Student lending is a challenging market. You are providing a needed and valuable service to borrowers, but due to media coverage, you sometimes look like the “bad guy” in the lending world. However, with careful planning and by staying ahead of the curve with trends in the industry, it is possible for you to remain a “good guy” and grow your customer base at the same time. Keep an eye on the following trends and always conduct further research so that you don’t become caught unaware by changes in the marketplace.
The amount of aid per student is growing
According to collegeboard.org, undergraduate students in the 2015 to 2016 school year received financial aid totaling an average of $14,460 per full-time student. This number included $8,390 in grants, $4,720 in federal loans, $1,290 in tax credits and deductions, and $60 in Federal Work-Study.
Repayment rates are improving
According to information published in the Obama White House Archives, students who entered school in 2009 (the peak of the recession) have shown a 70% repayment rate. This repayment rate is a noted increase and especially promising considering the timing. With further effort from the current administration and the cooperation of the lenders, this rate is likely to only increase further.
Future repayment options
The current administration has made statements indicating that repayment of student loans may be easier for all involved. One idea is that a student loan consolidation program, with an income-based repayment plan may be installed. If it is properly executed, it could be a win-win scenario as it would make repayment easier for the borrower and help assure that the lender receives adequate compensation too.
Now is an exciting time for anyone involved in student lending. If this is part of your business plan, make sure you are taking steps today to prepare for any changes that may occur in the future. Proper data tracking and borrower communications can protect you and help you thrive, even as other lenders become overwhelmed by the future prospects of the industry.