Student Loan Borrowers Want Diverse Channels of Communication from Servicers
A recent survey by First Associates Loan Servicing, showed student loan borrowers prefer multiple methods of communication from their loan servicer, rather than the typical home phone call and obligatory letter that most servicers provide. The survey results demonstrated a strong contrast to the limited choices provided by most student loan servicers.
"The responses clearly showed that student loan borrowers want to choose the communication channel that best suits their lifestyle and that traditional servicers are not providing those channels," said David Johnson, CEO of First Associates Loan Servicing." Individual communication preferences change constantly, driven by a variety of factors from loan lifecycle to employment status. Recognizing preferences and incorporating them into operations drives enhanced performance for lenders and superior customer experiences for borrowers."
The survey was conducted on more than 100 individuals from around the country over a one-week period in February, with approximately 75 percent of participants indicating text, email and mobile phone were evenly split as their top three preferences for daily communication use. More than 90 percent of respondents said it was either important or very important that lenders or loans service providers contact them the way they like the most. Despite these responses from borrowers, many servicers have stuck to the strategies they have had in place for the past few decades.
It’s a New World
Managing nearly $2 billion of private student loan portfolios, BPA has seen first-hand how a servicer can affect performance. Experiencing the highest delinquency and default levels of all time, many student loan servicers were not prepared for the increased volume of delinquent borrowers that needed special attention. The old world check-the-box strategy of making four phone calls per month and sending a letter, which many of the large servicers employed (and still employ), simply isn’t cutting it in today’s environment. It is the nimble servicers that have been able to change their outreach and communication strategies that have weathered the storm the best over the past few years. Yes, underwriting matters, but also high on the list is choosing the correct servicer.