Finding a lender with a soul can be difficult, but finding a student loan lender with a soul is damn near impossible, which is why when I first heard of TuitionU I was a bit skeptical. The service, which helps students bridge the gap between federal student aid and the cost of higher education, prides itself in putting students first. But do they really live up to the marketing hype?I was able to talk with Brian Cox, the founder of TuitionU, to learn more about the service. After a half hour chat I can definitely state that this is a company that gets student loans and understands the needs of today’s students. In fact, they are a student loan company with a soul! Then again, TuitionU isn’t a typical student lender. In fact, it isn’t so much a lender as a connector of students with need to lenders who aren’t looking to bleed students dry. TuitionU has two main programs available to students who need financial aid; a private student loan option available at credit unions nationwide, and a peer-to- peer lending model that lets students leverage their social networks to get loans at affordable rates.The credit union portion of TuitionU connects students to credit unions that, because of their aging customer base, are cutting rates lower than I’ve ever seen on private student loans. In fact, several lenders in California are offering rates as low as 3% APR, which is unheard of in private student lending.Not a member of a credit union? No problem! Cox said that for a $5 membership fee to a NASA-affiliated association anyone can then join the NASA credit union. Just think — you could get a great rate and bank with the astronauts. If you’d rather join a more down-to-earth credit union, that’s no problem; credit unions are incredibly easy to join, and despite their general behind-the-times online banking systems, they are very consumer friendly. They are able to offer lower loan rates than many banks due to the fact that they are member-owned, nonprofit lending institutions.GreenNote, which TuitionU acquired last year, is one of the coolest ways to get a student loan. Like Prosper and Lending Club, GreenNote is a peer-to-peer lender, but it only focuses on student loans. This position allows borrowers on GreenNote to enjoy a lower rate than they might typically get on other peer-to-peer sites and does not require a credit check, since, in most cases the lenders already know the borrower. Multiple friends, family and investors can contribute a portion of the loan you need via Greennote, with a minimum investment per lender of $100. Once the account reaches $1,000 it can be dispersed to the student. While you won’t likely raise the entire cost of your education in the peer-to-peer marketplace at GreenNote, you can easily combine this with the credit union option to pay for your schooling.GreenNote handles all the billing and servicing and splits out your payments to the various lenders who have invested in your education. This relieves some of the anxiety potential lenders might have. Students enjoy a respectable interest rate of 6.8% with a 2% origination fee and lenders are given a 5.8% return, with the remaining 1% going to GreenNote for servicing the loan. Lenders need not worry that they are funding a weekend kegger, since the money is disbursed directly to the school rather than the student.One of the most interesting aspects of a GreenNote peer-to-peer loan is that if the lender decides to turn the loan into a gift at graduation, the debt can be forgiven without any additional fees.When it comes to finding lenders, the sky’s the limit. Students can solicit their social networks on Facebook, Twitter, and even (gulp) MySpace; as well as looking to more traditional sources like churches, social clubs, and relatives. Overall, the TuitionU and GreenNote combo are a force to be reckoned with in the student lending market. After talking with Brian Cox, the passion that this company has for helping students get an affordable education is hard to miss, and it shows in the innovative lending products that they offer.
Here’s a list of every CEO in Wal-Mart’s (WMT) history — and where they went to college.Sam Walton: University of MissouriDavid Glass: Missouri State UniversityLee Scott: Pittsburg State University in KansasMike Duke: Georgia Institute of TechnologyThe company’s new CEO of U.S. operations, William Simon, continues that trend of public college grads in positions of power at what is arguably the most powerful company in the world: Simon is a graduate of the University of Connecticut.The point?Don’t think that your children need to go to big name schools — or, more important, that you or they need to take on $200,000 in debt — in order for them to have wildly successful careers. People graduate from all kinds of schools and get all kinds of jobs, and very few of the people doing the hiring care where anyone went to college. What will determine your offspring’s success will be his abilities, work ethic, and people skills — and whether he develops those will be determined by factors much more important than the name at the top of a diploma.Warren Buffett once said, “I don’t care where someone went to school, and that never caused me to hire anyone or buy a business.”It’s possible that admissions officers, guidance counselors, and braggy neighbors at dinner parties know something Buffett (himself an alumnus of University of Nebraska-Lincoln) and the board of directors of the most successful retailer in the history of the world don’t. But do you really want to bet $30,000 or more a year in student loans on it?
