In This Chapter

One of my contentions in Chapter 6 is that, if all else fails, federal student loans can save the day for most college students. Throw in the use of forgivable loans and loan forgiveness (see Chapter 7), and borrowing money for college ends up being some people’s single best plan for funding the high cost of higher education.

But, there will be times when federal and state student loans just can’t come through in a pinch like you hoped they would. Sometimes it’s because a parent or student let the federal or state application deadline slip through his fingers. Other times, a person is maxed out on how much he can borrow or his credit isn’t good enough for certain programs, such as PLUS loans. Still other people qualify for the loan and will receive the money in the near future, but they need the cash now to enroll.

In all these cases, peer-to-peer lending, when used wisely, can be a lifesaver. Of course, peer-to-peer lending, when done poorly or without the proper research, can leave borrowers with higher-than-expected interest rates, damaged relationships, or broken kneecaps. As a side note, always avoid borrowing money from people who have a utensil as part of their name, such as Johnny the Knife or Mike the Fork.