Latest trends in consolidated student loan leads

By Maria WoodSeptember 8, 2014

Student Loan Leads – The Latest Trends

With student debt in the US passing the trillion-dollar mark, the opportunity for lead generation firms to bring together graduates who want to consolidate or refinance their loan burden and the companies that can help them is great. However, the market, particularly the underwriting component, is undergoing changes.

Those changes were detailed during a LeadsCon NY session, “Financial Services Leads for Student Loan Consolidation: Making it a Win-Win for Providers and Customers.” Moderator Joe Deal, founder and president of Degree Prospects, LLC, led the discussion.

Underwriting standards in the student loan market are shifting, according to Matt Levin, head of business development of CommonBond, which focuses primarily on the consolidation and refinance market for graduate school loans. Instead of merely capturing an individual’s address and FICO score, lenders now want to know what school that person went to and his or her degree. “Bankers need to know that,” he said. “That’s a critical piece of a good lead.”

That’s because, as Stephen Dash, founder and CEO of Credible.com, explained, someone who graduated from at a top-flight school and has a degree in a high-earning field such as medicine or engineering is seen as creditworthy by a lender, even if that person has a FICO score of less than 800. Accordingly, lenders focus less on FICO scores and more on factors like school, degree and employer when assessing income potential, added Levin.

Moreover, Dash said he has noticed that lenders are “moving down the credit scale” in the student loan consolidation and refinance arena. That trend, combined with new entrants into the space, gives consumers more choice, he added. And by playing in the student loan refinance market, lenders have the opportunity to cross-sell other financial and insurance products to “high-value customers,” Dash continued.

However, succeeding in the student loan consolidation and refinance field comes in part from educating the public. Dash said content marketing to inform college grads about how much money can be saved by lowering interest rates is a major part of his strategy.

Likewise, Levin said that many graduates may not know that they can refinance federally backed student loans in the private marketplace without necessarily losing the protections written in their federal student loans.

Nicole Matz, marketing account manager for Reven Marketing and Media, stressed that buyers of these leads must do their due diligence about how the leads are generated, and providers need to focus on compliance. Also, it’s vital that loan consolidation companies not mislead the public into believing they are affiliated with the federal government or the Department of Education. She added that it’s expensive to get quality leads but doing so is important because “you don’t want the FTC on your back.”

This article was brought to you by LeadsCon.

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