According to a report by the St. Louis Federal Reserve bank titled “Student Loan Delinquency: A Big Problem Getting Worse?” the Federal government has determined that of the nearly $1.3 trillion in non-bankruptcy-dischargeable student loans, the delinquency rate for students in repayment is over 27 percent.
In addition, prior published student loan reports have stated that the “30+ days” delinquency rate (loan payments delinquent for more than 30 days) for all student loans increased significantly over the past 10 years from 11 percent to slightly above 17 percent. That means the delinquency rate rose from less than one in nine former students a decade ago to over one in four today. This level of delinquency is much higher than for any other type of debt (for example, credit cards, auto loans and mortgages).
Who is responsible for paying back these loans? The former students. They got an education with the hopes of getting a high-paying job that would let them pay off the loans during future employment and now they are working to pay the loans back. These former students can be separated into two groups: Millenials (ages 18 – 26) and the gen-Xers (ages 27 – 39). Many collection agencies are taking on student loans as another account and they are discovering that there is a need to get them to pay the loan back in a timely manner. So how do you do that?
You offer online mobile payments. According to a study by Deloitte.com titled “Unlocking the Money in the Mobile Payment Ecosystem”, millenials use mobile payments more than any other group. Deloitte studied mobile payment usage and 39% of the users were millenials. An additional 31% were gen-Xers. That means that 70% of all people who make mobile payments are younger than 39. Many of these people are college graduates who are now paying off their student loans.
If you own a collection agency that is collecting on a student loan, do you have the ability to take payments by a mobile device? If you own or manage a credit union or small bank that is carrying student loans and you take mobile payments, have you let those accounts know that they can pay via a mobile application? If not, consider doing so. If younger people who owe on student loans realize that they can pay via mobile, they are more likely to make the payments on their loans due to sheer simplicity of access to payments whenever and wherever they want. Writing checks is a burden to these people. But making payments via mobile fits right in to their usual busy lifestyle. When payments are made via a mobile device it will also cut related costs for the agency or collecting financial institution due to the sheer lack of need for agent-to-consumer interaction.
So Invest the time to examine the particulars of your accounts. Any account that is a student loan or is someone who is younger than 39 may be very interested in making payments via a mobile device. Reach out to those people with your mobile offering and you could see increased collection volume at lower costs, truly a win-win for everyone involved.
BillingTree offers a wide range of mobile payment solutions. To learn more, contact BillingTree or call us at 877-424-5587.