When it comes to economic protests, the Occupy movement has dominated headlines. But as the recent pepper spraying incident at a Santa Monica College tuition protest demonstrates, the struggle over America’s economy is playing out on several fronts. For college students, recent graduates and their families, the most pressing concerns may surround our higher education system: Student loan debt is at an all-time high, and the average college graduate leaves school with over $25,000 in loans. And, with tuitions rising and unemployment among recent college grads still high, it’s no surprise that many students are up in arms.”For years, there have been protests in response to university budget cuts,” UC Riverside student Chris LoCascio notes. “The system is clearly broken, and new solutions are needed.”LoCascio thinks that he may have found the answer. His group, FixUC, has developed a plan that, they claim, will ameliorate the student debt crisis while actually increasing university funding. On the surface, it’s remarkably simple: Rather than charging tuition, the University of California system would charge its graduates 5% of their yearly salaries for twenty years. “Charging students when they don’t have money doesn’t make sense,” LoCascio points out. Instead, the FixUC plan would charge students when they are actually able to pay — once they’re out in the workforce. “In 20 years, our plan would double the amount of money coming into the UC system.”
‘A Massive Undertaking’While the basic outline of the FixUC plan is simple, the implementation would be more complex. To begin with, there’s the issue of ensuring collection. Under the current system, universities have an ironclad method to compel students to pay their tuition: Those who don’t fork over the money generally aren’t allowed to stay in their classes. The FixUC plan, on the other hand, would task universities with recovering funds from students who are no longer under their control — which, LoCascio admits, would require some level of enforcement. He proposes that the IRS get involved: The FixUC plan calls for “a new department of the United States Internal Revenue Service in charge of collecting contributions.” This added layer of bureaucracy would be somewhat self-financing — partly funded by the tuition that it would collect.LoCascio’s knows that adopting the plan would be “a massive undertaking,” fundamentally changing the way that America views — and funds — college. “It would involve a complete tear-down of our current funding model.”A Cost Beyond Tuition? Because the FixUC calls for a 5% yearly contribution from graduates, it effectively establishes a wide-ranging tuition. One version of the plan establishes a base income of $30,000 — graduates who make less than that amount would be exempt from making their 5% payments. On the upper end, graduates who make more than $200,000 per year would have their yearly contributions capped at $10,000. In other words, the yearly post-graduate tuition payment would range from $1,501 to $10,000. One could argue that this system would, effectively, force graduates from high-paying majors to fund lower-paying ones. After all, while the median income for a petroleum engineering graduate is $127,000, the median income for someone with a bachelor’s in school student counseling is only $20,000. For universities looking to maximize their income, it would make sense to channel funds to more profitable departments, while letting less lucrative ones wither on the vine. Lest that scenario seem too outrageous, it’s worth remembering that a very similar situation led to Tuesday’s incident at Santa Monica College. The school, looking to increase funding, was considering a proposal to quadruple the price of some of its most popular courses. When students tried to attend the meeting evaluating the plan, they were pepper sprayed.But LoCascio is convinced that the FixUC proposal would not result in cuts to departments that lead to less lucrative careers. “I have a lot of faith in the UC faculty and their dedication to academia,” he says. “I can’t imagine that a plan like this would have such an effect.”A Plan for California … And the CountryHaving put together a plan for the UC system, FixUC is expanding. FixCSU, a similar proposal tailored for the California State University system, is in the works. Meanwhile, LoCascio has begun laying the groundwork for a national organization. “I’ve been contacted by a number of universities across the country,” he notes. “It looks like the FixUC plan might be way of the future.”With states across the country cutting higher education funding and the student debt crisis growing increasingly dire, there’s little question that bold solutions are needed. While some wrinkles certainly need to be ironed out, it seems like FixUC may well be on the way to finding the answer.Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.
The combination of soaring student debt loads and a tough job market has a lot of companies and colleges looking to help students who are struggling financially.BridgeSpan Financial introduced a cynical new product called SafeStart this week and let me tell you: It is horrible. Here’s how it works. Pay $40 to $60 for every $1,000 in federal student loan debt you’re accruing and then, after you graduate and can’t make your payments, they’ll make them for you. Then you have five years to pay them back, interest-free.The problem is that the program must, on average, be a complete ripoff. In order for the business to work, the company has to take in more than it pays out — by enough to cover its financing costs, marketing budget, administrative expenses, and earn a profit and pay taxes. So if you our your student feels tempted to use SafeStart, here’s a tip: Borrow less money and attend a less expensive college.The other thing that’s so bad about SafeStart is that it would really only be useful for private loans because the new Income Based Repayment system allows federal loan payments to be capped as a percentage of income — and low-income or unemployed students will not have to make any payments at all. But SafeStart can’t be used for private loans!In other news, the USA Today reports that “Bellevue University, a private university in Nebraska that primarily enrolls adult students, says students who are laid off can have tuition, fees and loan obligations deferred for up to six months.”That’s great except what happens in six months when you still can’t afford the tuition and fee obligations?
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