Just say no to peer-to-peer student loans ... at least for now

According

to BusinessWeek, "In recent months, peer-to-peer lending sites such as Prosper and Virgin Money USA have introduced student loans or started marketing existing offerings to families looking for college funds. Others, including startups GreenNote and Fynanz, are focused exclusively on making college loans."

It's not a surprising development. Peer-to-peer lending has been growing in popularity for years and the tightened credit market is making it tougher for some students to secure loans for college.

There may be a future in peer-to-peer student loans but I don't see it happening anytime soon. Here's why:

  • Subsidized student loans are always preferable. Before exploring any private loans, college students should complete the FAFSA form and take steps to see how much they can borrow at artificially low interest rates.