“We want more young people becoming teachers and nurses and social workers,” Obama said Monday while announcing the expansion of the Pay As You Earn program.
“We want young people to be in a position to pursue their dreams.
Other startups also are designed to save money for “high-quality” borrowers.
Founded by former Google employees, Upstart considers which school a borrower attended, academic performance and work history before providing low-interest loans to students it considers good bets.
The company’s backers include Google’s Eric Schmidt and Dallas Mavericks owner Mark Cuban.
And we want more young people who act responsibly to be able to manage their debt over time.” But some in the private sector are stepping up as well.
While it is still difficult to refinance through big banks, a handful of newer, more innovative startups have figured out a way to make life easier for student borrowers while still making a profit for themselves.
Now that it is getting easier to repay federal student loans, a growing number of private lenders are offering new ways to ease repayment of high-interest private educational loans as well.
One company, called Pave and based in New York, essentially uses crowdfunding to buy out existing loans, which are then repaid based on the borrower’s income.
Even without interest, Pave loans end up costing borrowers about the same as other loans because of fees—a ,000 loan, for example, costs ,212 to repay, compared to ,329 for a private loan with 7.32% interest—but the company allows more flexibility and forgiveness than most banks.
For example, if students (Pave calls them “talent”) go to graduate school or make less than one and a half times the poverty level, their payments can be deferred, something conventional lenders mostly don’t allow.
Borrowers routinely refinance mortgages and other loans when interest rates drop. Refinancing options for student-loan debt have been hard to come by, but a handful of promising developments are giving borrowers better chances of climbing out from under the trillion owed by former students for their college costs.President Obama this week vowed to expand a program limiting repayment of federal student loans to 10% of a borrower’s income, and the U. Senate is considering a bill that would give more protection to students who use private loans.