It’s a well-known fact in this country that attaining one’s undergraduate or graduate degree can be quite an expensive undertaking. The financial
aid packages offered by institutions of higher learning to their prospective students usually do not cover the full cost of attendance. As a result,
most students must borrow some amount of money in order to compensate for these gaps in price. However, unlike scholarships or grants, the money
borrowed through student loans must be repaid to the institution that lent it out.
Students have traditionally borrowed their student loans from two sources: the U.S. government and private lending institutions. Federal Stafford
loans and Private loans each have their pros and cons. Federal Stafford loans, for instance, are need-based, and will not be refused on the grounds
of bad credit scores. On the other hand, the Federal Stafford loan amounts are usually smaller than private loan amounts and have restrictions on how
they can be applied (i.e., just for tuition, just for housing, etc.). Private loans are usually larger, and certain private loans may require no
certification by the school the student plans on attending. However, private loans are heavily dependent on an applicant’s credit history, and
their interest rates are both higher and unstable. A co-signer is required on many occasions.
Finally, a third lending alternative is now entering the field of students loans -- peer-to-peer (p2p) lending. Peer-to-peer lending platforms
bring together borrowers and lenders without the mediating presence of a traditional financial institution. Peer-to-peer loans often remove overhead
costs while offering loans at more favorable interest rates. To learn more about People Capital’s role as a leading p2p lending platform,
please click here.