A Question of Price

I've been looking into the pricing structures of my competitors. As I look at how some charge for services, I can't help but think schools (and students) are getting fleeced. Its such a simple idea that its being overlooked.

Many (most? all?) default prevention companies charge per delinquency per month. Meaning if Johnny is past due, that school attempts to contact him and charges whatever the agreed upon amount is. Let's say the phone representative helps Johnny get a forbearance that lasts six months. This means that within the same year, Johnny can be past due again. Which in turn, said company charges another fee since it is a "new" delinquency.

There are two questions that I am left thinking. What will happen as schools now have a three-year CDR to deal with? What is the incentive for the these companies to impact delinquency in the long-term? If your school uses one of these companies, you should ask these questions. I'd surely be interested to hear an official response. Perhaps there is something I'm missing in the equation.

It is with these considerations that I know I have a special model in place. My business will only be successful if we can actively lower a school's CDR in both the short and long term.