the investor for an agreed upon period of time.  In some ways, this resembles the income-contingent repayment plans available for federalconsolidation loans.  These contracts are also meeting criticism, including comparisons to indentured servitude.  Others worry that students with prospects for high income will not be interested and that few people will want to invest in humanities students, who are likely to provide low returns on their investments.  Nevertheless, such human capital contracts are expected to be well-received by many students and investors.  As reported by The Boston Globe, one company is already piloting a human capital contract program with a handful of business school students pursuing MBA degrees.While human capital contracts and peer-to-peer lending are unlikely to wholly replace private student loans, they may provide students with more alternatives to the current forms of alternative loans.  While college scholarships, institutional aid, and federal student financial aid should always come first, some families do need to borrow significantly to pay for school, and many are likely to welcome a wider range of options for doing so.Get instantly matched to scholarships that meet your skillset, strengths and unique talents. Our search algorithms match you to scholarships that fit your profile. Access a complete list of college scholarships now by conducting a free college scholarship search at Scholarships.com.
As you've probably noticed, the current student loan market is not so great.  Between lenders backing out of the Federal Family Education Loan Program and temporarily or permanently suspending private loan operations, finding a loan has gotten tougher.  Family financial troubles and lenders' increased credit requirements for private student loans have made qualifying for a loan more challenging, as well.  While scholarship opportunities remain available, and many colleges and universities are even implementing new plans to help students cover college costs, many students and families are still coming up short on their tuition bills.

New models for student lending have surfaced in recent years, but have gained media attention as the troubles with student loans have continued throughout 2008.  One idea, which we've blogged about previously, is peer-to-peer lending, where students set up deals with friends, family members, or other interested parties to borrow money for college.  These deals are brokered through a lending company, and since the parties involved typically know each other, interest rates and default rates are expected to be low.

Another lending model that has succeeded in other countries and is now being tested in the United States, is more akin to investing than lending.  Investors, such as individuals or companies, agree to pay for a student's college education.  In return, the student agrees to repay a portion of their income to the investor for an agreed upon period of time.  In some ways, this resembles the income-contingent repayment plans available for federalconsolidation loans.  These contracts are also meeting criticism, including comparisons to indentured servitude.  Others worry that students with prospects for high income will not be interested and that few people will want to invest in humanities students, who are likely to provide low returns on their investments.  Nevertheless, such "human capital" contracts are expected to be well-received by many students and investors.  As reported by The Boston Globe, one company is already piloting a human capital contract program with a handful of business school students pursuing MBA degrees.

While human capital contracts and peer-to-peer lending are unlikely to wholly replace private student loans, they may provide students with more alternatives to the current forms of "alternative loans."  While college scholarships, institutional aid, and federal student financial aid should always come first, some families do need to borrow significantly to pay for school, and many are likely to welcome a wider range of options for doing so.

Get instantly matched to scholarships that meet your skillset, strengths and unique talents. Our search algorithms match you to scholarships that fit your profile. Access a complete list of college scholarships now by conducting a free college scholarship search at Scholarships.com.

ADVERTISEMENT
ADVERTISEMENT
Posted Under : Financial Aid , Student Loans

Discuss

Share your thoughts and perhaps thousands of students will benefit from your unique insight on the subject!



If you can read this, don't touch the following fields


 
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT
We want to wish all of our Jewish students a Happy Hanukkah! May you enjoy lots of family time and laughter this holiday season. During your final nights of Hanukkah, we hope you get your fill of delicious latkes, dreidel games, gift opening and great memories.

Jewish Student Scholarship Spotlight

December 3, 2021 2:36 PM
by Liz Montenegro
We want to wish all of our Jewish students a Happy Hanukkah! May you enjoy lots of family time and laughter this holiday season. During your final nights of Hanukkah, we hope you get your fill of
Adam Sandler undoubtedly paved the way in bringing the celebration of Hanukkah to the forefront of pop culture with his wildly famous “Hanukkah” song debut in 1994 on Saturday Night Live (did you know there is now a “Hanukkah” Part 4?). In the song, Sandler draws attention to famous Jews in mainstream culture. You may be wondering which celebrities are observing Hanukkah this year. Before we dive into Hollywood, let’s answer the question of why these “eight CRAZY nights” are celebrated by millions of Jewish people across the globe.

Hanukkah 2021: Celebrities You Didn’t Know Were Jewish

December 2, 2021 3:20 PM
by Liz Montenegro
Adam Sandler undoubtedly paved the way in bringing the celebration of Hanukkah to the forefront of pop culture with his wildly famous “Hanukkah” song debut in 1994 on Saturday Night Live (did you
Starting college is a very exciting time. Dorm life is full of new experiences, and many scholarships are available that can help cover the cost of your room and board. Like everything else, there are pros and cons to living in a college dorm.

College Dorms: Should You Give On-Campus Living a Try?

