Student loan debt: What can we do to help?

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Dave Rudd

Politicians, economists and consumer advocacy groups bemoaned the extremely high rising costs of healthcare until their outrage reached such a high pitch that Congress passed the Affordable Care Act. This legislation was “sold” with the idea that a centralized, controlled and monitored healthcare would lower costs.

It might be too early to pass final judgment on the cost-controlling features of the Affordable Care Act, BUT there is another industry with costs skyrocketing beyond healthcare expenses, which until now, seems to have remained just below the radar: higher education.

The New York Times recently reported that “66+ percent of students who earn a bachelor’s degree borrow to pay for higher education—up from 45 percent in 1993…This includes loans from the federal government, private lenders and relatives. For all borrowers, the average debt in 2011 was $23,300, with 10 percent owing more than $54,000 and 3 percent more than $100,000.”

The Times continued: “The cost of tuition and fees has continued to increase faster than the rate of inflation, faster even than medical spending. If the trends continue through 2016, the average cost of a public college will have more than doubled in just 15 years according to the Department of Education.”

Personally, I am a huge proponent of higher education. In fact, I believe education is one of the main keys to solving poverty and other challenges facing our country and world. Economists state that in the long run it is still better to graduate from college with debt instead of not graduating from college.

Many financial experts consider student loans to be a “good debt.” But at what point does the debt that potentially sinks our college graduates and dropouts do more detriment to our economy than not obtaining an education?

This is not a simple problem that can be resolved quickly or even magically with new legislation. It will require state governments, colleges, financial and even the ARM industry to work together to find a workable solution.  College costs need to be reined in and our students need to have the ability to pay back these outrageous loans.

How can the ARM industry assist those facing such massive loans, just after graduation and even 10 or 15 years down the line? We can help graduates figure out how best to handle their payments and successfully pay the loan(s) off in a timely, but realistic manner.

A few suggestions for doing this:

  • Assign agents to be “student loan specialists.” If you aren’t exclusively concentrating on student loan debt (or have different types of loans you’re dealing with), specializing can give the agents an edge in knowing how to approach the person. There are dialing technology features that allow you to pre-assign and schedule lists for whole groups of agents. Plus, call routing features available make sure inbound calls are sent to the right group of agents. Ask your dialer vendor about the possibilities.
  • Treat them with respect. Not that you shouldn’t do this anyway, but it’s a different kind of debt, and a different circumstance than someone buying a pair of shoes and then not paying for it. The person probably thinks of it that way, too, and might be much more cooperative if we acknowledge the difference.
  • Keep reminder calls friendly, but persistent with IVR Messaging.
  • Give them a lot of payment options, especially online options. Younger graduates are much more likely to go online than call or mail something in.
  • Try feinting. Read this blog post for ideas on “mixing-up” contacting strategies.
  • Show them how paying their debt will be beneficial for their credit score. Without decent credit, they won’t be able to buy the house/car/boat they dreamed about in college.

The ARM Industry is in a great position to help manage and resolve the current student loan tragedy. We have the people, tools, experience and ingenuity to help guide our debt laden college graduates back to solid financial ground.

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Posted in DialerFan | Brought to you by IAT, Opinion .

Continuing the Discussion

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  • avatar Brenda Pierce says:

    I just had the opportunity given to me to repay my student loan on a Rehabilitation Loan? They offered me great rates, I get the derogatory marks taken off my credit and I get my “title 4 ” back after 6 months of payments, which means I can then go back to school with more financial aid. Solves the debt issue, as well as the inability to utilize the student loan process to further my education, because, obviously I didn’t take enough classes to earn a good living!

  • avatar Steve Marcus says:

    If the student loan scenario wasn’t bad enough!!!!

    Beware the Student Payment Card. College Associated Debit Cards Carry High Fee Risks

    The U.S. Public Interest Research Group Higher Education Fund, in a report published this week, revealed that colleges are making secretive deals with banks allowing them to make millions in fees from student payment cards. The report said that two out of five U.S. higher-education students, or more than 9 million people, attend schools that have these deals with financial companies, and the fees may violate federal rules. For example, one financial institution charges a “lack of documentation fee” to students that fail to provide certain paperwork, while the U.S. Department of Education has advised financial aid officers that such a fee is not permitted. The colleges are also using the payment cards as a means of distributing financial aid to the students – at the student’s own expense.

    The usual process is that federal financial aid is sent directly to colleges. After the college takes its tuition they disburse the remainder to students. Previously, the college would issue a check for the remainder to the student which did not cost the student anything or generate revenue for the school or banks. Now, these same colleges have lucrative deals with financial institutions to perform those functions while encouraging them to deposit the money with those institutions. There are many ways in which the aid is distributed – checking accounts with debit cards, prepaid debit cards, even campus IDs that double as payment cards. Students need to be aware of other low-cost options to access their student loans and scholarships.

    Stephen Marcus, president of A New Horizon Credit Counseling Services said, “This is a clear example of colleges redirecting their cost of distributing financial aid dollars from the school to students, and then charging them a fee as a thank you. In other words, millions of dollars are skimmed from the student aid funds in fees that were never charged to the student before.” A New Horizon provides Credit Counseling and Debt Management services to the public. Marcus advises students to refuse the payment card programs and take their funds with either a direct deposit or a paper check from the lender.

    The fees charged on these payment cards ultimately increase the total debt that the student has already undertaken to receive their education and can linger for many years to come.

    If this isn’t a legal conflict, it sure would appear to be a moral one.

    Steve pres@anewhorizon.org

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