Frequently Asked Questions

You've Got Questions. We've Got Answers.

StudentSmart™ loans are different from traditional loans in a few important ways. To help make the differences clear, we’ll start be reviewing how traditional loans work, and then compare that with StudentSmart™ loans. Please note that there are many great sites explaining loans in detail – here we’ve made some simplifications to keep thing easy to understand.)

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How are these different than traditional loans?

There are a few important differences between a StudentSmart™ loan and a traditional loan.  The biggest difference is that a traditional loan gives you a certain amount of money, and you are obligated to pay some of that money back, plus interest, every month…regardless of how much you earn.

With a StudentSmart™ loan, we don’t require to pay us back; instead we simply ask you to pay a percentage of what you earn for an agreed upon amount of time. The percentage we ask for is based on our prediction of your future income. The more successful we believe you’re going to be, the lower the percentage we ask for.

Depending on how much you actually earn compared to our predictions, you may pay more or less than what you would have paid with a traditional loan, but you’ll never pay more than you can afford. In fact, below a certain level of income, we won’t take any money from you – there’s no point in worrying about paying us if you’re hitting rough times or trying to start a company, for example.

Furthermore, unlike traditional loan companies who get paid no matter how well you’re doing, we only get paid if you get paid! Therefore, we want to help you succeed (you’re our investment!), and we provide mentoring, counseling, internship assistance, job placement assistance…whatever it takes to help you be successful. With a StudentSmart loan, you don’t just get money, you get a partner (if you want one of course; all of this is optional).

For more detailed explanation of how traditional student loans work, visit our Student Loans 101 page.

Can you explain in a bit more detail how this works?

Sure. If we decide to fund you based upon the information you provide us in your application, we’ll give you an offer. This offer has three parts:

  • Income Threshold: The minimum amount you’d need to make before we charge you anything.
  • % Income: For every dollar you make above the that Income Threshold, the percentage of your income you’d pay.
  • Repayment Period: The amount of time you’d pay that percentage of income.

Let’s use an example. Say your income threshold is $25,000, your % income is 10%, and your repayment period is 10 years.

In the first year, let’s say you made $20,000. This is below the threshold, so you owe us nothing, but it doesn’t count towards your 10 years of payment.

In the second year, let’s say you made $40,000. This is $15,000 above the threshold, so you would pay 10% of $15,000, or $1,500. This counts as one year of payment, so you now have nine years left.

In the third year, you decide to try to start a company, so your earnings that year are only $24,000. This is again below the threshold, so you don’t pay anything.

In the fourth year, your business is starting to take off, and you make $75,000. This is $50,000 above the threshold, so you pay 10% of $50,000, or $5,000. This is your second year of payment, so you now have eight years left.

You follow this same procedure until you reach your Repayment Period.

How much will I end up paying back in total?

As mentioned in the first answer, with a traditional loan, if you understand how traditional loans work, it is possible to figure out exactly how much you will pay in total (though finance companies often make it difficult for you to figure this out).

Because of the unique way StudentSmart loans are structured, how much you end up paying really does depend on how much you earn, so even we can’t tell you how much you’ll end up paying. Because of our models we know how much a group of students like you will end up paying on average, but it is difficult for us to know for any one student.

For more detailed explanation of how traditional student loans work, visit our Student Loans 101 page.

What if I win the lotto? Won’t I end up paying a lot of money?

First, if you win the lotto, that’s awesome. Second, to avoid you ever having to pay out massive sums of money, for every year, we’ll also include a buyout price – that is, a price that you can pay to ‘settle’ your obligation, and stop paying any further money. This keeps you from ever having to worry about giving away way more money than you expected.

I’m super smart and amazing - aren't I going to end up worse off by using a StudentSmart™ loan?

Good question.

First, when we’re pricing the cost of the loan to you, we’re trying to take into account the fact that you’re amazing, which means we’ll charge you a lower percentage than someone who isn’t all of those things.

Second, because we have every incentive to help you be successful, that’s what we’re going to do! Mentors, networking opportunities, internships, job search assistance, and way more.  When you combine this with the downside protection of being debt free, this actually might be a very good option for aspiring entrepreneurs, artists, and professionals.

How do you figure out how much money I’ll make?

We have built some computer models that use the data you tell us about yourself to make some rough predictions. We can’t go into too much more detail about it since we want to keep them a secret (though if you’re a junior or senior or already finished with undergrad and are very interested, you could could always apply for an internship or a job, and we’d tell you a lot more!)

What information do I Need to provide? Do I need a co-signer?

Unlike traditional loans, we’re more interested in you than in your (or your parents’) finances. We do still try to make sure you’ll be able to pay us back of course, but we realize that there’s a lot more to that then just how much you or your parents currently make. This makes StudentSmart™ Loans perfect for students with poor or little credit (often the case when you’re young), or who don’t have co-signers with good credit. Your personality, experiences, grades, and goals are the things that are important to us.

Because of this – and because (unlike traditional loans) we never ask you to pay more than you can afford – our application process is a bit longer than a traditional loan application, but we spend a lot more time asking about something you should know well: yourself! This information helps us figure out how much we can lend to you.

Sounds too good to be true. What’s the catch?

See our answer here.

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