A long time ago, I covered the subprime mortgage industry. As I was learning the ropes, I remember a seasoned industry veteran telling me that he called subprime loans “story loans,” because there was always a story behind how a person ended up with a less-than-perfect credit score. Maybe it was because of a divorce or a medical situation or the person lost his or her job. But to be an effective subprime mortgage lender, you had to know the reason why the person was in this situation so you could figure out whether he or she was going to be able to make all the payments.
For any superhero fans, this is often referred to as an origin story. I like origin stories. I’m curious — some would call it nosey — and knowing how someone ended up where they are often provides pieces to the puzzle about who they are.
It is with that perspective that I read an article about for-profit cosmetology schools, especially in Iowa, and the crushing amount of debt that many students end up with who try to become hair stylists, manicurists, or some other profession in the beauty industry. I believe that collectors might benefit from understanding how someone came to be in debt and that knowing that might aid in building a path that gets those people back on track.
One woman took out $20,000 in loans to get her cosmetology license, only to get a job working for $9 an hour cutting hair. There are 177,000 people who enroll in for-profit beauty schools every year, with the average school charging more than $17,000 in tuition.
In Iowa, students are required to spend 2,100 hours in classroom and training before obtaining a certificate. By comparison, emergency medical technicians require only 132 hours of training.
Nearly 40% of students who graduated from cosmetology programs are not making enough to repay their debts, according to the article, and the schools, especially in Iowa, are fighting proposed changes that would cut the number of hours needed to obtain a license.
The best collectors are ones who can empathize with an individual and be truly interested in helping that person get out of debt. Knowing how someone got there in the first place can go a long way toward helping that person get back on track. Some people go into debt with the intention of trying to make a better live for themselves and their families. That is an admirable goal and everyone in the ARM industry should not look down on those people and should be genuinely interested in helping out.
