Student loan social lending sites latest P2P venture

NEW YORK (5/7/08)--More social lending websites are cropping up, with the latest batch focusing on providing student loans at a time when there's confusion in the student loan market.

A credit union venture--Zopa.com--a social finance site with at least six credit union partners--plans to launch a student loan feature this summer, according to SmartMoney (April 25).

At Zopa, loans are funded by the credit union partners. Investors on the site can buy certificates of deposit from the credit unions. Since the investments are insured, the borrower's payments are less than other sites (Yahoo! News May 6).

Credit unions will have plenty of competition from online person-to-person (P2P) lenders. Two new sites--Loanio and GlobeFunder--have announced plans to launch this year (Yahoo! News May 6). College Loan Market, based in North Reading, Mass., plans a June start up and will bid out students' loan applications to a group of lenders, according to Boston.com (May 6).

Others sites are already established, either as general lenders, student lenders, or as information sites for student loan comparisons.

Among them:

• Fynanz, a New York-based P2P lender dedicated solely to student loans. It is the newest start-up and allows borrowers to create an online listing with their educational profile, along with a loan and rate request. Student can request unsecured loans from $2,500 to $20,000, to be repaid over a 10-to-20-year period (finextra.com May 6).

• CollegeDegreeFund.com, a site that, like Fynanz, focuses on education debt.

• Simple Tuition Inc., a Newton, Mass.-based online service that helps students and parents compare loan options. The site is on track to about two million users in 2008, but some of the lenders it works with have vanished (The Boston Globe May 6). Last year its partner lenders totaled 55; that number has dropped to 31.

• Virgin Money, a Waltham, Mass.-based site (originally launched as CircleLending) that offers to formalize loans between students and their family members for $299;

• Lending Club, which has a Facebook application;

• Prosper, an auction-style site that connects lenders and borrowers. It probably is the most well-known P2P lending site.

Resource Links

Zopa

Fynanz

CollegeDegreeFund.com

Prosper

Lending Club