Last week, Joseph Cioffi, a nationally recognized financial analyst was a featured speaker on the Big 10 Education Finance & Loan symposium in Alexandria, VA. He moderated a panel discussing trends and current issues surrounding student loan debt and collections. This was his first trip to the Big Ten Conference and he was quite impressed by the level of education that the conference provided for attendees.
The conference focused primarily on education finance & loan industry and it was very interesting to hear the wide range of perspectives that were shared from students, industry professionals, and seasoned executives in this highly competitive market. There are so many areas in which education finance & loan companies can improve their processes and offer better value to customers that I believe it is worthwhile to take the time to review some of the highlights below.
Education finance & loan companies must be much more aggressive in pursuing delinquent borrowers who have defaulted on other types of loans. Student loans are unique in that there is no standard process when it comes to repayment. Many schools and colleges have adopted a default process, but it is often too strict, making repayment a daunting task.
It is important for students with student loans to be informed about the various repayment options available to them. In fact, if students are given a choice of a low-interest introductory period, they may choose to defer payment until the interest rates are lower or until the borrower has more disposable income. The key, however, is to not go over the minimum required repayment term. Many students do not understand that by failing to make payments on their student loans, they can significantly increase their debt load.
This area is very competitive in today’s education finance & loan market and companies are doing whatever they can to remain competitive. They are offering lower payments to students and parents and are also offering lower interest rates to students with good credit. If you can find a company that offers competitive rates, you should consider working with them to make your education loan payments easier.
In closing, education finance & loan companies must recognize that there is a need for greater education & loan debt collection efforts if they want to retain their current customers. If they lose business because they are not aggressive in their debt collection efforts, there will not be enough money left over to support the customer service needs of the remaining clients. A lack of customer service will likely result in less overall student loan revenue and less ability to continue to provide services to the loan and education community.