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If you are in the business of providing student loan consolidation services, you may be concerned about the negative news coverage. Recent findings tell us concern over reliability is nonsense. In 2015, the Consumer Financial Protection Bureau declared the student lending crisis overblown.
The truth remains that banks consider student loan consolidations less risky than school-issued loans. Original loans go to students in the midst of their studies. Some haven’t even declared a major yet. Consolidation loans, on the other hand, require that the student has graduated, is employed, and has a track record of repayments on outstanding consumer debts. These three criteria reflect an individual in a far less risky situation.
Another benefit of student loan consolidations over government loans is that the enrollment application process is easier to navigate and less complex than enrolling for a Federal student loan.
The whole student loan consolidation service industry has grown. In the United States, the outstanding student loan debt currently stands at more than $1 trillion dollars. The Consumer Financial Protection Bureau’s did an analysis that indicated 1.58 million student borrowers were enrolled in a repayment plan that was income-driven.
The student loan consolidation industry is starting to change. The latest trend indicates that rather than focusing solely on a student’s FICO score, loan consolidators are looking more towards a student’s earning potential based on the college diploma earned. Even with a low FICO score, a student can still be considered creditworthy with a degree in a high-salary subject (engineering, e.g.).
Another trend bodes well for the industry. Graduates are still able to refinance a federal student loan through a private consolidation service without losing the protections from a federal student loan.
Federal Student Loans Are Not Necessarily Secure
Once you convince your clients that private student debt consolidation works as well for recent graduates as public version, success in the student debt consolidation industry follows.
Explain to clients that the government itself in in currently debt by more than 19 trillion dollars. If a student gets a federal loan, it is basically backed by that national debt. Federal funding for a student’s education runs the risk of becoming null and void. A private firm student loan, however, is backed by private lenders, and potentially more reliable.
The Merchant Account Connects the New Grad and the Loan Provider
You may have already learned that your student loan consolidation business falls into the high risk category. Don’t panic about obtaining a merchant account. First Financial specializes in high risk industries and will make sure you can process the payments coming in. Read about our student loan services merchant accounts here!
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