A P2P loan, or a Peer-to-Peer loan, is like a traditional bank loan, except without the bank. For many students a bank loan can be costly, and not just while they are in college or graduate school, but for years after. But it doesn’t have to be that way. P2P loans are a solution that allows students to skip the bank and receive money for their education from other sources. Any student can take out a student loan from a “peer”. A “peer” can be anybody, from affinity or philanthropic groups to individual investors or family members.
This is beneficial to both students, who can receive loans at a more reasonable rate, and for lenders who can invest in not just in stocks and bonds but also in the education of individuals. Lenders receive verifications of student enrollment, as well as an assortment of credit risk analytic tools.
So how do lenders and students find each other to set up a P2P loan? The People Capital P2P lending platform brings together prospective lenders and students seeking finance for their education. And with People Capital’s Human Capital Score, investors can evaluate the student’s potential worth. At a bank this assessment will be done based on previous credit history, and most students don’t have a very lengthy and telling history. But the Human Capital Score uses data like GPA, standardized test scores, college, major and other factors to compile an insightful assessment of risk.
This score can help lenders determine if a loan is worth it for them and it also can help students because, if an investor is satisfied with a student’s potential to repay the loan, then a lower rate can be issued.
A win-win situation brought to you by People Capital.