Student Loans May Be Easier to Find Online

At last glance, her loan was fully funded after 260 potential lenders bid down her interest rate to 12.7% from 16.09%. Most of the bids were in $50 increments.

Celent senior analyst Edward Woods, who has researched P2P lending, warns that because the sites are relatively new and loans will take many years to pay off, only time will tell how they fare. However, statistics show that default rates on P2P lending sites are lower than industry levels. Some also argue that "self-policing" on the sites -- where users create personal connections through photos and stories of financial struggle -- mitigates some of the risk further.

"Now you're defaulting on an individual vs. an institution," says Woods. "That seems to be a motivator and once you've made a mistake in this environment you're kind of tagged."

No one suggests that P2P sites will replace the Sallie Maes of the world, but at least one start-up called Fynanz.com is hoping to make the most of recent market turmoil. The pure-play student lending site launched in mid-March and has about 200 members, adding 15 to 20 per day. Fynanz acts as an intermediary between the two sides. It provides the loan to borrowers, then sells portions of it to the lenders while earning fees on both ends.

Fynanz is currently testing out its product in seven states and hopes to roll it out nationally in coming months, says Founder Chirag Chaman. He hopes the site will not only be a successful business, but will prod students to learn more about borrowing as they are required to structure terms of the agreements.