HPA has made a new investment in Edulender.com. Edulender is an incredibly innovative business that is timely.
College costs are soaring in the United States for a variety of reasons. Many students and families need access to loans to pay for costs they were unable to save for. Unfortunately, finding those student loans used to be an archaic exercise. There was no price or term transparency and it was very difficult to compare anything. Add to that the randomization of differing states and private versus public costs and there is a huge pain point that needed to be solved.
Edulender solves it. They are a student loan clearinghouse. Edulender.com brings transparency and order to a chaotic and opaque market. There are literally hundreds of new entrants into the student loan marketplace, but no one knows how to find them. Students don’t even know if they qualify for certain lenders’ loans. Edulender gathers daily information on fees, rates, and terms from nearly all active student loan providers. Then they allow you compare them on an apples-to-apples basis. Edulender shows borrowers only the loans for which they are eligible based on their school, degree, state of residence, and other criteria. They aim to be broad enough so that borrowers gain a good understanding of their options and their relative value, but narrow enough so that they don’t waste time applying for loans for which they would not be eligible.
Edulender makes a very time consuming and frustrating process quick and pain free.
On the other hand, schools, colleges and universities are nervous. There has been some back room dealing and graft in the student loan business. EduLender provides a comprehensive, unbiased, and independent site that is ideal for financial aid offices that want to refer their students to a neutral resource. Beyond the student loan search engine, they will soon roll out related products and services including a reverse auction system in which lenders bid and compete for the borrower’s business, and student loan consolidation.
If you are a financial aid officer at an educational institution, all you have to do is direct students to Edulender.com. Edulender takes all the liability risk away from them.
There are now more lenders competing in the marketplace than ever before, but schools are looking over their shoulders to the extent that many financial aid websites now merely show a list of all lenders that have served students in the past 5 years. Half of these lenders aren’t even in business anymore. The other half just link to the lender’s generic loan page. Perhaps most critically, merely showing a historical list like this eliminates from consideration many of the newest lenders in the marketplace, which often have some of the best rates. Independent studies have shown that the same borrower can end up getting a rate which as much as 6% higher than the best rate they could have gotten, depending on the lender they choose.
What is interesting is that the Government Accountability Office (GAO) said that it would take millions of dollars to build a search engine to solve this problem. They essentially said it couldn’t be done. Three young entrepreneurs used sweat equity and proved that they could, defying all experts. They applied to Hyde Park Angels and went through our due diligence process and received seed capital.
Not only that, but HPA hooked them up with other angel groups to round out the financing. Now, individual angels are helping Edulender make connections to further their business.