Leaders in the education finance realm gathered May 24th and 25th in Washington DC for the 9th annual Education Finance and Loan Symposium. The conference included panels that covered everything from servicing trends to new lending opportunities, with a focus on what is to come. Our Founder and CEO Jack Zoeller was among the speakers and provided his insight on two panels.
Day 1 – May 24, 2017
The conference opened with a panel focusing on the state of the education finance and lending industry, including perspectives from a regulatory agency, lending institutions and a think tank. The panel addressed a few specific concerns facing the industry in light of our current political climate, while panelists offered their insights before opening the floor for questions.
Other panels of the day highlighted servicing and collections issues, focusing how these areas will change as technology grows and develops. Texting capabilities and smartphone technologies have greatly reduced some of the challenges associated with both collections and servicing. Companies reported a much higher response rate when borrowers opted in to allow texting, and the ability to text a direct link to a borrower has helped facilitate payment.
Jack spoke on a panel that focused on current origination opportunities in student loans. When asked what opportunities he sees for growth in the space, Jack had several insights into the growing student loan market:
-There are 6,000 banks and credit unions in the US that do not participate in online student lending, which would offer banks and credit unions an opportunity to target millennials
-Parent loan refinancing, including the opportunity for parents to take over a loan from their child (or vice versa)
The day closed with a panel examining what a federal loan refinancing program could look like through a public/private partnership. The proposal would require private lenders to have “skin in the game” and would increase competition for interest rates, yet maintain the current benefits that federal loans offer. Opportunities in private student loan refinancing are only available to a select group of borrowers, but the proposal would offer refinancing to those who otherwise wouldn’t qualify for private programs.
Day 2 – May 25, 2017
The second day of panels opened with a viewpoint different from anything explored on day 1: the university’s perspective. Representatives from Columbia, Purdue and Georgetown University offered their insight on tuition increases and financial aid among some of the nation’s most competitive higher learning institutions. Other panels focused on alternative education opportunities, with the rise of coding boot camps and new models of education through certificate programs. Speakers pointed out that accreditors don’t face any punishment for poor-quality programs, and neither do lenders or schools – only students are harmed by sub-par programs. Panelists made the point that schools, lenders, and accreditors need to shoulder some of this burden, too. The concept of nontraditional lending based on return of investment was introduced, which would make interest rates and repayment options tied directly to field of study. The subsequent panel detailed Income Share Agreements, and future opportunities for universities to implement these payment plans. While these concepts are still new in the student lending world, they have been gaining traction.
Jack spoke on a cloud-based lending panel that explored how non-depository lenders and traditional lenders are partnering to gain market share. Trends in this arena are evolving, and banks are partnering with online lenders to gain exposure to customers (especially millennials) they otherwise wouldn’t have. As banking shifts from the traditional brick and mortar model to an online focus, banks need to keep up with trends and maintain relevancy to retain younger customers.