It’s no surprise that the student loan sector is a multi-billion-dollar industry where traditionally only key players have been involved. This historical circle of key lenders meant that students and parents across all economic backgrounds could only tap into a few options to gain access to funding needed for higher education. However, with 30 to 40 percent of undergraduate students needing to access a student loan each year, it’s no wonder that the demand for more loan service providers is now on the rise.
Interestingly, a positive shift is now taking place that allows fintech companies – and even non-bank lenders of all sizes – to get involved with the student lending marketplace. This trend could be especially impactful since fintechs can now add a student loan or student loan refinance product to their service offering, especially if they have other loan products that may not be performing so well in this current environment.
“This current environment has been tough for many finance organizations which is why it’s a great time for them to explore other options,” said Sara Parrish, President of CampusDoor. “We make it seamless for fintechs and non-bank lenders to enter into the student loan sector because we remove barriers to entry on both the tech and compliance sides.”
Parrish continued by saying, “It takes a BIG investment to develop the level of expertise needed to make a splash in this asset class, but organizations like ours exist to empower lenders of all types and sizes to make the leap into student lending in a more cost-effective way. It’s our job to take care of the hard stuff so lenders can focus on acquiring customers for life.”
CampusDoor is one of the nation’s largest third-party student and specialty loan origination organizations. The company provides innovative, white-label solutions to all types of lenders enabling them to help customers finance a college education, pay off high-interest debt, or cover other unexpected costs.
In fact, CampusDoor’s Student Loan in a Box service provides a unique plug-and-play technology system that enables service providers to meet the student loan needs of their customers without them needing to hold these assets on their books.
“Our solution is perfect for fintechs, and we’ve supported many of them as they took the plunge into the student loan and student loan refinance industry,” Parrish added. “We support the program design, help navigate the compliance landscape, host the application, perform the underwriting, and provide an entire origination operations team. We make it easy.”
There are also a number of benefits that fintech companies can realize by offering student loan solutions, including:
Relationship building: Fintechs can begin building a relationship with some of their younger potential customers, especially within the GenZ audience. After delivering a positive experience, fintechs can use this goodwill to continue targeting this group for additional financial needs in the future, including mortgages, business loans, and other lending products down the road.
Driving revenue during a challenging period: It’s no surprise that the lending industry is being hit hard by a combination of economic factors. The ability to provide alternative services like student loans can provide a stable revenue stream for companies that may be trying to make up for losses they are experiencing in other areas.
Playing a role in driving more access: Students and parents need more options. As such, with fintechs becoming a part of this multi-billion-dollar sector, they can be seen as helping to drive more innovation and access as they work to better serve the needs of those seeking funding for higher education.
The bottom line is that private student loans and refinances provide a bridge for other financial entities, like fintechs and non-banks, to step up and meet a need, especially when mortgage originations and refinances are being challenged. If these fintechs can attract students or new graduates now, they have a good chance of participating in the ongoing lifecycle of their future funding needs. Innovative companies like CampusDoor not only play a vital role in helping fintechs to build a strong student lending program, but also in helping to reshape the student loan industry as we know it.