GreenNote Peer to Peer Education Loans
GreenNote (Redwood City, CA) enables students to obtain student loans through their friends, family and community. Loans range from $1,000 up to the cost of attendance, as certified by the school. (Loans are limited to legitimate school-related expenses, such as tuition, fees, room and board, and books and supplies. Loan funds are not available for personal expenses. Funds are disbursed directly to the school.) The loans are unsecured and are not subject to credit underwriting. The interest rate is fixed at 6.8% (6.0% in Pennsylvania and Washington DC) with up to a 5-year deferment, a 6-month grace period following separation from school, and a 10-year repayment term. Interest continues to accrue during the deferment and grace periods and is capitalized (added to the amount owed) when the loan enters repayment. There are no prepayment penalties.
GreenNote has also established the GreenNote Network to allow unrelated individuals, institutions and affiliate groups to lend to students. The terms of the loans are the same as for friends and family. GreenNote allows the lenders to select students based on a variety of demographic information, such as area of study and the name of the school.
Borrowers pay a documentation fee of $49 or 2% of the loan amount, whichever is greater, deducted from the disbursement check. Lenders pay a 1% management fee for servicing the loans.
Lenders may choose to forgive interest and/or principal or reduce the interest rate when certain milestones are reached, such as graduation. Borrower payments, delinquencies and defaults are reported to credit reporting agencies and so may affect the borrower's credit history positively or negatively.
GreenNote launched on June 4, 2008.
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