Social Media Data Is Being Used to Calculate Student Loan Risk in the UK
Calculating risk is a complex process, particularly in the competitive student loans market. Basing decisions on potential earnings rather than current assets and income, as banks traditionally do, makes more sense when it comes to loaning to young people. Now, some companies are turning to social media, and checking out clients’ connections, in order to assess the risk of the potential borrower, and also to put pressure on those who default.
(Photo Credit: dewfall/Flickr)
Companies are collecting data to learn more about perspective borrowers. They are looking at your connections, for example, to determine whether or not you have a network in place that is likely to garnish financial rewards in the future.
Cameron Stevens, chief executive of Prodigy Financial, says that the detailed data that’s available through social media can make it easier to finance some people who otherwise would struggle to be vetted. He said:
“Who someone connects to is relevant. If someone tells you they have worked for McKinsey and they are connected to 100 people who work for McKinsey, it’s likely that they have.”
There is also another side to this practice though:
“If you know all your defaulters are connected to a particular group of people, then you don’t want to lend to those people either.”
Given the fact that UK student loan organizations are using this data, it’s safe to expect companies here in the US will soon adopt similar practices — if they haven’t already. Either way, students would be wise to consider that the data they reveal through social media could be used in this way.
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Gina Belli works as a teacher, freelance writer, and educational consultant, and lives in her beloved home state, Connecticut. She likes to write about education, work-life balance, and the economy. Given her arresting capacity to over-analyze anything interpersonal, her writing often tends to focus on some of the more emotional aspects of workplace connections and disconnections, as they relate to partnerships and teams, personality and communication styles, and leadership. In her free time, she likes to putter around her renovated one-room schoolhouse home, take walks in the woods, and eat as much guacamole as she can get her hands on.