CHICAGO, June 17, 2014 /PRNewswire-iReach/ -- National Education's institutional loan servicing business expanded in the 2013 academic year, as several new partner schools awarded their first institution-as-lender loans to school-selected students.
A school-driven program, SAGE Tuition Advantage boasts a 4.84% fixed interest rate and offers generous incentives to its borrowers: 25% potential principal forgiveness for students that both graduate from the lending institution and pay their loans on time, which can result in a 0% or negative APR for borrowers.
Originally crafted to help private schools lower their discount rates, partner schools are now leveraging the low cost and friendly borrowing terms to 1) enhance recruitment of new students, 2) improve enrollment of students that appeal their initial award, or3) save "financially-fragile" and gapped students from stopping out. In all scenarios, the loan program serves as an alternative to giving away more unfunded aid. Schools proactively target qualified candidates by including the loan program in financial aid award letters and also retroactively respond to student inquiries as need arises.
In that light, National Education revised its program terms to ease or remove credit requirements at the request of the school, eliminate the need for co-signers, and increase the maximum annual loan limit. Ken Bogacki, Vice President of Product Development at National Education, states "It was necessary to make changes to product design so we may better accommodate the majority of our clients and the students they serve. Given the primary focus on recruitment and retention, non-credit-based loans with relaxed lending restrictions make the most sense." He continued, "Schools pre-determine need and risk tolerance prior to offering loan awards to their students. To then disqualify students based on credit denial or the inability to find a co-signer would leave these financially-fragile yet desirable students at risk of dropping out, which we certainly want to avoid."
This tactic may already be paying off, at least for one school in North Carolina, which announced the arrival of its largest class of first-time freshmen in over a decade, packaging nearly 70 loans in pre-selected students' award letters.
As early results indicate, the Sage Tuition Advantage program has not had a negative impact on yield or retention. At an average net price of $40,000, a school that adds or retains 25 students will see an immediate increase of $1,000,000 in revenue and will generate positive cash flow as students repay their loans. Schools can increase net tuition revenue without stressing their discount in a period of unstable enrollment growth.
For more information about NES and services offered, please visit www.nationaled.net.
National Education, established in 1988, is a financial solution company sharply focused on developing, marketing, originating and servicing education financial products. National Education has received the "Exceptional Performer" designation from the U.S. Department of Education.
For more information, contact:
Ken Bogacki, 800.345.4325 x5509, VP of Product Development, National Education
Bill Engler, 800.345.4325 x5108, National Sales Manager, National Education
Media Contact: Ken Bogacki, National Education Servicing, 312-205-5509, email@example.com
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