...still no NSLDS for lenders....

....this is just a plain old bad decision.

This whole mess is apparently prompted by this Washington Post article from Sunday, April 15, 2007.

So, we've got this financial aid officer quoted as saying: "Our students are being inundated with marketing from consolidation companies," said O'Leary, of Stonehill College. "How else are the consolidation companies getting our students' information?" And Senator Kennedy gets his panties all in a bunch.

Alrighty. . We feel a rant coming on.

First Ms. O'Leary is probably a really good financial aid officer. We're thinking not so good at marketing though. Which probably explains why she's a financial aid officer, and not running a marketing department.

Here's how it works. Yes, NSLDS contains detailed, loan level information on each loan that a borrower from the Direct Loan or FFEL programs has ever had. And this is good. Servicers, lenders, financial aid officers, guarantors, and students all access NSLDS to verify student lending activity for various reasons. However, and this is very important so sit up while reading this, the 3 main credit bureaus in the United States ALSO carry the information. Not generally to the same level of detail, but the fact that you have, or have had a student loan is recorded at Equifax, Experian, and Trans Union. This is a fact.

Now, financial services marketers have permissible purpose to access the credit bureaus to determine loan eligibility when making a pre-screened firm offer of credit. When dealing with the credit bureaus, if an approved and paying client, a financial services company can obtain a list of names, addresses, phone numbers, and sometimes email addresses of people that meet specific criteria to market a specific product, as long as a firm offer of credit is made. It's not as easy as calling up the credit bureau and requesting a list, there's apparently a whole science behind this pre-screening process.

Contrasting this process to NSLDS, you'll see that using NSLDS as a marketing prospect tool is simply ridiculous. NSLDS offers users two views of the data: one for lenders/servicers and one for student borrowers. Both views are allowed only thru web-based screens/views. There is no raw database access -- one MUST use the web browser provided rendering mechanisms. Now couple this with the fact that a borrowers address, phone number, and email address is not made available thru these views. Not only is it a logistical nightmare to access the information on a mass basis, there's no indicative information to be used for marketing purposes. The industry uses NSLDS to verify loan applications, create payoff requests, and facilitate the financing function.

It's just plain old silly to imply that the industry is using NSLDS on a wholesale basis as a prospecting tool. Financial services companies use the credit bureaus to prospect for customers. That being said, there are probably some fairly unsophisticated marketers attempting to use NSLDS as a prospecting source using screen-scraping techniques, and they should be punished for doing so.

Tomorrow, we'll provide a solution to the NSLDS access problems. You'll be amazed at how easy this is to fix.