The way lenders connect with education finance consumers is changing
As the cost of a college education continues to rise, more and more student and parent loan borrowers enter the marketplace, looking for creative ways to finance higher learning, as the pool of traditional funding such as grants and scholarships shrinks and becomes even more competitive to obtain under the added push for financial aid. In response, additional lenders also enter the market, looking to fill
the need by providing the federal and private loans necessary to bridge the gap between the spiraling education costs and limited funding sources. This white paper considers some of the ways that new technology is impacting student loan servicing among lenders, including new entrants to the market and lenders who are looking to diversify.

A need for a new approach
As the dynamics of the education finance industry continue to change, many lenders servicing the space find themselves on Legacy Systems, searching for new technologies and
more cost effective ways to provide student loan servicing.

At the same time, most banks are also looking for creative ways to leverage their existing client base. The problem is that each customer is often segmented into their own “stove pipe” (mortgage loan, auto loan, home loan, student loan) and the various systems don’t “talk” to each other. From a systems architecture perspective, the sheer amount of time and labor necessary to take these outdated database systems to the next generation is frequently daunting and problematic – even for large players in the market.

Even within the student loan process, there are non-integrated multiple systems (Federal, Private, and Consolidation Loan structures) that do not “talk” to each other and the added pressure of more borrowers entering the market has created an even greater need to integrate these systems in the student loan arena.

A solution emerges
Volta™ — the high-voltage student loan origination program — was created and is supported by Sabertooth, a service of Cology. Volta responds to the need for a person-centric approach to loan servicing with a profile-driven web-based approach that allows for total customization according to each client’s particular needs by taking advantage of some of the latest technology available in today’s marketplace.

Volta also provides ease of service in managing clients by combining many student loan products onto one platform and fully integrating Stafford, PLUS, GradPLUS, Private, and Consolidation Loan programs.
This technology creates efficiencies, allowing for more volume at less cost, enabling lenders to become a single source for all loan products that a student or parent loan borrower may need – all within a single technology solution.

A focus on methodology
Volta allows clients to specifically target its customers with a web-based, profile-driven methodology, offering advantages to:

• Lenders:
  • User friendly web interface
  • Ability to profile processing requirements
  • for creditors, guarantors, servicers,
  • lenders, schools, and disbursing agents
  • E-mail communications
  • Person-centric architecture
  • Component-driven processing
  • Component tracking
    
    
• Schools:
  • User friendly web interface
  • School profile provides maximum
  • flexibility with profiles at campus level,
  • profiles by loan type, flexible disbursement
  • set-ups, preferred guarantor or servicer
  • defaults, and the ability to assign school
  • sales/account representatives to campuses
  • Component-driven processing
  • Component tracking

• Borrowers:
  • User friendly web interface
  • E-mail communications
  • Person-centric architecture
  • Component-driven processing
  • Component tracking
  • E-signature

Person-centric architecture means that with Volta, a lender can view all loans associated with a person regardless of relationship (i.e. borrower, student, reference, etc.). This efficient architecture also allows Volta to support all loan processing flows, since all components in any order are readily accepted and processed, including the application, school certification, and guarantee.

Implementing referral partners
While some lenders still go after their own business, the current industry trend is for companies to obtain their business from referral partners. Marketing companies are now the primary source for leads in the field, selling loans to student loan lenders.

Volta processing takes in to account the need for customization in regard to loans acquired in this manner, and it is designed to maintain total control of a loan from receipt of the application through disbursement by offering custom branding through logos, color schemes, messaging, tracking, and e-mail communications. Maintaining a consistent identity with a potential borrower is an extremely important advantage in finalizing the loan application process.

Tracking lenders in the pipeline
With even more referral partners entering the student loan space, a demand for even more simplicity in loan origination was created. Cology Inc. responded to this need with their product named Joule™, backed by their operations center and powered by Volta. By providing a cost-effective entry into the student loan market, Joule streamlines loan origination and gives organizations the power to process and close loans efficiently and quickly. Now, organizations can start taking applications without a high, up-front investment in technology and still gain highimpact customer support services. Referral partner tracking includes multiple levels of referral tracking on each application.

• The web-based referral portal Joule:
  
  • Allows referral partners to enter applications via phone or paper
    
  • Allows borrowers the ability to retrieve, review, and download or e-sign applications
    
  • Provides partners real-time online reporting to track their pipeline
    

Origination options
Clients have options in terms of how to best implement Volta within their organizations. Choices include (1) a full Service Bureau approach (3rd party origination and disbursement), (2) a remote access
implementation, where the client does as much or as little “hands on” as they prefer, with the remaining processing completed by the Service Bureau staff, as well as (3) licensing Volta internally for their own use.

Summary and conclusions
Just as student and parent consumers continue to turn to online resources in hope of uncovering education finance resources, student lenders move to new technologies to leverage existing customer databases, as well as discover new customers. Volta and Joule take advantage of the new architectures to provide efficient, cost effective, person-centric solutions to lenders who are then able to offer
their customers more student loan products at less cost.

Contact information
For more information on Volta or Joule, visit Cology, Inc. at www.cology.com or call 877 COLOGY 3.

Greg VanPelt | 2007 | Cology, Inc.
© Copyright − Cology, Inc. 2007