I was reading TechCrunch and I came with this article “Fynanz: How Student Spell Peer-to-peer Loans”. What is a student peer to peer loan? Student Peer to Peer loan (peer to peer lending) is a way to borrow and lend money using the internet as the marketplace between person to person. The idea is similar to ebay for loans. Check this out for more about on peer to peer loan.

The peer to peer (p2p) lending continues getting better day by day in the world. Fynanz is launched on last Monday and it is the latest among of them which is devoted solely to P2P student loans. Fynanz is an innovative marketplace and its offers student loans with the lowest interest rate on private student loans. Most of the lenders are individual such as family, friends, alumni and others who believe that “Education is the Best Investment”.

CEO of Fynanz Chirag Chaman (former banker) initially has invested $500,000 and said that:

We looked at 15 years worth of data to create an underwriting model specific to student loans. We now what are the factors that reduce default rates. I was doing structured loans at Citibank.

You can think of it as securitization for the masses, but I am removing investment banks from the process.

How does it work?


  • First of all, students have to sign in.
  • State the details of their loan (how much they need, desired interest rate, desired payment term, etc)
  • Fynanz then rates each potential borrower based on credit history and information gleaned from historical student loan records.

Right now it is only available for resident of Florida and New York. But that will expand to the entire country later this year and anyone can become a lender. Check this out for more about on Fynanz “an interviewed of Fynance CEO, Chirag Chaman about Fynanz”.

I think student p2p lending is a very good idea which will give the opportunity to the middle-class students to fund themselves to study in a private university even in an expensive university. This idea may come out as a solution to the ever increasing number of the successful students. Then the student may be able to stop depending on government student loan. Other advantages could be avoid banks and other middleman, anonymous transaction, a whole new asset class, optional rates and loan amount, lower interest rates for borrowers, higher returns for lenders, faster and easier process, increased transparency and control, and satisfaction.

On the other hand, peoples want to supports students but they always worried about will student be able to repay to them. People scared to lend their hard-earned money because of huge risk involvement. Interest rate could be another issue for the businesses like Fynanz, Prosper, Zopa, Kiva, Lending Club, Loanio . Because of now interest rate on student loans is tend to be very low which will give them tough time to attract students. Also for traditional student loans borrowers have the option to defer payments. But many investors don’t allow delaying payments or they might charge high interest rate.