Although the credit crisis has helped to bring about the demise of many privatized student lenders, it’s also helped to encourage the emergence of many online peer-to-peer lending Web sites.

Because many of these lending sites launched in the past year, it’s difficult to know how successful they’ve been in helping to bring more funding to the marketplace. College finance experts caution students to exhaust all their alternatives before trying one of these unproven loan products.

“I think generally speaking, more competition is better than less -- that said, we don’t have a track record of performance,” said Christopher Penn, chief media officer for the Student Loan Network. “In many cases, when the lending is among strangers, there’s no way for the lender to find out how at risk their money is or for the borrower to know how stable their lender is.”

Since the crunch has made private student loans more difficult to secure, many students who need to cover the gap between their financial-aid packages and their tuition costs are having difficulty finding a lender. Government loans are still available to students, but they typically do not cover the entire cost of tuition. That’s where Web sites such as Greennote.com, Fynanz.com, and Virginmoney.com are coming into play; they help fill the void left by the disappearance of private lenders -- a void that is expected to grow.

“Private lenders are leaving the market in droves because they’re looking for security and the student has no means of paying back their loans at the outset,” said David Kenney, CEO of CollegeZapps.com, an online service that allows students to apply to multiple colleges at once. “The private lenders are now requiring higher origination fees, higher interest and cosigners, so I think what’s going to happen is you’ll see just a few lenders left providing student loans.”

The idea behind many of these sites is that they facilitate the loan transaction between a student and his or her family and friends. VirginMoney.com helps students set up a formal loan from a relative or friend, and allows the lender to set the terms, including the payment schedule and interest rate. Greennote.com allows students to receive multiple contributions from family members, friends -- even strangers -- and then pay back the loan over 10 years at an interest rate of 6.8%, or lower. Fynanz.com assigns each student a grade using his or her academic background and credit history, then allows lenders to bid on the loans, rates and payment schedules of which vary according to risk.

In concept, the sites could be beneficial in opening up additional lines of credit to students at a time when there’s likely to be fewer options for funding than ever before. Thanks to record numbers of high school graduates and a high demand for college degrees in the job market, competition for scholarships, government-backed student loans and even private loans is increasingly fierce.

“Last year we had the largest graduating class since the Baby Boomers, and 76% of them are going to go on to college,” Kenney said. “There’s a lot more competition to get into school and to get scholarship money as well as loans.”

Reecy Aresty, a college financial-aid expert and author of the book, How To Pay For College Without Going Broke, said these lending sites certainly sound like a good option, but he cautioned against using private loans as anything but a last resort. Aresty argues the loans could be counted as part of your financial-aid package if they’re disbursed through your college’s financial-aid office, and could work against you by lowering the amount of aid money the college would have provided. Penn agrees.

“If you take out a $1000 loan from a peer-to-peer lender, that’s considered cash and it will alter your availability for financial aid,” Penn said. “The benefit is to start the government program first. Sign up for fafsfa and then go from the least expensive loan to most expensive.”

Even the companies themselves advise against using their product unless you’ve looked elsewhere for funding. You want to exhaust all your scholarships, grants, free money and things that you don’t have to pay back and apply for financial aid even if you don’t think you can receive it, said Su Joun of VirginMoney.com.

Penn suggests always doing your homework before signing up for any kind of loan.

“I always caution students to read the contract really carefully because there may be ‘gotchas’ in there that you don’t know about,” he said. “No one is really quite clear yet on the newer loans about how they qualify for tax credit -- so you want to talk to a qualified tax professional to find out what the tax credits are.”