Student loans have been an item of concern lately, not only because of the extraordinary pace of increase in debt levels but additionally in interest rates assessed to them. There are some options beyond private loans or subsidized loans, such as community-based student loans, which are getting traction.

Getting loans from the public

Though Daily Finance made it apparent that there are a ton of community organizations showing up to help students, MarketWatch had the majority of the info about them. These organizations are community-based and offer school loans to students in the area that need a bit of help.

The donors get solicited for funds with „crowd sourcing,“ and the program is very similar to that. Loans are given with the cash people put into the communal pot.

According to MarketWatch, it isn’t even new; one such organization, the Canton Student Loan Organization of Canton, Ohio, has existed since 1922 and has lent $27 million to more than 5,000 students.

The loans are repaid with interest just like other crowd funded personal loans sites such as Prosper.

What are the loans?

From the information accessible on MarketWatch, Daily Finance and Bankrate, community-based school loans, or rather student loans from community student or college aid organizations, fit somewhere between federal school loans and private loans cost-wise.

The cost of going to a community bank or credit union for a private loan is higher than going to Sallie Mae normally. Sallie Mae accounted for 46 percent of all Consumer Financial Protection Bureau grievances made about school loans.

Usually, federal Stafford loans have the best rates. Private loans range dependent upon lender, but can be as high as 16 percent. Community-based student loans can range from zero-percent interest, from some organizations and generally top out, according to MarketWatch, at 8 percent from most institutions. However, they also typically come with harsher terms, as many have shorter repayment periods and some require collateral up to and such as the parent’s home.

Just for tuition and books

According to Bankrate, community-based student loans might not be enough to pay for the total cost of university, 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.

A „personal loan for educational purposes“ could possibly be provided by credit unions in the same way, and the terms would be better than if you were to go to a private lender. Students and parents need to do the work to determine which program will work best for them. According to CBS, there are loan consolidation programs at credit unions that could be worth checking out.

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