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Circuit Cents: Students have new, nontraditional lending options

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Students who are looking into financing for college now have a number of new and nontraditional borrowing options to cover their costs.

Reporter Kelli B. Grant of CNBC.com recently wrote about the choices:

Academic history, grades and earnings potential factor in to the rates borrowers get with lenders such as Upstart and Pave. Both introduced new short-term loans this year, with fixed rates starting at 5.7 percent and 6.8 percent, respectively. "That employability speaks to how easily you'll pay back a loan," said Dave Girouard, founder and chief executive of Upstart. Another lender, CommonBond, offers fixed loan rates as low as 3.89 percent for graduates and 6.24 percent for incoming students. It restricts borrowing to four graduate degrees--J.D., M.D., M.B.A. and engineering--across more than 100 programs.

More personalized lending could offer substantial savings for some borrowers. A 2013 report from the Center for American Progress estimated 70 percent of outstanding federal student loans have rates of more than 5 percent. Rates on Direct PLUS loans for parents and graduate students are currently 7.21 percent, and direct unsubsidized loans for graduate students: 6.21 percent. "It doesn't make sense to get such high rates, especially for creditworthy borrowers," said Klein.

Grant joins The Daily Circuit to talk about how to sort out financial options when considering higher education.