19 märts Virgin Money’s Student Payback Could be the Beginning of Something Disruptive
Financial institution opportunities Lenders have taken some heat recently as they've cut back on student lending during the credit market turmoil
- Loans are deferred for up to five years while the borrower is in school, then initiate a six-month grace period before repayment begins
- Interest accrues during the deferment period
- Repayment is over a 10-year period, meaning that lenders must commit their money for 15 years
- The rate is currently 6.8% fixed, but GreenNote takes 100 basis points of that, so lenders receive a 5.8% return (which they can elect to lower at repayment time)
- GreenNote charges a 2% loan fee at funding, with a minimum of $49
Financial institution opportunities Lenders have taken some heat recently as they've cut back on student lending during the credit market turmoil
- Allow third parties to browse loans they might want to fund (e.g., alumni)
- Facebook integration
Analysis At first glance, it looks like an expensive way to put a nice wrapper around funds that have already been made available by the student's family. And certainly, if moms and dads are providing the bulk of the cash, it's not necessary to pay 2% for a promissory note. For most loans, you can do that for less at online paperwork specialists such as Virgin Money or LoanBack.