There are countless colleges across the US offering education in many different fields, from law schools training up the next attorneys to medical schools educating aspiring doctors, nurses, and surgeons. However, one thing that binds these colleges and schools together is the fact that they can charge very high fees for their services.
Student loan companies exist to help out, providing students with funding and other financial services to be able to pay for their studies and enjoying the benefits of advanced education. In order to run a student loan company, like a student relief business or debt consolidation company, you have to a student loan merchant account. This guide will cover all you need to know about student loan merchant accounts.
Statistics show that the total value of US student debt is in excess of $1.5 trillion, with tens of millions of Americans owing money on their student loans and the average college student graduating with close to $40,000 to pay off. Given these high costs, there’s clearly an urgent need for student loan relief and consolidation companies to assist the many students and graduates with their debts.
Student loan companies like debt relief companies help to make it easier for students and graduates to manage their debt. They can offer a range of services to restructure or redefine the terms and conditions of loans, such as adjusting rates or extending terms to give borrowers more time and flexibility to pay off what they owe.
Setting up a student loan business of this kind can be a great way to not only help borrowers in need and give them more time to pay back their debts but also to make a lot of money in the process via service fees and interest. However, in order to accept payments and handle the day-to-day operations of this kind of business, a student loan merchant account is a necessity.
So what exactly is a student loan merchant account? You might be wondering about how student loan merchant accounts work and why your student loan company might need to obtain a merchant account in the first place. Well, in order to understand the specifics of what they do and how they work, you need to know the basic definition of a merchant account.
A merchant account is a special type of business account that is used for facilitating and allowing secure online electronic transactions. In simpler words, merchant accounts make it possible for a business to get paid digitally. So, if a borrower at your student loan company wants to make a repayment by card online, you’ll need a merchant account to accept that payment.
The customer’s money will leave their account and enter the merchant account, where it will be held and processed before passing through to your main business account later on. It’s a very simple process, and the merchant account is a vital piece of the puzzle for allowing these kinds of transactions to happen safely and securely.
And these days, a lot of student loan repayments are happening online; students like to be able to log in to their student loan accounts, see their remaining balances, and make repayments to pay off the debts they owe. You can’t really run a student loan company without having a merchant account in place, but getting a student loan merchant account can be a real challenge.
We can clearly see that having your own student loan merchant account is vital if you want to run a student loan company in the modern world and receive repayments electronically. However, a lot of banks and financial institutions refuse to offer merchant accounts for student loan companies because the student loans industry is seen as a “high risk industry”.
There are many different high risk industries out there. These are types of industries that are regarded as dangerous or unreliable by banks. The student loan industry falls into this category, and so banks will often decline to work with student loan companies because they don’t want to deal with all the associated risks of high risk credit card processing.
The worlds of student loans and student debt consolidation are seen as particularly risky for several reasons. One of the biggest issues is the possibility of chargebacks. Students who make payments by credit card could dispute those payments and try to get their money back, leading to additional fees and hassle for the banks and payment processors involved.
There’s also a risk that debt consolidation companies can take on students who aren’t able to pay back the money they owe. This can put the company in financial difficulty if they give out too many loans and aren’t actually able to collect the money they need to cover the repayments. Because of all this, banks can sometimes prefer to not work with these kinds of businesses.
Due to the high risk credit card processing involved in the student loan business and student debt consolidation industry, it can be difficult to get a student loan merchant account for your business. So what can you do if you’re setting up a student loan relief company and want to get one of these accounts in order to receive payments online?
Well, Shark Processing can help with that. Even though some banks may refuse to work with you, there are still plenty of other banks and payment processors out there who are happy to offer student loan merchant accounts, and we’re here to help you find them, boasting one of the biggest networks of high risk merchant account providers anywhere in the world.
With the power of our network, combined with our extensive experience in high risk student loan merchant accounts and businesses, you’ll be able to get an account with fair rates and fees quickly and conveniently. We aim to make the process of opening a student loan merchant account as simple as possible. Contact our team today to find out more.