It is the time of year when high school grads will need to think about financing their college education, and recent college grads may also be looking for consolidation or refinancing offers. For education lenders, that means it’s a critical time to get their student loan marketing right to help borrowers navigate some tough challenges.
Student Loan Debt Is Higher Than Ever Before
The latest student loan debt statistics for 2019 show student loan debt continues to grow. I was surprised to learn student loan debt is now the second highest consumer debt category, only behind mortgage debt.
2019 student loan debt statistics continue to be staggering:
- 1 in 4 Americans have student loan debt
- As of 2019, 44,700,000 Americans have student loan debt (a 1.1% increase over 2018)
- Student loan debt is $521 billion more than the total U.S. credit card debt
- $1,560,000,000,000 in student loan debt is owed by Americans in 2019 (a 5.4% increase over 2018)
- $29,800 is the average student loan debt amount for recent graduates
- $35,600 is the average amount for federal parent loans
With so many people owing so much, borrowers are naturally looking for better ways to finance their education and refinance their current payment plans.
Repayment Options for Recent College Graduates
Intimidating as these figures are likely to be, educational lenders are helping recent college graduates navigate student loan repayment by offering two options that could help manage payments and save money:
- Student loan consolidation allows qualified graduates to combine multiple student loans into one larger loan.
- Student loan refinancing allows qualified graduates to obtain better interest rates, reduced monthly payments, or a reduced cost of the loan.
Educational Lenders Are Increasing Their Use of Direct Mail to Reach Potential Millennial Borrowers
Nearly 95% of all student loan marketing via direct mail in Q1 2019 offered loan consolidation and refinancing options, as reported by Competiscan. More than 47 million student loan direct mail offers were sent in Q1 2019—a 56% year-over-year increase compared to Q1 2018’s student loan direct mail volume. That jump is due to significant direct mail increases from SoFi and Earnest, which demonstrates the effectiveness of direct mail in reaching potential student loan borrowers. Citizens Bank, Discover, Earnest, Laurel Road, and SoFi were the top five mailers and sent 87% of the total student loan direct mail volume. New student loan offers are expected to increase again this year as borrowers prepare for the fall semester.
Educational lenders promoted the ease and simplicity of loan consolidation and refinancing to potential borrowers. Here are a few recent examples of student loan marketing messages that caught my attention:
- “At SoFi, we believe simplifying should be, well, simple. That’s why we’ve made it so easy to refinance your student loans.” ‒ SoFi
- “Get your personal rate estimate in 2 minutes BetterStudentLoan.com/easy1” ‒ Earnest
- “Refinance now to shorten your term and do more with your money” ‒ PNC
As mentioned in “Student Loan Debt Trends for 2018: Reaching Grads with Payment Options,” direct mail is an effective marketing tool to reach recent college graduates as they look for student loan repayment options. Millennials prefer receiving direct mail rather than a telemarketing call or an email message, and they are more likely to open and read direct mail based on its personalization and customization.
Direct Mail Best Practices for Student Loan Marketing
Here are a few direct mail best practices educational lenders can use to attract recent college graduates and potential borrowers:
- Benefits Statement: Use color and icons to highlight the benefits of your student loan offer compared to other educational lenders. Consider a unique placement of a Johnson Box—a box of text containing the key message(s)—somewhere in the letter, such as on the left hand side or in the middle, to draw the loan recipient’s attention.
- Omnichannel Marketing: Promote the ease and simplicity of applying by directing recent college graduates to your website or mobile app to apply for your student loan consolidation and refinance offer.
- Personalization: Consider adding a personal tagline to the outer envelope: “John, we make it easy to refinance your student loans!” Personalization adds relevance and increases response and return on marketing investment (ROMI).
Never stop learning. IWCO Direct can educate lenders on direct mail best practices for student loan marketing. Contact us today!
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