I think more attention needs to be paid to these alternative lenders. For me, given the relatively high rates of interest and closing costs on federal student loans and the absence of refinancing for existing debt, why are more students not flocking to these products? And, why are financial aid officers not talking about these as an alternative to private loans with banks? And, why isn’t REPAYE, a government option now in place, not getting more attention? There are risks with these alternative lenders and to be sure, some focus on high credit worthy borrowers. But, it is an option worth considering and well worth at least investigating. Some had options for periods of unemployment (like federal deferral or forbearance). And out of more than curiosity, what happens to these loans in bankruptcy? Are they treated as student loans (and non-dischargeable) or unsecured borrowing? Some structure themselves as contracts for membership in a club; does that mean they are executory contracts not debt and can be rejected? Open issues on all fronts. Silence will not answer them. Speaking on this very topic in Canada tomorrow. More after that…..

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Author, Educator & Commentator; Former President, Southern Vermont College; Former Senior Policy Advisor, US Dept. of Education; Former Law Professor

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