College Ave Student Loans is the first new college education lender to launch since the social lending start-ups SoFi and CommonBond were founded in 2011. College Ave began making private student loans in December 2014. The launch of a new education lender may be a sign of an improving economy.
During the financial crisis, the number of lenders offering private student loans dropped from about five dozen to nearly a dozen commercial lenders and a similar number of state loan programs. Non-bank financial institutions were unable to raise the capital needed to make new loans. Most new private student loan volume is currently made by banks and credit unions.
During the economic recovery, more banks will begin making private student loans and increasing their loan volume. As the capital markets thaw, non-bank financial institutions are also expected to start or re-enter the private student loan marketplace.
College Ave has a management team with extensive experience in education financing and they specialize solely in student loans.
College Ave’s private student loans are school-certified with variable interest rates of 1.66% to 9.91% APR with no fees, among the lowest cost private student loans. Like private student loans available from other lenders, loan limits are up to the full annual cost of attendance and a 0.25% interest rate reduction is available for borrowers who repay their loans through automatic payment. Cosigner release is available to borrowers who satisfy income and employment criteria after making 24 consecutive, on-time, full monthly payments of principal and interest. Unlike other lenders, College Ave allows borrowers to choose one of four repayment terms (8, 10, 12 or 15 years) in addition to choosing one of four in-school repayment options (immediate repayment, interest only, flat payment and full deferment).
Giving borrowers another choice for education financing is good news for the health of the lending space. The competition leads to innovative products and lower borrowing costs for all. This is another sign of the improving economy and a forerunner of other future lending innovations.
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