In the midst of economic instability and bailouts for large corporations, young people are entering college with no guarantee that the value of their degree will be worth what they paid. Worse yet? Many of them don’t know how they’ll pay it back.
Student debt is rising faster than starting salaries for new graduates. The average debt for the class of 2007 was nearly $19,400 at public colleges and $25,700 at private colleges. According to some reports, average student debt at graduation rose by six percent between 2006 and 2007, while earnings for college graduates 18 to 24 year’s old rose only three percent.
So how can students afford college? Or at the very least enter without the prospect of a life of debt? Enter peer-to-peer lending. Tweaking the idea made popular by Nobel Peace Prize Winner Muhammad Yunus, new and emerging organizations are creating ways for individuals to lend small amounts of money to students who need it.
Using social networking as a base, GreenNote allows prospective borrowers to create a personal social network so that they may ask for small student loans. GreenNote facilitates the process by “formaliz[ing] everything into legally binding loans and handles all the details from loan documentation through repayment.”
Vittana is a similar, albeit much newer, organization, but its focus is on getting loans to students in the developing world.
These organizations are among a growing number that signal a new, creative approach to student lending–one that may just save an entire generation from owing what many of its predecessors do.
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