No matter which country you plan to study in, or which country you come from, student debt is likely to be a major contender in your decision-making process. Can you get a scholarship? Which location has the lowest fees? Or do you bite the bullet and get a student loan?
It can seem like the hardest decision in the world, but smart marketing ploys from some private student loan providers in the US make it sound like a piece of cake. After all, who wouldn’t want free trips to the movies, exclusive cocktail events with other students and enticingly low-interest rates to fund their degree?
Private loans companies currently own less than 10 percent of the student loan market in the US, previously falling short to federal loans that allowed graduates to take out funds that matched the value of their attendance, according to Inside Higher Ed.
But the scales are speculated to tip towards private providers due to the recent passing of the Prosper Act, which caps graduate loans at US$28,000 to encourage responsible borrowing.
The PROSPER Act would eliminate student loan forgiveness for public service employees &alter income-driven repayment options, increasing debt burdens for struggling borrowers. We must OPPOSE! https://t.co/xIQTlHdpyg #StandWithStudents
— AAUW (@AAUW) April 23, 2018
Private providers can offer uncapped loans to recent graduates, usually with lower interest rates than the government-guaranteed alternative. However, they have fewer benefits such as loan-forgiveness or income-driven repayments, according to Inside Higher Ed.
To position themselves as student-friendly, private companies are not only offering cheap loans but a whole new lifestyle.
Social Finance Inc (SoFi) is a perfect example of this new breed of student loan that doesn’t just fund your socialising; it actually facilitates it.
The then CEO, Mike Cagney, said at a technology conference last May, according to The Guardian:
“We don’t think of ourselves as a finance company, we think of ourselves as money, career and relationships.”
From cocktail parties to cooking classes, SoFi owns more than just your finances; it also influences where you spend it. By the end of this year, they will have held 800 member events in the US and hosted over 42,000 members in total.
These events can be a fun way to meet like-minded people – and who cares about crippling student debt when you’re sipping fancy drinks on a rooftop somewhere, anyway?
The concern is that the trend towards private loan companies acting like a mingling platform is actually a clever marketing ploy. What better way to track spending and complete market research than herding your clients in one place and encouraging them to connect through your in-house messaging service?
Student debt hit US$1.5 trillion in the US this year, according to data released by the Federal Reserve. For international students, the cost is even higher due to inflated tuition fees, potentially weaker currencies and the added stress of being away from home.
Is now really the time for the government to step back and allow private providers to capitalise on the student market?