Does this idea have any promise - a student loan bank?
I know that there are plenty of banks out there offering student loans...and I remember that I used to see more commercials about banks focusing on student loans a few years ago...but recently, I'm not seeing many at all.
It seems like there might be room in the market for a dominant student-loan company to arise.
I'd also like feeling really, really good about what I was doing. Giving good, hard-working kids --- that excelled in high school, but who don't have the means to go to college because of mistakes their idiot parents made --- a chance to get a college education, and at a better life.
First, do you think there's room for something like this to succeed?
Second, how would I go about making the dream happen!? I'm guessing that I would need to start off working for one of the top student loan companies out there. But how would I raise the capital to get things off the ground?
Thank you very much for any advice!
Sincerely,
Blue
All I know about starting a bank is that it's freakin' hard... it's a long process!
student loans are pretty risky for banks, hence the high interest rates. theres room, but every bank gives student loans. the hardest part would be getting your reputation out there, and raising capital obviously. your also looking at putting out huge amounts of cash without being paid for years. hard sell to whoever is loaning you money to start.
however, if you could get it off the ground and offer more competitive and fair interest rates than exist now i could see you doing well challenging the big boys who are unwilling to lower rates.
good luck!
It would be cool to have a student loan business that is very focused and engaged. For example, one that has high standards in student performance (to minimize risk, and allow smaller rates), and provides career consulting and financial planning.
The career consulting part would be fun. Helping them design a path, and even finding opportunities, would be beneficial to both parties. And, designing a financial plan around their loan size + career aspirations would allow you both to set expectations for the loan.
Sallie Mae.
^ is a bitch, and a rip off
I'd like to see a loan where the interest rate is directly related to your college transcript. Each semester the bank should require a copy of your grades to determine interest rates.
major and job opportunities from prospective major should factor into interest rates as well.
hmmm...some very interesting ideas.
Hire a few Senior Actuaries to handle the risk and reserve management.
Rising tuition + programs to send more kids to college + government loan subsidies = future student loan bubble
How would you ever raise the money for this? Starting a traditional bank is a massive enough undertaking, let alone starting a bank for the riskiest loans. It would require a giant grant from the federal government to ever get this started as no private investor--save a philanthropist--would ever invest in this. Plus, you'd have to develop a business model that separates you from virtually every other bank and Sallie Mae that offers these loans.
I really don't think this is a good idea.
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