Transaction Growth of Top Ten Student Loan Companies

Many business analysts predicted that the industry of student loan companies would follow the most common path of being led by just a handful of major players.  But, as the national student loan database providers continued to expand, top rated student loan consolidation companies proved otherwise.

In a 2002 rating of top 100 student loan companies, there are indeed two strong players in the student loan company population that generate about half of the loan contributions.  They are Sallie Mae and Citibank.  In the ranking of the top ten student loan companies, these two companies are the top two.

Then you ask, if there are two players among the top ten student loan companies who account for half the total business of all 100 student loan companies, how then can we say that the student loan industry is not focused on huge players only?

Furthermore, a strong indication of the high probability of ending up with a limited national student loan database includes the significant bank mergers that have occurred in the 1990’s.  There were a significant eight of such banks that opted for this merger : Fleet Bank and Bank of Boston, Wells Fargo and Norwest, Bank of America and Nations Bank and Banc One and First Chicago.  Note that all of these banks were likewise strong players in the student loan company arena.  Again, with less players as a result of these mergers, how can we say it is not a concentrated business market?

What seemed to be a decreased number of players in the national student loan database resulted to better benefits for borrowers thereby encouraging more loan transactions.

If we take a look at the movements of several business entities, including banks, as they move with interest to become part of the national student loan database and their reasons for doing so, we can safely assume that the student loan industry will continue to foster many important players.

Let’s take a few observations on the national student loan database.

First, what seemed to be a decreased number of players in the national student loan database resulted to better benefits for borrowers thereby encouraging more loan transactions. Consequentially, this resulted to a more attractive area of business, thereby causing intense interest of companies who were not among the national student loan database in the first place, to become student loan servicing centers as well.

Second, as proven by Sallie Mae’s acquisition of three non-profit student loan companies and, more importantly, their success keeping these student loan companies as significant contenders in the top 100 student loan players list has likewise spiked the growth of student loan company database.  They may not be among the top ten student loan companies, but their presence and contribution in the industry cannot be ignored.

Finally, we ask, what are the benefits of the current dynamics of student loan company trends?  By having a wide option base of student loan companies, we are assured of continued product and service innovation resulting to better benefits to borrowers.  This advantage is a natural output of the presence of strong business competition.