Chela Financial: Developing An Internet Strategy For Today And Tomorrow

Market Wire, 20050229

Chela Financial, a non-profit education finance company, is charting a path to growth on the information superhighway. Knowing that today's students are computer savvy, and realizing that the internet will be a primary distribution channel for loans in the upcoming decade, the San Francisco-based company is focusing on being better versus bigger than its competitors.

Chela Financial has created a sophisticated Web-based technology infrastructure that rivals those of the "Goliaths" -- the enormous for-profit banks entrenched in the student loan industry. At times, the non-profit company leads the pack, as was the case with one of its interactive loan certification products.

According to Chela Financial President and Chief Operating Officer Carol Coffman, the company's technology course has been carefully plotted, using market data and intuition to make some very critical decisions.

"All businesses know that they must incorporate the Web into their operations. The key is figuring out what is vital to our customers and industry both short- and long-term so we can invest appropriately," Coffman said. "I feel confident that we've allocated our monies to the areas that allow us to compete where it matters most, and also gives us a technology edge for the quickly approaching time when the majority of loan transactions happen via the Internet."

Four Critical Components

Chela Financial's focus on technology is proving that what it lacks in size, it makes up for in services and conveniences for two of its key target markets: students and college administrators. In the past year alone, the company has unveiled four online programs to market and distribute its loans and scholarships.

Online Applications Everyone offers online applications, right? Wrong. Many online applications ask the user to print out the application and fax or mail it to a processing location. Chela Financial is right up there with the few larger industry players offering true online applications for two of its loan programs. By accessing applications via Chela Financial's secure Web site, www.chelafinancial.com, students submit their personal and financial information via the Internet. Credit checks and approvals are processed quickly online. "Snail mail" only comes into play at the end of the process for final approval when a student must submit the necessary back-up documentation for the company to release the funds.

Online Loan Certification For certain loans, a college financial aid administrator must preview a student's loan application to ensure all information is accurate and to approve the amount of the loan -- a cumbersome and time-consuming task. Using Chela Financial's Online Loan Certification process, the financial aid administrator (FAA) now reviews a conditionally--approved application from Chela Financial and directly enters data about the student such as graduation date, certification amount for the school and loan disbursement amounts. The application is then forwarded to Chela Financial for final processing, greatly eliminating time delays and duplication of paperwork.

Online Entrance/Exit Interviews Students are required to complete a counseling session to indicate that they understand the repayment terms of their Stafford loan before funds are disbursed. Chela Financial is one of only a handful of student lenders to offer an interactive counseling session that students can use to fulfill this requirement. Students only need to give their financial aid administrator the completed exam and answer a few questions to prove they have fulfilled the requirement, saving FAAs time and paperwork.

Online Scholarship Contest In 2000, Chela Financial is awarding $50,000 through an entirely online scholarship program. Students submit applications through its Web site, including an essay, describing how they financed their education. Winners are posted on the Web site and receive an e-mail notification.

Chela Financial is a San Francisco-based family of nonprofit education finance companies. It is the largest nonprofit secondary market holder of FFELP (Federal Family Education Loan Program) loans in the United States. In 1999, the company provided financing to over 14,000 new students and its secondary loan portfolio reached $2.0 billion. Since its inception in 1979, Chela Financial has helped more than 800,000 students achieve their education goals with more than $3 billion in loaned funds. Through scholarships, grants and community outreach programs, Chela Financial promotes responsible borrowing so students may enjoy lifelong learning as well as lifelong financial security.