Student lending

The student lending market is very large, complex, disrupted, and growing. Tuition and fees for a four-year public institution have risen on average 5.2% annually for the past decade driving outstanding student loan debt to surpass $1.2 trillion. Students and their families are now beginning to question the value proposition of obtaining a higher education degree. These market dynamics coupled with the passing of comprehensive education finance reforms in 2010, and the increased scrutiny from the Consumer Finance Protection Bureau (CFPB), have forced the student lending industry participants to rethink many aspect of business models. Particular areas of focus by many industry participants include:

Regulatory Scrutiny from the CFPB in the form of examinations and subsequent issue remediation. Many lessons have been learned from the CFPB’s scrutiny of the mortgage industry that can be readily applied to the student lending industry.

Customer Centricity that is now at the forefront of many strategic initiatives. Between the CFPB and fierce competition among the major industry participants, the customer can no longer be treated as simply an applicant. Customers are demanding and responding to a more personalized approach to lending.

Channel Strategy and Channel Management approaches that are being actively tested with a renewed focus on data analytics to better understand applicant and borrower behaviors.

Operational Excellence in light of the new market dynamics. Industry participants are seeking the optimal approach to managing the lifecycle of the borrower from application submission to making their last payment.

PwC’s student lending team can help industry participants such as lenders, originators, servicers and collections agencies with critical strategic, operational, regulatory and analytical services such as:

  • Development of growth strategy for student loan portfolios
  • Operational and regulatory risk assessments
  • Strategies and approaches to manage compliance with upcoming CFPB oversight
  • Vendor surveillance program assessment
  • Development of operations excellence strategy and capability
  • Operational policy and procedure development an assessments
  • Development of customer experience strategy
  • Default management strategy and business model implementation
  • Retooling sub-optimized segmentation strategies
  • Technology platform assessments and rule development
  • Advanced decision analytical tools, models, and management