I recently wrote a post on the Prodigy Finance blog discussing the oddities of the preferred lender list situation in the U.S. The article spells it all out but the gist is that the differences in approach by different schools makes things confusing for students and when you extend that to international the students the weirdness multiples. Why? Because schools have been without options for so long that they have tended to work with the one lender to which they provide a guarantee. Throwing other loan businesses into the mix can upset the relationship and create some mix issues in the guaranteed portfolio.
I can’t think of a banking sector that is more convoluted then student lending. And while some of the underlying dynamics driving up student debt levels may be in the very early stages of abating, I don’t see any likelihood of things changing soon. Smart banks can take advantage if they approach the business carefully.
Photo by Pabak Sarkar