President Barack Obama only paid off his student loans about nine years ago. If StudentLoanHero was around back then, he may have been able to pay them off sooner.
StudentLoanHero is a startup that gives student borrowers tools to repay their loans faster. The company just closed a seed round with Expansion VC and was accepted into the latest batch at the Socratic Labs EdTech Accelerator in New York City.
Students and grads carry more than $1 trillion in student debt right now, and 65 percent of borrowers misunderstand their student loan obligations
“Unlike the mortgage crisis, student loans are not dischargeable through bankruptcy, nor do you have an asset to liquidate,” said CEO Andrew Josuweit in an interview. “Student Loan Hero is on a mission to not only help the 37 million borrowers with outstanding loans but to also pave the path for greater financial literacy and transparency. At age 17, very few borrowers are in the position to make an educated decision on a $100,000 investment, yet our financial aid system does not provide borrowers with the financial literacy necessary to make such a significant life-changing decision.”
Josuweit said students loans are now the second largest form of household debt, surpassing credit cards and auto loans. When he graduated from college, Josuweit had 16 loans from four banks tolling $104,000. Staying on top of his debt was overwhelming and time-consuming. He didn’t have access to the tools or guidance he needed to effectively manage his finances, and so he founded a startup.
On the StudentLoanHero, students can stay organized by viewing all their loans on one dashboard and rank them by importance. The site also offers repayment strategy suggestions and sends monthly payment reminders. Users create a profile with information that aggregates their financial data. The technology then analyses their loan portfolios to find potential savings, such as prepayment options and financial offers. It also helps borrowers identify programs that might reduce or postpone monthly payments.
Since launching in September, StudentLoanHero has reviewed over $60 million and is growing substantially every month. The average customer has eight loans and $55,480 in student loan debt, but some students with upward of 25 loans and $300,000 in debt.
The company claims to save the average customer $6,000 over the lifetime of their loan repayment, not counting the net savings that result from improved financial literacy. The service is free, but Josuweit said the financial data aggregation technology is proprietary, which paves the way for media partnerships and work with affiliates on revenue campaigns.
Competitors include Tuition.io and LoanLook, but considering the size of the problem and the tremendous need to fix it, the more the merrier. StudentLoanHero currently has five employees and is backed by Startup Chile and Expansion Venture Capital.
Entrepreneurship is not necessarily the quickest route to loan repayment, but it is one that will help others eliminiate their debt along the way.
Photo Credit: Mr Moss/Flickr