Loan researching site Tuitionu.com is buying the student-loan micro-finance site Greennote.com for an undisclosed sum, peHUB reported this morning. Greennote raised $4.2 million in 2007 from Menlo Ventures and GlenBrook Partners.
Neither site has much traffic, with Greennote reaching about 3,000 users per month, but Greennote's business model is unique. It opens up the pool of possible funding sources for students by having lots of people each chip in a little bit toward the loan. People can loan as little as $100; the rate of return for lenders is fixed at 6.8 percent. The site is a response to the increasing difficulty students in recent years have had financing their education bills. Greennote makes its money through fees for packaging the micro-loans into one legal document. Given Greennote's slowness to take off, the VCs who financed the company were likely trying to cut their losses with the sale.
By Rory Maher