Collegebound Network

Since 1987, America's Trusted Resource on Higher Education



My Rich Uncle Offers an Alternative to College Loans

Imagine having a rich uncle who you've never met that's willing to loan you money toward your college education. Sound like something you'd appreciate, right? Well, we've found a rich uncle just for you: MyRichUncle.com (MRU).

MRU is not a traditional student loan. It's "an educational investment," used as an alternative to student loans for some, and for others, a "gap-filler" -- to finance the remaining cost after financial aid and loans have been applied, says Raza Khan, co-founder of MRU.

"Many students choose not to go to the school of their choice or not to attend college at all, because of finances," says Khan. "This has a very negative impact on the future of their lives. Our idea was to come up with an innovative idea to offer students alternative academic financing, for greater career choices later on."

Here's how it works: You apply for money that doesn't exceed 15 percent of your projected future income (calculated by using rates based on research and analysis). If approved, the money is paid to the school on your behalf. Over a 10- to 15-year period after you graduate, you are expected to pay "a fixed rate," that's based upon the amount borrowed -- between 0.1 to 0.4 percent of your gross annual salary (depending on how much you earn).

There's no principle or interest added to the funds. If at the end of the payment period, you haven't paid off the entire debt, you don't have to pay any more money and you aren't penalized. "[Since] you are paying a fixed percentage of your income, your payment obligation is always in line with your ability to pay.

In other words, you'll pay less when you earn less, more when you earn more, virtually eliminating the risk of default," says Khan.

Although this college cash option may sound "too good to be true," it's actually legitimate. However, you should be aware of some upfront loan policies.

First, there is an origination fee for service -- 2.5 percent of the borrowed amount.

Secondly, you are required to pay the specified "fixed rate" for the duration of the allotted time once you sign the contract. In other words, you may actually end up paying more than you originally borrowed if you start drawing a high-end salary.

Thirdly, if at any time you default on your agreement, you will get a bad credit rating. Out of work? Out of luck! You still gotta' pay... though MRU may consider temporarily adjusting your payments through its deferment plan. Also, late fees will be added on for untimely payments.

Getting money to pay for school isn't always easy. Just make certain you do your research, read all the fine print, know what you're getting yourself into, and trust your instincts. And remember, you do have options!


Share
ShareBar