For students pursuing higher education, loans may be simply a fact of life. It is nearly impossible to attend any institution or pursue any sort of degree without borrowing some or all of the tuition required.
When attempting to collect student loan repayments, it is important to understand how graduates perceive their student debt and the reasons they may not be repaying. Taking a closer look into the mind of a graduate could be the key to recovering your funds faster and easier.
How Student Debtors Perceive Their Loans
A study was published in the Journal of Student Financial Aid entitled “College On Credit: How Borrowers Perceive Their Education Debt.” The study was conducted by the Nellie Mae Education Foundation and was the fourth of its kind. Since 1987, Nellie Mae has surveyed students about their federal financial aid borrowing patterns and how it affects their lives after post-secondary school.
Over 1,200 students in repayment were surveyed for the study, representing students from all over the country. The average amount of debt students carried in 2002 was $27,908, with an average monthly payment of $261. For the class of 2017, this average amount has now grown to $39,400 with a monthly payment of $351.
The survey looked at the debt burden of these students, or the percentage of their income they used to repay the loan. It differed according to which level of accreditation they acquired:
The survey also revealed some of the underlying attitudes these graduates had toward the loans themselves. Some of the feelings were negative:
- Over half felt financially burdened by their student loan debt
- The same number reported that if they were to do it all over again, they would try to borrow less
Despite this, however, there was positive feedback from many respondents:
- Two-thirds of those surveyed said that student loans were very important in their pursuit of higher education
- 72% reported being “satisfied or very satisfied” with the investment they made in their education with student loans
In its conclusion, the Nellie Mae study reports that while there hasn’t been a significant decline in standards of living for student borrowers, mounting education debt factors into the delay of major life events for students, such as purchasing a home, having children, or getting married.
And in a similar study, many psychological factors come in to play, with more than 67% of respondents reporting physical symptoms of anxiety due to stress from student loan debts.
So what does this data tell us about how students actually feel about their student debt when they finish school, and how can that help your institution recover the funds in a way that keeps everybody happy?
A Compassionate Approach to Collections
The main takeaway from this study is to underline the contrasting feelings graduates have toward their debt: while they suffer under the constant pressure of paying it back, they also recognize that borrowing the money was a wise decision and crucial investment in their lives.
This allows recovery professionals to approach collecting the debt owed in a compassionate and respectful manner that gets borrowers back into repayment status. There are a number of ways to support the feeling graduates have that borrowing the money in the first place was a good move while relieving some of the pressure associated with paying it back. Methods include:
- Coming to an agreement on an extended repayment plan
- Offering repayment plans that are tied to current income
- Removing prepayment penalties on student loans
- Offer loan forgiveness programs to graduates entering specific careers (e.g public service)
We understand the multiple emotions associated with student loan repayments. We can help you recover your funds in a timely, yet compassionate, manner, supporting your institution as a destination for higher education. By working together with graduates, educational institutions, and funding agencies, we ensure the highest level of respect and integrity. To learn more, contact us today.
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