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How companies are approaching consumer marketing of student loans and how Sallie Mae does it differently. 2008 Southern Association of Student Financial Aid Administrators Conference Crystal City, Virginia Prepared by Sallie Mae Consumer Marketing Department. Topics.

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How companies are approaching consumer marketing of student loans and how Sallie Mae does it differently

2008 Southern Association of Student Financial Aid Administrators Conference

Crystal City, Virginia

Prepared by Sallie Mae Consumer Marketing Department


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Topics loans and how Sallie Mae does it differently

  • Cost of attendance overview

  • What is direct to consumer marketing?

  • Trends in direct-to-consumer student loan marketing

  • Who is mailing what?

  • What companies are selling mailing lists and how do they acquire them?

  • Sallie Mae’s approach to direct-to-consumer marketing

  • How to opt out of DTC marketing

  • Appendix – Sallie Mae’s bedebtsavvy


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How much is the cost of attending college rising? loans and how Sallie Mae does it differently


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2006 Cost of Attendance = $229 billion loans and how Sallie Mae does it differently

Parent/Student Contributions

Down 15%

Federal Student Loans

Up 10%

Other

(Includes scholarships, grants, tax relief and other aid from states, colleges, employers and other sources)

Up 6%

Private Education Loans

Up 21%

Source: Based on estimates by Octameron Associates, “Don’t Miss Out”, 29th Edition; College Board, “Trends in Student Aid”; and Sallie Mae. Includes tuition, room, board, transportation and miscellaneous costs for two and four year college degree granting programs.


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Demand for Private Education Loans loans and how Sallie Mae does it differently

Demand for Private Education Loans

Private education loans help bridge the gap between funding available through government financial aid and the rapidly increasing cost of education

Source: College Board Cost of college including tuition, fees, room and board, transportation and other expenses for degree granting institutions.


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2006 Cost of Attendance loans and how Sallie Mae does it differently

  • In 20 years, average tuition and fees have doubled for private institutions

    • More than doubled for public institutions

  • 05/06 to 06/07 increase for private tuition, fees, room, board is almost 6% to $30,367

  • For public institutions, increase is just over 6% to $12,796


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Borrowing for College Today loans and how Sallie Mae does it differently

  • More than half of all college students borrow

  • Total federal loan dollars AY 06/07 = $74B

    • 139% increase in 10 years in number of loans

    • 20+% increase in two years

  • Total private loan dollars AY 06/07 = $23B

    • 1200% increase in 10 years

    • 64% increase in two years

  • 74% of students use credit cards for school supplies

  • 24% report using credit cards to pay some portion of tuition

    • OF NOTE: Section 529 college savings plan assets = $72 billion in just 10 years


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What is direct to consumer marketing? loans and how Sallie Mae does it differently

  • The promotion of services directly to consumers via broadcast and print media such as television, radio, magazines, mailings, phone calls, billboards, and the Internet.


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What trends are we seeing in the loans and how Sallie Mae does it differently

direct-to-consumerstudent loan marketplace?


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DTC trends loans and how Sallie Mae does it differently

458 million pieces of direct mail offering student loans were sent last year

(Source: Compremedia Dec 2005-Nov 2006)

Consolidation

Loans

PLUS

Loans

  • With the cost of attendance rising, more lenders are using direct mail to market student loans than ever before

Private

Loans


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DTC Trends loans and how Sallie Mae does it differently

  • Private Loan messages are typically targeted to students, not parents

  • More messages are from lenders; fewer messages are endorsed by or from schools

  • Consolidation messages often have official/government look and feel

  • Proliferation of print, television and radio advertising in national publications, airline magazines and networks

  • More aggressive on-campus marketing campaigns


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Who is Mailing What? loans and how Sallie Mae does it differently


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The number of student loan mailings has increased by 50% or more each year over the past 5 years.

Source: Compremedia. Includes Federal & Private Student Loan and Consolidation offers


Who is sending mailings l.jpg

4.0 Student Loans more each year over the past 5 years.

AAA

Academic Financial Services

Academic Lending Center

Academic Loan Group, Inc.

