And no, I am not referring to the St. Louis resident, who forged her daughters' signatures to take out $140,000 in student loans and gambled it away, according to the Kansas City Star.
Instead, I wanted to highlight news that Fynanz had secured a $6.5 million Series A financing round, according to TechCrunch:
At last check, the company currently has 20 credit unions listed on their cuStudentLoans page. Here are some additional details about the company's business model and customer penetration to date (Dow Jones Information News):
I might take exception to this statement from that same article:
Based on College Board data, he private student loan market peaked at $23 billion in 2007-08 and declined to $11 billion in 2008-09 with SLA forecasting another 24% drop for 2009-10. What's driving this decline in private loans?
- More students taking out federal loans (20% + growth in 1Q 2009-10)
- Larger number of students eligible for Pell Grants and increase in max. grant size
- Students attending lower cost schools
- Lenders discontinuing lending programs at many for-profit institutions
- Lenders raising their underwriting standards
- Secondary markets largely moribund
- Increased discounting
It may be that these are all short-term effects and that longer-term the private loan market will have great growth characteristics...but then again, remember that Perkins Loan expansion in 2011 could (emphasize could since no student loan reform bill has passed yet) add up to an additional $5 billion lending capacity for low-income students. Of course, there is always market share that can be gained at the expense of the incumbents many of whom have drastically cut back on their commitment to private student loans.