I have been in the industry long enough (about 20 years) to remember the creation of the "preferred lender." Its beginnings were pure and humble. Its purpose was to assist the facilitation of the student loan application.
At the time, which was about 15 years ago, at least 40 percent of the applications came in without a lender noted - and subsequently needed to be returned to the borrower. Even back then the days of the family bank were long gone, so the returned application would inevitably initiate a phone call from the borrower to the school or guarantor, asking which lender to choose. All of us would struggle with how to respond, as we felt that we could not recommend a particular entity.
Since this was a common issue that plagued the industry, we devised a process whereby if an application came in without a lender noted, said application would be randomly assigned a lender based on the list provided by the school. I remember the many debates about whether or not such a process should exist: Not in terms of the market and legislative debate today (honestly it never occurred to us), but in terms of the long-term effect on the borrower. The fact that a borrower did not consciously choose a lender could mean they were not actively recognizing that they were applying for a loan - and perhaps were not conscious of the debt they were incurring and that it needed to be repaid.
Remembering this has made me realize how many processes we have put into place to make obtaining the loan easier. Think about it - Electronic Funds Transfer puts the money in the school's account without the borrower even having to see a physical loan check. The Master Promissory Note eliminates the need for the borrower to have to fill out the loan application annually. And e-signature allows the borrower to take on a debt without even putting pen to paper and signing her own name. In our rush to expedite the process, have we in fact made it too easy to obtain a student loan?
Granted, no one wants to return to the days of copious amounts of paperwork and weeks of waiting for a student loan check. But maybe we need to take heed and remember that borrowers are in fact responsible for applying for the loan as well as the debt itself. Perhaps if we took the time to appreciate the borrower's responsibility a bit more, we would remember to include them in the decisions we make on their behalf.
Posted by Shelley Saunders on April 11, 2007 at 11:52 AM EST
Ms. Saunders, I can see how the preferred lender process was easier before, but things have changed. There are some scandals now. Since some lenders have been accused of receiving kickbacks, wouldn't it be natural for upcoming students to be concerned about their loans, and where those loans are coming from?
Posted by James Devinn, Bayport Community College on April 18, 2007 at 03:00 PM EST
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Susan Nathan
Vice President, Lender and School Services
Susan Nathan is Vice President of Lender and School Services at American Student Assistance (ASA)®. She has held this position since October of 2002. Ms. Nathan joined ASA in February 1987 as supervisor of the external program review unit. She has held roles of increasing responsibility in product development, operations, client management and customer service, and marketing. She has been a member of the design teams for a number of ASA’s signature products, including FASTFUND, ASA’s disbursement product, and ASA Direct, ASA’s web processing tool. She was the manager of the business plan for ASA’s major system conversion in 1998.
She is credited with the development of ASA’s nationally recognized client management team. Ms. Nathan oversees the ASA Advisory Council, and is the staff liaison to the Marketing Planning Committee of ASA’s Board of Directors.
Prior to joining ASA, Ms. Nathan was a Financial Aid Officer for Lesley College. She is a graduate of Brown University and a fellow of the Institute for Educational Leadership. She is a member of state, regional and national financial aid associations and is routinely sought by the financial aid community as a professional development trainer.
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