A newly formed company has combined the powers of social networking, microfinance and the… A newly formed company has combined the powers of social networking, microfinance and the Internet with the ambition of making student loans efficient and attainable. GreenNote, an exclusively online alternative loan company, now offers students another lending option for financing their educations. ‘My business philosophy is very simple,’ said Akash Agarwal, co-founder and CEO of GreenNote. ‘I believe that there is a tremendous amount of money out there, and students should be able to get that money without credit ratings or high interest.’ Through the power of the Internet, technology and joining small amounts of money together, we should be able to help them.’ Pitt’s Office of Financial Aid reported that 3,700 students at Pitt applied for alternative loans during the 2008-09 school year. Alternative loans usually cost more than federal loans and typically have variable interest rates. GreenNote’s benefits are available to students everywhere. Similarly, potential lenders across the country provide support to students with a simple click of the mouse. Through the GreenNote Web site, students create and submit online profiles detailing community service involvement, activities and educational goals. The students also designate how much money they need to finance their educations ‘mdash; this can be as little as $1,000 or it can be the entire cost of four years of schooling. ‘ GreenNote does not provide money for loan, but connects students with those who wish to finance education, like family members, friends and community leaders. The lenders pledge a certain amount of money to contribute toward the lump sum. Students don’t need a credit rating to determine their eligibility, because they borrow from friends and family members interested in helping them. For this same reason, GreenNote has no co-signer requirement either, Akash said. After a six-month grace period following graduation, students pay off their loans to family and friends, not to banks or conglomerates. When it comes time for repayment, students send the money to GreenNote, which repays the lender. GreenNote carries a fixed interest of 6.8 percent for most of the nation and 6 percent in Pennsylvania and Washington, D.C. These areas are exceptional because they have a maximum rate on consumer loans. Other lenders typically range from 8.5 percent to 20 percent. GreenNote makes its profit by collecting a documentation fee of 2 percent from the student during his pledge drive, or the time when the student is requesting money from the social network. GreenNote also receives a management fee of 1 percent from each loan payment, and this comes out of the pocket of the lender. According to GreenNote’s Web site, there are no additional hidden charges. ‘These small fees mean that most of the money raised goes toward the student,’ said Agarwal. ‘Our fees are transparent in comparison to those of alternative lenders.’ At state schools, the gap between the price of tuition and the average federal loan is about $33,000. Besides federal loans, students can fill their financial disparity in paying for higher education by getting alternative loans from private companies, according to the Web site FinAid.org, a public service guide to students’ financial aid. Nationwide, the number of students applying for alternative loans is on the rise. Families typically turn to alternative loans when federal loans provide too little money or when they need more flexible payment options. Major providers of private loans include Sallie Mae, PNC Bank, MyRichUncle.com and Wells Fargo, FinAid.org said. Top lenders, such as America Corp and Citigroup, have slowed alternative lending by giving out fewer loans to students, and the government has reduced the subsidies provided to lenders. GreenNote was co-founded in 2007 by Agarwal, a Harvard-educated business management executive with experience at companies such as Oracle and Hewlett-Packard, and Ben Sharma, who gained experience operating Web content while working on Speedera Networks. Today, they are the company’s CEO and chief technology officer, respectively. ‘Traditional sources of finance are shrinking in proportion to cost,’ said Agarwal. ‘We provide a service that’s very attractive to the student.’