There are specific things like community-based student loans, which many might not be aware of. Essentially, some areas have groups which take donations to lend students money, a lot like crowd funding.
A crowd-sourcing opportunity
A recent Daily Finance article discussed a growing number of community organizations springing up around the country, offering community-based student loans that are being made to students heading off to college, albeit without a lot of details. However, the MarketWatch article Daily Finance quoted did have a few more specifics.
It is just like the recent "crowd sourcing" that has been going on. The funds are all put into one big pot and loans are made from it.
According to MarketWatch, it's not even new; one such organization, the Canton Student Loan Organization of Canton, Ohio, has existed since 1922 and has lent $27 million to more than 5,000 students.
However, just like crowd funded personal loans websites such as Lending Club or Prosper, those loans do have to be repaid with interest.
Surely not government
Daily Finance, Bankrate and MarketWatch all made it clear that community-based student loans, on the subject of cost, are someplace between federal student loans and private school loans.
A loan from a community association, community bank or credit union is still a private loan, but it's typically lower-cost than going to Sallie Mae, which according to CBS accounted for 46 percent of all grievances made to the Consumer Financial Protection Bureau about student loans all on their lonesome.
Depending on the community-based student loan organization, interest can be anywhere from nothing to eight percent, according to MarketWatch. The catch is that the loans typically require a massive piece of collateral, such as a parent's home, and have much harsher terms. Federal Stafford loans have the very best rates and Private loan rates could be as high as 16 percent.
Just for tuition and books
The idea of the community-based student loans is to help students cover tuition and books. They are not enough to help pay for all other university expenses, according to Bankrate. The federal government has more money than small organizations.
You may want to go to a credit union for their loan consolidation programs, and there are also programs similar to these ones that offer university funding, according to CBS. The terms are generally pretty good. Make sure parents and students are both doing the research to determine what is best.
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