As we move into August, peak student lending season is in full force. The NJ Higher Education Student Assistance Authority (HESAA) released a report on trends in loan volume for their private student loans. While their report was specific to their loan product and the New Jersey market, the trends seen are similar throughout the private student lending market. In the past seven years, over 75% of yearly loan volume has been approved between June and September. Each year, more students are waiting to apply for private student loans until August because they have to wait for the results of their Free Application for Federal Student Aid (FAFSA) to determine their need. Last summer, NJ HESAA did over 50% of their 2008 private student loan originations in August. Targeting this peak period in your lending strategy is incredibly important for increasing student loan volume.
Here are 4 strategies for originating private student loans during peak season:
1. Train your staff. Applying for financial aid and federal loans can be confusing, so your staff needs to be ready to help students and parents who come in with questions. Your branch staff should refer your members to the appropriate member of the lending staff for help as well as be able to explain the basics of your loan product when asked. Your lending staff should be able to help guide your members through the FAFSA process before selling them on a private student loan.
University of Wisconsin Credit Union ($1.2B in Madison, WI) has trained its lending center employees so that they are knowledgeable about the entire financial aid process. They have monthly meetings to go over any new information, such as how changes in the FFEL Program will affect the credit union and its members. The lending center employees can help members every step of the financial aid process, even if the members decide they don’t require additional financing from the credit union. This service to members builds a stronger relationship between the members and the credit union, and increases the probability of the member coming to the credit union for financing in the future.
2. Educate the community. Reach out to high schools or hold financial aid seminars for the community. Teaching families about financing college will make them smarter borrowers and will connect your name with student lending in their minds.
Holy Rosary Credit Union ($142M in Rochester, NH) held a seminar in April for members of the community. They covered the entire financial aid process, from looking for grants and scholarships, to filling out the FAFSA, to alternate financing, such as work-study and private loans. Not only did 130 people showed up to learn about paying for college, but through word of mouth, even more families found out about Holy Rosary’s fair value, private student loans.
3. Partner with schools. Cultivate relationships with financial aid offices. Submit RFPs to get on the preferred lender lists. Many students select their lenders from these lists. Working with colleges can be hard. For some tips, see 5 Steps to Productive Relationships with Your Local Universities.
NuUnion Credit Union ($837M in Lansing, MI) has been able to get on the lists of several colleges in Michigan. Just from being on Central Michigan University’s lender list, NuUnion has seen big results. 31% of NuUnion’s application volume, to date, is from students attending Central Michigan.
4. Do some traditional (or not so traditional marketing). Make statement stuffers, pu posters in your branches, or create radio spots. One credit union even advertised their student loan on a billboard. Get creative, and get your name out there before and while people are looking for alternative student loans.
Erie General Electric Federal Credit Union ($183M in Erie, PA) created a TV ad to showcase their private student loans. Grow Financial Federal Credit Union ($1.7B in Tampa, FL) recorded a radio spot talking about the financial aid process and introducing their private student lending program. TV and radio are two effective channels for building brand recognition.