Earlier this month, President Biden authorized a bill that suspended the US government’s debt ceiling until 2025 to avoid the country’s first-ever default. While this comes as a relief considering the nature of the alternative, a significant provision was made that requires student loan interest and repayments to resume no later than the end of August. The deal did not address the President’s active pursuit of student loan forgiveness through the Supreme Court, meaning nearly 30 million borrowers will be expected to resume paying off their debt within the next few months. Even with the US government’s income-driven repayment plans, many are bracing themselves for impending financial hardship.
“26.6 million student loan borrowers will be adding, on average, $203 to their monthly household debt obligation of $2600 [when loan activities resume]. Collection efforts, including wage garnishment, will resume for another 7 million loans.” Ellen Callahan & Jessica Steele, SFA Research Corner What to Expect When You’re Expecting: Student Loan Repayment, Consumer Credit and ABS
For a great deal of subprime borrowers especially, the return of these repayments will be an expense that has not been factored into their budget for over two years and one that will exceed what they can afford on a monthly basis. In many cases (part of 7 million in a matter of months, according to the SFA Research Corner), borrowers will have a percentage of their earnings withheld to repay a loan. Because a considerable amount of these borrowers could not afford the payment in the first place, automatically deducting that amount from their income will only be a detriment to their ability to stay current on the other bills they may have been prioritizing.
Servicing Solutions provides primary and backup loan servicing for subprime and near-prime lenders. We recognize that while these loans may present a higher risk to fulfill, they come with a greater opportunity to help people achieve financial freedom. In many cases, these loans are a means for a borrower to rebuild their credit after a significantly impactful event. Without opportunity, there is no space for growth, and we hold that idea as a pillar of our culture. We make an effort to foster meaningful connections with our borrowers and lenders. Through transparency and constant communication, we build trust that both sides will fulfill their obligations.
We take a tactful approach to helping our lenders create bespoke solutions for their borrowers. We build customized loss mitigation programs and have a relentless appetite for support. Each borrower requires a unique set of resources to succeed, so creating an infrastructure to support that is vital. We pair hyper-proactive services with rapid responsiveness and availability to instill reliability. Borrowers know they can talk to us about their circumstances and that we will guide them in the right direction with tools to make their payments on time. Lenders know they can depend on us for clear expectations and accurate reporting. Our representatives are highly trained, not only in the systems they are being installed into, but in empathy and customer experience as well. It goes without saying that a positive customer journey will often lead to more successful outcomes, but this is especially true when it comes to paying off debt.
It is important to consider the power of compassion as a partner in the lending community. Household debt and unemployment rates are on a continuous upward slope, and many borrowers are struggling to face these upcoming challenges on their own. Many lenders are wary of the influx of loans requiring service and their ability to accommodate them on their own. As a trusted partner in the space, we always prioritize a quality experience at Servicing Solutions and offer a broad scope of support to our borrowers and lenders alike.
Learn more about what we can do to assist you by contacting sales@servicingsolutions.com today.