Pay for College with these Student Loan Alternatives
Looking for student loan alternatives that will prevent you from becoming a statistic in the long line of students with out of control student loan debt? These alternatives can be the “game-changer” you have been looking for.
Once you find out the alternatives that are out there, pay attention. You will see that no one discuss them from. Whether you are a high school or already a college student, or even for us parents, nothing out of the norm gets discussed.
Students and parents. You both share in the same emotions and paying for college and loans pull at our very fragile heartstrings.
It’s talked about every day in a variety of places but rarely is an answer given to the question “what other alternatives are out there”?
Student Loan Alternatives that we know about
Taking out student loans doesn’t have to be the only way you pay for college. It is unfortunately the most common way for students but as we know it has attributed greatly to the student loan debt crisis that we are facing.
Student loans (government or private) are the norm. And also we try so hard to make sure we are not abiding by the rules of the norm, we are reverted back to the same solutions.
With proper and effective planning one can use these other methods to pay for college and these are all things we have discussed at great length.
I repeat the proactive planning piece just to give parents (and students) the ability to feel at ease that there are other way. Now the ways below (again which we have discussed previously) will take work. Some will almost be like having a part-time job.
- Private Scholarships
- Institutional Scholarships
- College Grants
- Federal Pell Grant
- Federal Supplemental Educational Opportunity Grant
- Teach Grant
- Federal Work-Study
- SMART Grants
- 529 College Savings Plans
The Good News
The silver lining is that with all of the consistent discussions about the student loan crisis, the attention gained has given the opportunity for those to try and find a solution to the problem. It’s a big program but with innovation, you will see that opportunity exists.
Student loans can basically cripple a young person’s life and they may spend years upon years trying to pay it down.
Add in a degree where you are your salary projection is not high then you have an almost perfect storm of debt. That perfect storm of a debt will immobilize you. It will leave you feeling not great about yourself and therefore regret the decision that you have made with regards to your career.
It paints a grim picture and I don’t mean to get anyone down. I almost paint that picture to give one motivation and the fuel needed to not be just another one in the mix.
Alternatives to student loans
Luckily there are some bright and brilliant minds out there that are coming up with “out of the box” ways to combat this.
They are leading this positive change and this will hopefully change the landscape.
One of these may be an option to help you on your educational journey. Let’s take a look at the players, what they offer, and how it all works.
They have been one of the hottest FinTech startups. They are on a mission and that is to basically simplify the loan process.
SoFi helps people achieve financial independence. Their team of career advisors helps students save money on student loans, grow their careers, and invest in their future.
How it works?
They offer personal loans and mortgages but mainly focus on student loans. Their offerings are Federal and private loan refinancing along with the parent loans and parent plus loans. They have an easy application process which is done entirely on their website and they offer fixed rates starting at 3.5% and a 2.14% APR for the variable rate loan.
Their website states that they have been able to save student loan members and average of $18,936. If you happen to lose your job, they will pause the payments and even help you find a new job.
Blair is helping students to finance their tuition or costs of living. With no debt and therefore no interest, students are not controlled and tied down by loan repayments. Their solutions are affordable and accessible and you don’t even need a parent’s credit score or a co-signer. They care about one thing that is the student’s future potential. They offer one-on-one coaching, mentorship, and industry insights.
How it works?
Blair is utilizing Income Share Agreements (ISAs) which is where a student will pay back a percentage of their income after they graduate for a fixed period of time. Income share agreements are more flexible than student loans. Therefore, the payments will always be affordable. If your income is below $25,000, then you do not have to pay anything back in that year. ISA’s are also capped so that you do not overpay.
They have a simple process:
- Complete the application
- Receive offer
- Accept offer
- Start Working
- Payment obligation ends
WeFinance allows individuals the ability to secure student loan financing at rates and terms that they set utilizing crowdfunding and technology. Their loans are backed by people who believe in you. Founded in 2014, they’ve attacked the student loan debt crisis using crowdfunding. The borrowers and lenders strengthen their relationships while keeping all benefits and interest in their own community.
How it works?
You create a profile and tell your story on why you are applying for funding. Then your profile can be browsed through by decision makers and they can determine whether they want to invest in any of your goal. If the target goal is met then the campaign is closed and a simple contract is generated. The loans are then sent to your bank account.
There’s a genuine human element to this via crowdfunding which makes it unique.
These aren’t banks but individual investors who have an interest in your success. The awesome part is that WeFinance doesn’t charge any fees when you receive or make a loan. Their money is made by the referral of borrowers to additional financing vehicles if needed.
After your campaign, your loan will then land in your bank account. Repayments are automatically drawn from the same account.
Started in California at Allen Hancock College. It’s a program that allows a student to borrow funds to pay for their education and then pay them back based on a fixed percentage of your income with the assumption that they earn at least $18,000 annually.
13th Avenue Funding also points out the fear of loan default or not being able to afford college, causes students to go to college part-time or not at all. So if one does not go to college full-time, then the outcome is lower paying jobs and therefore the ability to make less money.
Their solution is to finance one’s education without debt using locally controlled, equity based technology to send member of the community through college.
They have also built a platform to where you and others in the community could create your way of paying for college.
The steps required are:
- Create an organization
- Get good legal advice
- Build some support
- Write your own lenders’ agreement
- Write you own student contact using the 13th avenue funding model
- Find the money
- Recognize that what you are doing is hard
How it works?
Students only repay if they are employed and the financial is local and community based which creates flexibility. So if you are out of work, you do not owe. In their pilot program, student paid 5 percent per year. You can even adjust your parameters accordingly.
If you go to their website they have a cool line that says:
“IT’S NOT A LOAN. AND YOUR NOT ALONE!
I just love that!! This program is very innovative and it started all on a college campus. So the Back a Boiler program offers junior and senior Purdue University students the option to receive funding from the Purdue Research Foundation in exchange for signing an income share agreement.
How it works?
A student will then pay back a fixed percentage of your income for a specific number of years. So the university is investing in the future of their students. It’s not really considered a loan but more of an advance on earning potential. It’s not free money but there is no interest charged which can allow it to be less expensive than the traditional student loans.
Once the student successfully makes the required monthly payments for a specific term of contract, then no additional payments are required even if they have paid less than the amount of funding the
Purdue also offers a great comparison tool where you can type in your major and see how the Back a Boiler program compares to private or parent plus loan options. This will display your income expectations and what you total payment would look like comparing the ISA, Plus Loan, and Private Loan. Your monthly payments will also be shown as well.
I am totally on board with what these companies (and universities) are doing to help support students. It’s a very advanced and long-term way of thinking.
10 years ago I would have never thought of anything like this being available. If your child is young, then think about what more options would even be available.
Our children will then be able to get out of college and based on what they make, be able to pay it back in an affordable manner. I personally think that this will also cause student to choose their degree wisely. Students are going to want to be able to make as much as they can this way those monthly payments won’t be a burden.
Through innovation, hard work, technology, and the wanting to help as many people as possible, we see that alternative are making a name for themselves.
I can only image that there will eventually be more options and alternatives and that should ease some of our fears.
That is all for now. I would love to hear your thoughts on this. Please feel free to leave a comment as healthy conversation for something this massive is welcomed and needed.