Student loan servicers and collectors who are trying to reach borrowers through the traditional methods like landline telephones and snail mail would be better off shooting them a text message or email, according to a recent survey from the National Council of Higher Education Resources (NCHER).
According to a press release from NCHER, federal loan servicers currently use traditional methods like landline phone calls and traditional mailings to reach borrowers. However, the Federal Communications Commission (FCC) is currently developing new rules to carry out the Telephone Consumer Protection Act (TCPA), which will allow the federal government and its contractors to "robocall" borrowers' cell phones. The final rule is due by early August.
"As new generations of students take out loans to finance their education, it is clear that they will be reachable via cell phones rather than landlines and accustomed to making their financial decisions electronically," NCHER said in the survey report. "These differences between age groups indicate a shift in technology adoption and preferences that policy must adapt to."
The survey included the responses of 4,004 respondents between the ages of 18 and 44 about the most effective methods of communication for helping student loan borrowers struggling with their debt. Over half (55 percent) of the respondents were postsecondary graduates with student loans. Thirty-one percent of the respondents were currently enrolled students with loans and 14 percent were former students with loans who did not complete their education.
An overwhelming majority — 83.2 percent — of survey respondents reported owning a cell phone, while only 27.3 percent said they own a landline.
However, younger borrowers are far more likely to own a cell phone than older borrowers, who are more likely to own a landline. Among borrowers between the ages of 18 and 24, 91.2 percent reported owning a cell phone, compared with only 15.4 percent who own a landline. Nearly 79 percent of borrowers in that age range said they own only a cell phone, while just 3.1 percent reported only owning a landline.
Forty-three percent of borrowers reported using their tablets or computers when making financial decisions, followed by 26 percent who said they use cell phones. Younger borrowers are also 30 percent more likely to conduct their banking over a cell phone than older borrowers, with 34.3 percent reporting it as their top banking method.
Overall, 70.7 percent of respondents said they preferred email, cell phones, and text messaging as their primary forms of communication and the best way to provide information to them. While email was the top ranked method overall at 35 percent, nearly half of borrowers in the 18 to 24 age group said that text messages or calls to their cell phones were their primary method of communication. Traditional mail and landline calls were the least preferred method identified by all borrowers.
Regarding their student loans, 74 percent of all respondents said email, text messaging, or calls to their cell phones would be the best ways to communicate important changes regarding their students loans, such as entering default or becoming delinquent. While email is the top ranked method, 45.8 percent of borrowers aged 18 to 24 said they would prefer a text message or cell phone call. Traditional mail and landline calls, again, were the least preferred method identified by all borrowers.
Survey respondents were given a variety of important events related to their student loans that they would like to be contacted for, such as when a payment is due or missed, or a loan goes into default. Just over 71 percent of all borrowers — and 81 percent of those aged 18 to 24 — selected at least one event for which they would like to be contacted. More than 50 percent of younger borrowers chose "when a payment is due" and 68.4 percent chose either, or both, "when a payment is due" and "when a payment is missed."
Publication Date: 2/29/2016