All Student Loan Corporation

American Education Services

American Student Assistance

American Student Loan Consolidation Corp.

American Student Loan Services

AutoMoney, Inc.

Bank of America

Brazos Higher Education Service Corporation, Inc.

Buffalo Metropolitan Federal Credit Union

CFS Affinity Services

CFS-SunTech Servicing, LLC

Charter One Bank

Chase

Citibank

Class Advantage, LLC.

Class One Associates

CLC/College Loan Corporation

Clout College Loans

College Funding Consultants

CollegeInvest

Collegiate Funding Services

Commerce Bank

Commercial Bank of Texas, N.A.

Compass Bank

Connecticut Student Loan Foundation

Direct Loans

Doral Bank

EdFed

EdFinancial Services

EdFund

Edloan

Education Direct

National Student Loans

National Student Loans Direct

Navy Federal Credit Union

Nelnet

NextStudent

North Texas Higher Education Authority, Inc.

NSL Direct

PNC Bank

Sallie Mae

ScholarPoint Financial, Inc.

Student Funding Services

Student Lending Works

Student Loan Consolidation Center

Student Loan Xpress, Inc

Student Trust

Student Trust, Inc.

SunTrust Bank

TCF National Bank

The Educated Borrower

The First National Bank of Bryan

The Student Loan Processors, Inc.

TIAA-CREF

Top Consolidator

U.S. Bank

UFS

University Financial Services

Vista Financial, Inc.

Wachovia

Wells Fargo

Xanthus Higher Education Loan Program

Who is sending mailings?

  • Education Finance Partners

  • Education Loan Center

  • Education Loan Funding

  • Educational Direct

  • Educational Loan Company

  • Fast Payday Loans

  • Federal Student Loan Consolidation Professionals

  • Federal Student Loan Solutions

  • First Convenience Bank

  • First National Bank

  • First Ohio Banc & Lending, Inc.

  • GMAC

  • Goal Financial

  • Graduate Consolidation Services

  • Graduate Loan Associates

  • HSBC

  • Huntington Bank

  • IDAPP

  • JPMorgan Chase & Co.

  • K2 Financial

  • KeyBank

  • Higher Education Resource Loan To Learn

  • M&I Bank

  • M&T Bank

  • Mohela

  • MyRichUncle

  • National City

  • National Student Loan Center

  • National Student Loan Center Finance Unit

Source: Compremedia 2006



Who is sending plus loan mailings l.jpg

Academic Loan Group, Inc. year since 2004

All Student Loan Corporation

American Student Loan Services

Charter One Bank

Citibank

College Loan Corporation

Collegiate Funding Services

Commercial Bank of Texas, N.A.

Connecticut Student Loan Foundation

Education Loan Center

Educational Loan Company

GMAC Bank

Goal Financial, LLC

Higher Education Resource Organization

JPMorgan Chase & Co.

MyRichUncle

National Student Loan Center

Nelnet.

NextStudent

Sallie Mae

Student Loan Xpress, Inc

SunTrust Bank

The First National Bank of Bryan

Wachovia Education Finance

Wells Fargo Bank

Who is sending PLUS Loan Mailings?

Source: Compremedia 2006


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The number of Consolidation Loan mailings has increased nearly 30% per year in the past 3 years

Source: Compremedia


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Nearly 40% of annual loan consolidation mailings hit student’s mailboxes in May and June

millions of pieces mailed

Source: Compremedia


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4.0 Student Loans student’s mailboxes in May and June

Academic Financial Services

Academic Lending Center

Academic Loan Group, Inc.

All Student Loan

All Student Loan Corporation

American Education Services

American Student Assistance

American Student Loan Consolidation Corp.

American Student Loan Services

Bank of America

Brazos Higher Education Service Corporation, Inc.

CFS Affinity Services

CFS-SunTech Servicing, LLC

Citibank

Class Advantage, LLC.

