By Jessica Duncan, Senior Director of Insights
School is back in session and a hot topic this August was President Joe Biden’s announcement on Federal Student Loan Forgiveness. On August 24, President Biden announced that qualified borrowers would be eligible to apply for up to $10,000 in federal student loan cancelation. In response, lenders released communications to help explain the announcement to customers and what this could mean for them. A wave of refinance communications were also sent, encouraging customers to consider refinancing as another money-saving option if they did not qualify or if they had existing private loans. This edition of Commentary focuses on what Competiscan observed from a marketing perspective, including noteworthy tactics and the impact the announcement had on student lending communications in the days and weeks following.
Educating Customers
Raising awareness to topics that are important to your customer base is a staple best-practice used in marketing. It can build deeper trust and reliance on your institution. The day following the announcement, SoFi included an article within its SoFi Daily News email with the headline “What you Need to Know about Biden’s Student Debt Relief Announcement.” The article covered the basics regarding who would be eligible based on income and other key takeaways. More importantly, they offered a link for customers to visit if they had more questions. Ahead of the link, SoFi stated “It’s natural of us to have questions.” This showed customers that they were anticipating their needs and proactively offering assistance in understanding the already complex system of student loan repayment.
Customer Service Impacts
Loan servicers were flooded with customer inquiries triggered from the announcement. Social media was the preferred channel of response, enabling institutions to share timely updates on call-in delays and to provide additional resources to minimize call volume. Nelnet released a series of tweets between August 24 and August 26 asking its customers to refrain from calling as they were experiencing extremely high website and phone traffic. They addressed that there was no immediate action to take and offered links to resources that included up-to-date information. Another customer service topic addressed was the possible threat of increased scams. IH Mississippi Valley Credit Union took to social media to outline the steps its customers should take to avoid being taken advantage of by scammers.
Prompting Customers to Check Rates
Hot topics make great conversation starters, and lenders used this announcement to encourage customers to check rates and consider refinancing. Thus far in 2022, August was the second highest month of estimated email volume activity observed for educational loan refinance and consolidation offers. SoFi, Citizens, and Splash Financial were the top three marketers observed in August. In total, they accounted for over 90% of the estimated email volume captured by Competiscan in this category. IH Mississippi Valley Credit Union, LinkedIn Sept. 5 Nelnet, Tweets August 24 – 26 For more information on marketing trends, Competiscan clients can view our archive of reports and insights online. Not a client? Sign up for a demo today. LinkedIn: Competiscan Twitter: @Competiscan Instagram: @Competiscan ©2022 Confidential & Proprietary. All Rights Reserved Prompting Customers to Check Rates (continued) In an email offer that was sent the week after the announcement, Earnest did something clever by placing a “Check Your Rate” call-to-action directly below a headline that said “Now what? Let’s break down the debt cancellation, CARES Act and more.“ The reader was redirected to a landing page that offered a small paragraph on the latest news, but presented large, colorful visuals of Earnest’s current fixed and variable APRs and a bold call-to-action to take two minutes to see if refinancing could mean a lower rate.
A Combination of Factors
Rising interest has been another motivating factor used in messaging. Lenders have urged customers to consider refinancing and lock in a low rate, similar to the message used by Splash Financial in an email offer sent the day of the announcement.
Overall, the Federal Student Loan Forgiveness announcement may have sparked questions and raised conflicting opinions, but it also created an opportunity for lenders to capture marketing attention for its products and services. This topic will continue to be a talking point and area of focus for lenders and student loan servicers in the months and year ahead. Maybe SoFi was on to something with its latest email offer that used a subject line of “How does a migraine-free student loan application sound?”