In an show of vitality rare in this economic climate, People Capital, the innovative marketplace for student loans, secured second round financing from the private equity firm, the Radcliff Group Inc today. The company matches borrowers to lenders exclusively in the market for student loans, helping philanthopic groups, individuals, and institutional investors better evaluate prospective borrowers who may not have any credit history. Because students usually have low FICO scores due to their minimal borrowing history, they are often seen as high risk by lenders and in a tight credit market, they may find it difficult to get a loan.
People Capital aims to change that. With a new risk methology created at Wharton, the company seeks to give a better picture of creditworthiness of young borrowers. Here is their approach: "We apply cutting-edge strategies from the credit card industry. Our patent pending Human Capital Score underwrites students without credit history, FICO scores or co-signers by projecting individual income levels and ability to pay indebtedness. We incorporate GPAs, standardized test scores, college and major to provide a true and unbiased, data-driven measure of the economic value of an education."
With Fynanz shut down, People Capital is the exclusive p2p lending platform focusing on student loans (and most student borrowers probably wouldn't qualify to borrow on Prosper or Lending Club anyhow). It's an interesting proposition, betting on the ability of education to enable young individuals to reach their potential value.