Wednesday, December 03, 2008

Peer to Peer Student Lending

"Meredith comments: I’m sure this feels as much like news to you as the official declaration we’re in a recession yesterday. To add insult to injury student loan money is getting harder to come by. My husband and I were talking last night and wondering if direct-to-consumer lending (like Prosper) might eventually step in and play a role. I’ve heard it called the ultimate “patient capital” and seems like as much a safe bet as the markets right now."

There have been attempts to do social/ peer-to-peer student lending, including on Prosper where clubs of alumni were forming to loan to current students of their alma mater. Unfortunately that model is running into some regulatory problems just when students need alternative sources of capital.
In the future, average student loan balances will have to be smaller. I think that's the only sustainable option. Unfortunately that means a lot of dreams deferred until we come up with a more workable higher ed system.

1 comment:

Anonymous said...

Lending Club went through what Prosper is now going through with the SEC, and is now back to lending. So if you're looking for a peer-to-peer option, check Lending Club.