Student Loan Companies: Stand-alone Services

2007-03-08 10:33:40

( Financial )



BRANCHING OUT

In the previous times, lending companies usually specialize in one or two loan products and establish a reputation in that particular field. However as the needs of the market become more complex, more and more financial companies are recognizing the advantages of becoming a one-stop shop for financial products and services.

Often refinancing companies are loan consolidation companies as well because the two financial services are parallel and analogous in nature. Online mortgage companies will also extend other horizontal services such as equity loans and home equity lines of credit.

However, such is not the case with student loan companies. Student loan companies offer a very specific product which targets a very narrow and specific market base, and are governed by separate guidelines. Often student loan companies are non-government organizations mandated by the federal government to provide loans to people looking to pursue professional education.

PUBLIC SERVICE

These student loan companies do not earn profits from providing loans. As the government’s main conduit for federal student loans, these organizations receive subsidies from the government for extending such services. Because these student loan companies are non-profit by nature, to extend other financial products such as mortgages and other types of loans would involve some form of conflict of interest.

On the other hand, there are some private financial institutions that are offering student loan services as well. A common scenario would be refinancing companies or loan consolidation companies offering student consolidation services for those looking to reformat the payment scheme and of their outstanding college debts.

A general rule of thumb if you are planning to branch out your business is to look at your flagship product – what product are you most known for? From there you can offer supplementary products and services that complement one another. And do keep in mind that while expansion can be good, it is not for everyone.


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