How to Finance College Without Banks

CEO and founder Asheesh Advani says this structured loan repayment makes the process easier for both students and parents. The Student Payback loan can be structured to accrue at a very low interest rate (or at no interest). He notes that about 25% of the loans in the program so far are no-interest, while the average rate being charged on interest-bearing loans is around 4%.

(Non-interest bearing loans under $10,000 are not considered a gift, and a new loan can be created for each year's tuition.)

Flexible terms allow families to be creative. You can, for example, set up a plan for your kids to start repayments three or four years after graduation. Those payments can be stretched out over a period of years, or structured to end in a balloon payment at some date in the future. There is even a provision for "loan forgiveness," which would typically be kept to an amount below the current $12,000 per year ceiling for gifts.

Paperwork is minimal, and handled online or by phone. Repayments are administered using direct debit and direct deposit. You can securely check your amortization or balances at any time. And if the lender agrees, the terms can be changed at any time.

With the Student Payback loan at Virgin Money, the family can save money through lower rates and more flexibility, while the student is empowered to cost-effectively share the burden of his or her education.

The cost is minimal -- only $199 to set up and document the loan as well as creating the repayment schedule. Collecting the money is subject to a charge of $9 per payment -- one reason most loans are set up with a quarterly repayment plan.