The student loan service industry is always changing, isn’t it? In an industry where you are servicing multiple generations of customers dealing with enormous debt, you need to keep up with where the industry is going and current trends.
In 2018, we see a few changes, many of them focused on the client’s experience. Now is the time to prepare for the future. Here are a few trends that we expect in 2018 to get you started.
Increased Interest Rates Have Borrowers Seeking Consolidation
In the 2016-2017 lending cycle, borrowers experienced the lowest interest rates in over a decade. This, of course, was great for students. The low rates were also just the encouragement that many needed to take that final leap into starting or continuing their college education.
Per the Higher Education Act’s guidelines, interest rates are evaluated and changed every year on July 1. When the first day of July rolled around in 2017, student loan borrowers were in for a bit of a rude awakening. Interest rates for undergrads jumped from 3.76 percent to 4.45 percent, while graduate rates saw a spike from 5.31 percent to 6 percent. For most students, jumping ship due to an increase of interest rates isn’t an option.
Students who are graduating in the winter term of 2017 are going to be looking at getting a head start on debt consolidation and loan repayment. This means those that work in the student loan industry can expect to see a surge of consolidation requests in the first part of 2018.
Student Loan Consolidation Software Becomes More Crucial
While student loan debt is increasing, the number loan payoffs is decreasing. In 2017, 4.2 million borrowers defaulted on their student loans. Even though the rate of repayment is lower, borrowers have no interest in dealing with the consequences of defaulted loans. In the past, we have seen borrowers that have just let things go and missed the opportunities to put their financial future on track by taking charge of their loan repayments.
In 2018, we expect to see a shift in more conscious thought and action regarding student loan repayment. A big trend with this is going to be student loan consolidation, meaning that having the best student loan software is a must for anyone in the industry.
Simplicity and Customer Relations Matter
Customer relations have always been important; however, the focus is becoming more personal. Millennial borrowers account for about 65 percent of student loan debt. This is an important number because it speaks about what the current client base in the student loan service industry expects in terms of customer relations and value offered.
This is a generation that is focused on experience and interaction. Plus, they expect simplification. When they come to you with their student loan consolidation needs, you need to be prepared to offer a streamlined service and fast, reliable customer service. If you are bogged down with outdated standards and software, your clients will notice and take their business somewhere else.