Class One Associates

CLC/College Loan Corporation

Collegiate Funding Services

EdFed

EdFinancial Services

Edloan

Education Direct

Graduate Loan Associates

National Student Loans

National Student Loans Direct

Nelnet

NextStudent

North Texas Higher Education Authority, Inc.

NSL Direct

Sallie Mae

ScholarPoint Financial, Inc.

Student Funding Services

Student Lending Works

Student Loan Consolidation Center

Student Loan Xpress, Inc

Student Trust

SunTrust Bank

The Student Loan Processors, Inc.

Top Consolidator

UFS

University Financial Services

Vista Financial, Inc.

Wachovia Bank

Xanthus Higher Education Loan Program

Who is sending Consolidation Loan Mailings?

  • Education Finance Partners

  • Education Loan Funding

  • Educational Direct

  • Federal Student Loan Consolidation Professionals

  • Federal Student Loan Solutions

  • First National Bank

  • First Ohio Banc & Lending, Inc.

  • Goal Financial

  • Graduate Consolidation Services

  • Higher Education Loan Providers

  • Higher Education Resource Organization

  • HSBC Bank USA

  • JP Morgan Chase Bank

  • K2 Financial

  • KeyBank

  • Loan To Learn

  • Mohela

  • National Student Loan Center

  • National Student Loan Center Finance Unit

Source: Compremedia 2006


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The growth in private loan mailings seems to have leveled off a bit in the past year

Source: Comperemedia. 2007 data is YTD through October.


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Who is sending Private Loan Mailings? Top Mailers in 2007 off a bit in the past year

  • Bank of America

  • Charter One Bank

  • Chase

  • Discover

  • Education Finance Partners

  • GE

  • General Motors

  • Goal Financial

  • KeyBank

  • Loan to Learn

  • MyRichUncle

  • National City

  • PNC Bank

  • Sallie Mae

  • U.S. Bank


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Sample off a bit in the past year

Private Loan

Mailing


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Sample off a bit in the past year

PLUS Loan

Mailing


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Sample off a bit in the past year

Loan

Consolidation

Mailing


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What companies are selling mailing lists off a bit in the past year

and how do they acquire them?


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Industry lists & Compiled Lists: off a bit in the past year

American Student List

Student Marketing Group (SMG)

FastWeb

Kaplan Test Prep

Princeton Review

Alloy/360 Youth

Credit Bureau Lists:

Equifax

Experian

TransUnion

Who sells lists?


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How do companies acquire their mailings lists? off a bit in the past year

Industry lists & Compiled Lists

  • College-bound Students

    • Scholarship searches

    • College prep classes and inquiries

    • Surveys

    • Online websites

  • In-college Students

    • Compiled University Directories

    • On-campus Surveys

    • Online websites

  • General Compiled Lists

    • Product Warranty Cards

    • Public Information sources including:

      • home ownership records,

      • drivers licenses in some states,

      • auto registrations,

      • even college registrations through the freedom of information act.


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How do credit bureau lists work? off a bit in the past year

Credit Bureau Lists

  • Pre-screened Lists

    • All Federally regulated lending institutions are required to report their consumer lending relationships to at least one credit bureau.

    • The mailer submits a list request with specific credit criteria such as minimum FICO score, loan balance, deferred or not-deferred payment status, etc. that meet the requirements for the loan being offered.

    • Mailer must extend a firm offer of credit in their mailing

  • Invitation to Apply Lists

    • Demographic data pulled from the credit files, and compiled lists held by the credit bureau.

    • The mailer submits specific demographic criteria (age, income, age) that they wish to target.

    • No individual credit information is provided to the mailer

    • Mailer is an invitation to apply

  • Firm offers of credit must:

    • State the amount for which they are pre-qualified

    • Tell recipient how to opt-out of receiving future pre-screened offers via bureau


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Sallie Mae’s Direct to Consumer off a bit in the past year

Marketing Approach


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Five Simple Consumer Marketing Best Practices from Sallie Mae

Best practice #1:

Sallie Mae's 1-2-3 approach to paying for college.SM

  • Free - Get the free money first

  • Federal - Apply for federal student loans

  • Private - Fill any gap with private loans


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Sallie Mae Consumer Marketing Best Practices… Mae

  • Encourage students to apply for scholarships and grants first, then federal loans, then private funding.

