Student Loan Origination Software
College students and recent graduates might not yet be ready to purchase a home, but within the next few years, they are likely to begin searching for a place to settle down. With loan interest rates continuing to rise, it could become more difficult for these individuals to maintain strong credit.
Financial institutions cannot ease those burdens, but it is in their best interests—and that of potential borrowers—to ensure that poor credit does not become worse. By investing in comprehensive lending software, banks can determine the individuals who can handle various loans and make payments on time. This will keep the organization profitable and also help creditworthy borrowers.
The Consumer Financial Protection Bureau (CFPB) recently announced that student loan debt is now outpacing credit card debt by close to $1.2 trillion. Furthermore, the CFPB projects a 20 percent increase in student loan debt from 2011 to May 2013.
Michigan State University student Michael Rands spoke to the Detroit Free Press about his loans. According to Rands, he already had $15,000 out in student loans and will need to borrow more in the fall. With the interest rates increasing, he knows that he will now have to pay more.
“There’s no way for me to afford school without getting a loan, but I need a degree to get a good job,” Rands said. “I’m trapped.”
Financial institutions do not want to fall into their own type of trap either. With strong lending tools, such as credit risk software, banks can determine who the strongest borrowers will be. The more well-rounded view that can be drawn, the more likely that organizations can make decisions that will keep themselves and their customers afloat.