Leveredge – Bulk Discounts for Student Loans
Leveredge takes advantage of “bulk” discounts, by consolidating student loan applications in order to increase the bargaining power of individual consumers.
The process is relatively straightforward, with the following key steps:
- Borrowers provide key information (contact, education, financial) to participate in the collective negotiation group
- Leveredge negotiates with financial institutions on behalf of the borrowers, through a RFP process of sorts
- Leveredge presents the deal to members, who then apply directly with the lender
In this workflow, Leveredge does not absorb any balance sheet risk, simply acting as a negotiator on behalf of it’s consumers. However, the business plan is structured wherein the more consumers sign up, the greater the potential benefits.
While Leveredge’s product offering is generally marketed towards consumers, their value proposition has to target both financial institutions and consumers.
For consumers, the service offers the following benefits:
- Competitively priced interest rates
- Simplified loan process
For financial institutions, on the other hand, the benefits are:
- Larger loan applications, which result in greater fees
- Reduced operational workload
The benefits for both parties are only realized if Leveredge obtains a large enough pool of applications and the bank if willing to offer a competitive rate.