  • Provide online tools including cost-of-attendance calculators and award letter analyzers to help families determine the cost of attendance at their chosen school and to estimate prospective repayment amounts.

  • Provide online services such as courtesy emails to remind in-school students of FAFSA deadlines, help them borrow responsibly and maintain good credit, and encourage them to graduate.

  • Prevent over-borrowing and provide educational materials and online tools and support on managing finances.


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What should schools expect from lenders? Mae

Require that the lenders you include on your lender lists…

  • Prevent over borrowing by providing clear roadmaps to help consumers borrow wisely and to clearly understand and navigate their education financing options.

  • Teach consumers how to establish and maintain good credit through smart decisions and responsible financial habits.

  • Educate borrowers about their rights and how to opt-out.

  • Encourage students to consult with their financial aid office at every step of the way.


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Cost of attendance calculator Mae

  • Cost of attendance available for all schools

    • COA information gathered from College Board or school profile

    • Used as guide for how much an applicant can borrow

  • Over-borrowing review

    • Originations system now captures borrowers’ existing SM loans & loan requests adjusted accordingly

    • Call to borrower if multiple private loans for same academic period in process – borrower given choice

  • Calculator tool

    • Helps estimate unmet financial need by calculating in-school expenses and any gaps in financing.


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Sallie Mae’s 1-2-3 Approach to Paying for College Mae

  • Guides students to get free money first and provide links;

  • Positions federal student loans as the first loan alternative;

  • Then use private loans to fill any gaps.

  • We also provide helpful resources addressing myths about financial aid


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Graduate Student Loan Pages Advise Federal Options First Mae

  • Place Federal Loans first and advise them that these have more favorable terms,

  • Provide a direct link to a PLUS MPN,

  • Remind them of the federal loan option once again in the text of the private loans


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Private Loan offers remind students about federal loan options and reinforce the message of not exceeding the cost of attendance

Maximum loan amount and loan availability varies by school. Tuition Answer Loan proceeds are solely to pay for a student’s qualified higher education expenses, as described in Section 221 (d)(2) of the Internal Revenue Code of 1986, 26 U.S.C. Section 221 (d)(2), at an eligible educational institution. The expenses considered “qualified higher education expenses” may vary from school to school and may affect a student’s ability to qualify for a school’s financial aid program. Students seeking federal financial assistance should seek that assistance first, and then use the Tuition Answer Loan, and any other private loan proceeds, for any remaining financial need gap and, if necessary, to finance their expected family contribution (EFC).


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Does Sallie Mae sell students other products besides student loans when they contact us?

  • Customer research has shown that our borrowers trust Sallie Mae to refer them to other reputable companies who provide some specific services they need upon graduation.

  • Our partnership process is highly selective and driven by requests and feedback form our borrowers.

  • Customer communications are limited to borrowers in-repayment (NOT to in-school borrowers).


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How can students stop receiving marketing communications? loans when they contact us?

bedebtsavvy

Advice for Any Consumer

Easy steps to:

Opt out of unwanted solicitations

  • Credit Bureau Opt-out

  • Telemarketing – DNC Registry

    Guard against identity theft

  • How to proceed if a victim

    Build and protect credit

  • Understand lending terms

  • Identify/avoid credit scams



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Do lenders take responsibility for helping prevent students from over-extending themselves? Sallie Mae does.

Goals

  • Centralize and integrate Sallie Mae’s debt management materials to for the benefit of a wide variety of audiences.

  • Provide a clear roadmap for consumers for borrowing wisely and navigating education financing options.

  • Teach consumers how to establish and maintain good credit through responsible financial habits.

bedebtsavvy


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What does from bedebtsavvy deliver?

The right guidance for borrowers at the right time:

  • Before college (borrowing wisely)

  • In school (budgeting, learning about credit)

  • About to graduate (understanding repayment options)

  • Out of school (how to get and maintain good credit)







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