LendingTree is setting up a student loan refinancing and consolidation marketplace.
This marketplace will allow borrowers to compare student loan refinancing options and to look for consolidation loans for both Federal and private student loans providers – such as peer-to-peer lenders. This announcement comes just 5 months after the company first began facilitating new student loans.
Access to this new marketplace has been integrated into LendingTree’s personalisation platform, known as My Lending Tree. When a borrower creates an account, the My Lending Tree experience instantly provides them with an overview of their current portfolio of loans and will alert them when fresh investment opportunities crop up by accessing data through the LendingTree network. This allows LendingTree to offer borrowers the chance to leverage their network of traditional, specialty and peer-to-peer lenders.
Tamara Kotronis, SVP & GM, Education at Tree.com, commented:
"Student debt has become a major concern in regards to the economy, and we're hoping to help alleviate some of the financial woes with this new product offering. Total student loan debt outstanding is second only to mortgage debt, but unlike mortgage debt holders, many student-debt holders don't realize they might qualify for a better loan. Due to recent market innovations brought about by alternative lenders, new offerings are available to student loan borrowers who may have improved their credit profiles relative to when they first took on their loans. This experience affords them the opportunity to shop and compare private refinance and consolidation loans side-by-side in a consistent manner, and truly find the best fit for their personal financial needs."
There is a staggering $1.2 trillion of student debt outstanding in the US, more than the rest of the world combined. And two-thirds of students graduating from University in the US have student debt. This debt burden may well filter through to have crippling effects on the American economy – young adults delay setting up their own households, buying cars, and default rates are rising. According to a recent LendingTree survey, 49.7% of college-educated millennials carry student loan debt, and 28.7% say they need to pay off student loans before they can consider buying a home. Furthermore, LendingTree’s data found that, on average student loan borrowers have 4 student loans, and an average of $33,000 in total student debt. According to a study by PWC US, 24% of millennials said that they expect that their student loans will ultimately be written off.
These circumstances have given birth to an opportunity that a number of peer-to-peer lenders are attempting to take advantage of. Platforms such as SoFi concentrate on student loan refinancing, whereas platforms such as Prodigy instead issue student loans in the first instance. LendingTree has positioned itself nicely to address, and in theory alleviate, the widespread problem of increasingly onerous student debt.