As it becomes more difficult for some students to get loans, new options have emerged, including an online person-to-person lending system.
The program may sound great to those who are in need of loans, but there are faults within the P2P program. The assistant director of scholarships and financial aid said taking a loan with this system would be risky as it is untested.
The P2P system offers loans by having students fill out a profile online with how much money they need and what interest rate they are looking for. Then a lender picks a student it wishes to give a loan to. It all sounds great – the borrowers and lenders make an agreement, and the student gets to pay for college.
But this form of lending is risky for both students and lenders. First, the lenders may be giving out loans with less information about the recipients. Second, these type of programs, because they are new, may not be as trustworthy as more established lending companies.
It makes the lending system seem weak and, ultimately, less credible.
Loans can be a big part of a person’s financial life. Choosing a loan is not something that should be taken lightly, and using a program whose credibility has not been firmly established is a risk students shouldn’t be willing to take.
Decisions about financing education will impact students long after the four years of college are over, so it’s important to research and understand the lending process before any action is taken.