However, if the student has a problem with the school, the student may not pay. But if a student has a problem with the school while dealing with us, he is much more reluctant to stop paying because we are an outside credit corporation. The schools are the good guys, and what they're doing is giving the student an education. Students probably prefer to pay the school because they know we are going to go after them more than the school would. There's much more to collecting loans than sending bills and bugging students on the phone if they don't pay.
Many schools mistakenly think they can save money by servicing loan accounts themselves.
It's actually less expensive for a school to outsource tuition receivables to a third party loan provider. Yes, you need to call them on the phone, and you have to track when they are past due. But you also have to send out notices. We use 14 different kinds of notices in different colors, sizes and formats. Usually if a school sends notices and uses a software program, it will send out past-due notices that all look the same.