Please sign in to participate in this lecture discussion.

Resetting Your Password?

Start Learning Now

Our free lessons will get you started (Adobe Flash® required).
Get immediate access to our entire library.

Membership Overview

  • Available 24/7. Unlimited Access to Our Entire Library.
  • Search and jump to exactly what you want to learn.
  • *Ask questions and get answers from the community and our teachers!
  • Practice questions with step-by-step solutions.
  • Download lecture slides for taking notes.
  • Track your course viewing progress.
  • Accessible anytime, anywhere with our Android and iOS apps.

Two New Alternative Financing Methods

While most students tend to go for the typical plethora of loan and grant options without doing much research, there are some new, alternative, financing methods that make use of the Internet. Two such sites are and

SoFi—Alumni Funding Students at their Alma Mater

SoFi (, which stands for “social finance,” was started by Mike Cagney ( with the idea that the site could make alumni the lenders of student loans instead of having banks financing the loans. In essence, the model allows alumni to group together to fund students. These students are not individually chosen by the alumni, but are rather chosen by the site and grouped.

The alumni stand to make a return of at least 5% off of the loans. When using the site, students should look to pay about 5.9% an up on loans (government loan rates start at around 6.8%). This makes the site a win-win for both investors and students.

Like other online peer-to-peer lending bases, SoFi functions as a marketplace for online loans (although in this case group-to-group might be a more appropriate term).

Students can register on SoFi’s web site; if accepted, students will receive loan funding through their school’s financial aid office.

The site also offers loan consolidation of up to 200,000 for new graduates with a fixed interest rate of 5.99%.

Upstart—Capital for a Portion of Future Income

Upstart ( is a totally new model of financing. The idea is based off of the future value of promising graduates. Upstart takes information from applicants including schools attended, work experience, job offers and signs of potential including accomplishments and even standardized test scores.

Upstart then uses statistical models to predict the individuals expected income during the next 10-15 years to determine a funding rate. They then allow individuals to determine a specific percentage of their future earnings that they would like to share—although they are capped at 7%. Based off of the statistical determination made, upstarts are granted a specific funding amount for each percentage of income shared.

Obviously this model doesn’t work for everyone, but only those who are really promising and committed to having a strong career to repay those who have decided to invest in the individual.

Students can use the funds raised for student loans, but are not limited to doing so.


Get full access to’s entire library of courses.