student loan consolidation

Review of for Student Loan Consolidation

Michael Lux Blog, Consolidation, Student Loan Consolidation Reviews, Student Loans 0 Comments

Let me start by saying that and other peer-to-peer lending sites offer a fantastic product.  Peer-to-peer lending is one of the most exciting developments of the internet age.  By allowing many strangers to come together in this manner, people are able to get a great return on their investments, and they are also able to borrow without getting beat up by the banks.  Essentially, eliminates the middle-man, aka the banks, and allows borrowers and investors to connect in a more direct manner.

Despite the excellent platform that provides, it is not yet ready to handle student loans or student loan consolidation.

Why Prosper to consolidate student loans?

It is an idea that frequently gets suggested, and there are a number of reasons.  First, advertises itself as a place to go for consolidation of debt.  Second, student loans are a huge burden for many, and Prosper appears to be a creative solution.  Third, student loan borrowers as a group seem to be especially fed up with the banks and giant lenders, there seems to be a certain appeal in paying interest to regular people rather than a major corporation.

Why doesn’t Prosper make the grade? as of this writing isn’t really equipped to handle student loans.  If you consolidate with Prosper, your new loan isn’t a student loan at all, it becomes unsecured debt.  While this is a good thing for a perspective borrower, it means the debt is a much riskier proposition for the lender.  That means higher interest rates.  Student loans are “lower risk” investments because they have almost non-existent bankruptcy protection.  The difficulty getting a bankruptcy is part of the reason that lenders are able to offer such low rates on student loans and consolidation.

As of this writing.  The lowest interest rate offered by is 6.74%.  While this number is excellent for credit card consolidation, it is abysmal for student loan consolidation.  Furthermore, in order to qualify for the 6.74%, borrowers need to have an excellent credit/income status.  Those with such fantastic credit scores and incomes will likely find lower rates elsewhere for their student loans.  Finally, Prosper will lend a maximum of $35,000 for a maximum of 5 years.  For people looking to consolidate their student loans, they will likely need more money, and more time to pay it off.

The Bottom Line

People looking to get creative with their student loans are definitively wise to consider; in theory it makes a lot of sense.  Unfortunately, the Prosper structure just isn’t equipped to handle student debt and its many unique characteristics.

For borrowers looking to lock in low rates and avoid banks, their options are likely best served by options like and Credit Union Student Loans.

However, if you have unsecured debt such as credit cards, investigating your best rates at could be a wise decision.