In a conference call with investors today (June 30, 2008) to discuss the upcoming spin-off of Tree.com, IAC/Interactive executives discussed plans for Tuition Tree, which they described as "just like lending tree but for student loans." With this announcement, Tuition Tree would join several competing loan comparison sites, including Simple Tuition and a host of recent start-ups seeking to capitalize on the recent dislocation in the student lending market. IAC/Interactive indicated that given their current lending platforms, starting Tuition Tree will require "a very small investment, a couple few hundred thousand dollars in internal site development."
With the site expected to be "launch(ing) in about a month", it will be interesting to see how they deal with the following key questions for a comparison site:
- Which lenders will choose to participate? I would expect that their existing relationships with financial institutions that participate in the Lending Tree network would be helpful in building a deep bench for student loans also.
- Will they have a creative solution to deal with private loans? One of the current difficulties in searching for a private loan is the search cost. Every application you complete requires a separate credit pull which has the potential to lower your score and therefore drive up your financing costs. Will Tuition Tree "crack the code" and enable borrowers to provide credit information once while applying for private loans from multiple lenders.
These will be interesting developments that SLA will monitor once the site launches. Stay tuned!
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