November 30, 2021 4:02 PM
by Liz Montenegro
Starting college is a very exciting time. Dorm life is full of new experiences, and many scholarships are available that can help cover the cost of your room and board. Like everything else, there
When asked the question, “Who was your favorite teacher or coach growing up?” For most anyone, an image of that educator’s face immediately pops up in their mind. What was it about that person that made them stand out? Maybe it was the way they encouraged or inspired you as no others had previously done. Perhaps they saw something in you that helped you to gain the confidence to achieve a goal that had once seemed unattainable. The truth is, there are as many answers to this question as there are people in this world. One common denominator unites them: it all started with the foundation of mutual respect and trust this individual established with you.

This Week is American Education Week 2021

November 18, 2021 1:54 PM
by Liz Montenegro
When asked the question, “Who was your favorite teacher or coach growing up?” For most anyone, an image of that educator’s face immediately pops up in their mind. What was it about that person that
Since the beginning of our nation, Native Americans and Indigenous communities have been a powerful influence on modern U.S. society. Although art, beadwork, music and dancing may first come to mind when you think of Native American contributions to today’s culture, did you know that many of the foods we consider to be staples, such as potatoes, wild rice, beans, corn, and peanuts were first grown and harvested by Native Americans? Not only that, but Native American groups also taught European settlers some of their farming techniques to help them survive and live off of the land, many of those practices are still used today. American Indians were also the inventors of goods we rely on every day, like topical pain relievers, baby bottles, and even rubber products.

In November, We Celebrate Native American Heritage Month

November 12, 2021 4:07 PM
by Liz Montenegro
Since the beginning of our nation, Native Americans and Indigenous communities have been a powerful influence on modern U.S. society. Although art, beadwork, music and dancing may first come to mind
Are you a high school student looking for opportunities to help others around you and set yourself apart on college applications? With the holiday season in full swing, this is the perfect time to start your search for volunteering opportunities in your area. Along with strengthening ties to your community, serving as a volunteer demonstrates to colleges that you have given your time and energy to help those in need, and that you have applied the knowledge you’ve gained in your studies to real-world settings. Many college applications and scholarships have a minimum number of community service hours that their applicants must complete in order to be eligible. But just because it is a requirement, doesn’t mean it cannot also be a meaningful experience.

Community Service Benefits Everyone

November 8, 2021 3:12 PM
by Liz Montenegro
Are you a high school student looking for opportunities to help others around you and set yourself apart on college applications? With the holiday season in full swing, this is the perfect time to
 With Veteran’s Day quickly approaching, what better way to honor our U.S. military members and their families than to shine a spotlight on the scholarships and grants available to them? Military life often presents unique challenges that can be overwhelming for the entire family. Lengthy deployments and frequent changes of station are just a few obstacles military families face, but their strength and perseverance through these hardships is truly remarkable. As a way to honor their sacrifices, Scholarships.com offers a wide variety of grants and scholarships to help offset the cost of college as they pursue their educational goals.

Scholarships for Military Members and Dependents

October 29, 2021 3:24 PM
by Liz Montenegro
With Veteran’s Day quickly approaching, what better way to honor our U.S. military members and their families than to shine a spotlight on the scholarships and grants available to them? Military
FAFSA is an acronym. It stands for Free Application for Federal Student Aid. Please take note that the first word in the acronym is Free. You do not need to pay to fill out the FAFSA but there are certainly websites out there that will charge you for their assistance. If you are asked for a credit card at any point in the process, you are at one of these sites. If you do not want to pay to complete the FAFSA, be sure to apply at https://studentaid.gov/h/apply-for-aid/fafsa. The FAFSA must be completed by you and your family each year if you wish to be considered for need-based grants from the college or university you are or will be attending as well as subsidized student loans.

What is the FAFSA?

October 8, 2021 2:52 PM
by Scholarships.com Staff
FAFSA is an acronym. It stands for "Free Application for Federal Student Aid". Please take note that the first word in the acronym is "Free". You do not need to pay to fill out the FAFSA but there
A study abroad program can be the beginning of the most exciting chapter of your college experience. Often, the travel, housing, credits and even food are included in the price of the program you choose. However, this is no reason not to look for more financial opportunities!

Want to Study Abroad? Find Scholarships

August 31, 2021 12:30 PM
by Scholarships.com Staff
A study abroad program can be the beginning of the most exciting chapter of your college experience. Often, the travel, housing, credits and even food are included in the price of the program you
As you get ready for this next big step in your life, this last year at home can feel like the longest and the shortest you ever had! While you prepare to select a college and research scholarships and financial aid, don’t forget to spend some quality time with your friends and family. While movies, even when based on a true story, are always a little bit fantastic, they are also works of art that share experiences among their viewers.

Movie Night! College Classics

August 19, 2021 12:22 PM
by Scholarships.com Staff
As you get ready for this next big step in your life, this last year at home can feel like the longest and the shortest you ever had! While you prepare to select a college and research scholarships