ACS, Direct Loan Servicer, Indicates Strength in Student Loan Segment During 4Q Conf. Call

Affiliated Computer Services (ACS) provided some commentary on the strength of their student loan business during their 4Q conference call today (thanks to Seeking Alpha for their transcript).  The comments, while somewhat cryptic, seem to indicate they are gaining share in a challenging marketplace. 

Here were their student loan specific comments:

• Commercial student loan platform has had recent customer wins:
  • "For example, investments in our commercial student loan platform have allowed us to win new business."   Here is a description of the services they provide to student lenders found on their website:

As one of the country’s preeminent loan origination and servicing providers, ACS has a distinguished history in education services. For more than 30 years, we have provided student loan management services and superior customer service and support to lenders and secondary markets nationwide.  ACS is the only student loan servicing provider focused exclusively on loan origination and servicing.

ACS offers fully integrated, self-service Web access to lenders and Financial Aid Administrators (FAA’s) as well as to student and parent borrowers at all phases of the loan process - from origination through repayment. With the cutting-edge systems and services of ACS, borrowers can make real-time transactions such as applying for loans, applying for a deferment or forbearance, accessing tax information, and making payments; FAA’s and lenders can access and input information, post transactions and make updates in real-time.

Because our lender clients and their schools have different needs, ACS customizes application and disbursement methods to fit those needs. ACS supports loan applications submitted via phone, Web, or paper. We can disburse funds through a variety of methods. In short, we work with you to develop, implement and manage an application process that satisfies both your needs and those of your school clients.

Our independent status ensures that lenders receive the most competitive loan sale premiums for their portfolios, and that schools and students receive premium service and advanced Web-based tools to simplify loan management and repayment. Our priority is to help you maximize your business in student loans, and to provide you with the highest caliber service and range of capabilities available to support you, your schools, and your borrowers.

At ACS, we don’t believe that competing with our partners makes good business sense. In fact, we feel it contradicts the very nature of being a partner. Unlike other loan servicing providers, ACS does not originate, acquire or otherwise hold student loan assets. ACS is a partner, not a competitor.

• Department of Education relationship remains strong:
  • "We continue to leverage our student loan processing solution with Department of Education (hmm, leverage is one of those business words really doesn't tell us much)"
    • I might read this to mean that the Direct Lending program has benefited by a significant growth (over 50%) in loan originations in the last year which is serviced by A.C.S. 

• More good news about the commercial student loan business:
  
  • "...our commercial student loan area has had some very good results. In all of those, as we especially in our areas of our, like commercial student loans, we've always talked about the one to many model that we have. So when we can add additional portfolios to a base business like commercial student loans, the incremental margins are very attractive and it has resulted in better margins in commercial."

Comments

[Ryan]

I have an explanation for ACS's financial success from a customer perspective. From my personal experience, their customer service business philosophy seems to be this:

"Use deception to get as much money from the customer as possible, then enable our CS Reps to do absolutely nothing for the customer."

I have never had so much difficulty in dealing with a company, nor felt so taken advantage of. Anyone who works for this company should be ashamed of themselves.

Disagree? Do you work for ACS? Are you capable of doing anything productive? Then I would love to hear from you via email livefromkiev@yahoo.com

[Shanon]

ACS is not a good servicer. I have dealt with four loan servicers over undergrad and grad school, and ACS has been second worst, right next to Sallie Mae, which takes the cake.

The biggest problem: Outsourced customer support (India of course) who read from manuals and often get confused by your questions and what you're asking them to do, such as change your loan status to in-school deferment. This is bad enough when your toaster breaks, but when there are potentially thousands of dollars on the line, I do not want to F@$k around.

Then, when you think you've straightened everything out, your online account is shown as past due in big red letters because there is a glitch between when you posted payment, which was on time, and when it's actually processed, which is ACS's problem.

The best loan servicer I've dealt with is Total Higher Education, which had domestic customer support who understood and explained things very well. They are of course no longer accepting student loans because I'd imagine it is difficult to survive an industry where a premium is put on advertising, a nice website, and stock photo models, and not on competently handling loans, which I guess drives up operating costs.

I am a free market guy. Share information about the bad companies, do business with the good ones. Good luck!

[Y]

I don't think it's okay for company's to behave this way. I know that the lending business is what it is, but I think that you should have a say in who buys your loan. I was perfectly happy with slfc, then I beg an to receive notice that my loan was sold to acs. Communication issues are the biggest problem. I think that if you have customers in the U.S., you should automatically be sent to the call center in the U.S. If you are a customer in India, then you should be transferred to a call center in India. And so on. I've asked the same question three times to three different reps, and am told three different things even after being on hold for ten minutes while one rep asks a supervisor to tell me they can't help me. Only to call them back a minute later and get a different answer and have the issue fully resolved. I've read a lot of comments on other sites that they also have an issue on applying payments to the right "customers" account. I think that's pretty sad. Even though no company is perfect, it's pretty sad when 99.9% of your customers think you're incompetent and would rather the other guy but didn't have a choice because you bought their loan out. Competence should be your game, not how good you are at expanding call centers. Quality, not quantity please.