How to Finance College Without Banks

Federal student loans don't provide nearly enough money to pay for a year's tuition and college costs. And the current credit crunch isn't helping as students and their parents try to raise money for college.

As the nearby chart based on College Board statistics shows, there is a huge funding gap -- even beyond the various education tax benefits, grants, and federal student loans that are given out each year.

Click here for larger image.

How do American families find that extra $113.5 billion dollars to pay tuition bills and other college expenses? And whose burden is it really: the student's, or the parents'?

Those questions are troubling the American system of higher education just at the point when we need more educated and skilled college graduates to keep our economy competitive in the 21st century.

Fortunately, technology is coming up with new ways to approach the problem of the college funding gap.

Here are two new services that hope to provide an answer to the problem of raising money for college:

Virgin Money Student Payback Service

Virgin Money (a unit of Richard Branson's Virgin Group) has long offered services to document and service private loan agreements and repayments, such as intrafamily mortgages. Now, they're applying the same technology to student loans.

A recent survey shows that nearly 75% of Americans believe their children should pay for at least part of their college tuition. So, while many parents borrow through PLUS loans, home equity loans or 401(k) loans, Virgin Money has created a mechanism for students to repay at least a portion of those debts that their parents have incurred.