Alternative Lending And Student Loans: Millennials, Take Note

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studentloandebtThe alternative lending universe is rampantly expanding, which is good news for Americans burdened by tens of thousands if not hundreds of thousands in debt.

For Millennials in particular, the debt crisis can be crippling. According to New America data and the Consumer Financial Protection Bureau, the student debt situation comes in at an astronomical $1.2+ trillion, with the average bachelor’s-degree-holding college graduate carrying roughly $30,000 in student loan debt.

 

Not only are the numbers shocking, but the implications are downright depressing. Carrying around such substantial debt has led to a widespread trend of delaying major life events for the generation as a whole.

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Furthermore, Forbes reported late last year that “30 percent of Millennials would sell an organ to get rid of student loans.”

“[A] new survey asked indebted adults this and other would-you-rather questions and found that a not-insignificant portion would forego their physical and psychological well being in exchange for their student debt balance wiped clean,” Forbes’ Maggie McGrath elaborated.

Paying Off The Debt

While utilizing alternative lending services to deplete overall debt comes with its own caveats, approached with the proper amount of financial literacy, alternative lending can be a prudent move to attack student loan debt.

The Wall Street Journal explained the broad concerns of using just any alternative financial services, “The use of alternative financial services, such as auto title loans, payday loans, pawnshops, rent-to-own loans and tax-refund advances, represents another significant source of short-term debt.”

However, not all alternative options are as risky as auto title loans or payday advance loans.

For example, Upstart, an alternative lender, has loan options geared specifically toward the Millennial, CEO Dave Girouard commented to the outlet.

Many of these alternative financing providers can offer lower interest rates than the average credit card, and their practices and policies are much more upstanding than payday lenders or pawn shops.

SoFi and CommonBond are two additional alternative lenders, both specializing in student loan needs and providing borrowing and refinancing options.

Before delving into consolidating or refinancing options, know your credit score.

Below are just a few trusted names in the Alt-Fi world that have a track record for helping eliminate student loan debt:

Earnest

  • Tagline: “Radical repayment flexibility for your loan.”
  • Rates: Variable rates starting at 2.13 percent APR; fixed rates at 3.50+ percent APR with auto billing.
  • Other Benefits:
    • Tailor minimum monthly payment
    • increase payment any time to pay off loan faster
    • save on interest with twice-monthly payments
    • make extra/early payments without fees
    • skip a payment and make it up later
    • consolidate private and federal loans

SoFi

  • Tagline: “Got a sharp mind? Use it to slash your student debt. Find your rate in two minutes.”
  • Rates: Variable rates starting at 2.14 APR with autopay; fixed rates at 3.50+ percent APR
  • Other Benefits:
    • Refinance and consolidate private and federal loans
    • Live customer support every day of the week
    • Unemployment protection
    • Career support including coaching, resume proofing and strategies

CommonBond

  • Tagline: “Rise above our student loans”
  • Rates: starting at 2.14 percent APR with autopay
  • Other Benefits:
    • Full deferment options
    • Interest-only payment
    • Full principal and interest payment plans
    • No prepayment penalties
    • Economic hardship temporary forbearance

Upstart

  • Tagline: “A smarter loan. You earned it. You are more than your credit score. On Upstart your education and experience help you get the rate you deserve.”
  • Rates: From 4.66 to 29.99 percent APR
  • Other Benefits:
    • No prepayment penalty
    • Lower rates (30 percent savings compared to credit card rates)
    • Team support 6 a.m. to 8 p.m. PST M-F, 6 a.m. to 6pm PST SS
    • Considers FICO score, years of credit, education, area of study and job history

It’s important to remember that alternative financing options are tools. In the wrong hands, without the proper expertise, they can be misused. However, with adequate education and a guiding hand, alternative lending can help many people dig themselves out of what may seem to be insurmountable debt.

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By Quizzle. Helping You Make Better Financial Decisions.