Transcript
SUSIE GHARIB: More than five million people are behind on their student
loan payments. So says the New York Federal Reserve Bank. But as bad as
these numbers may seem, they’re adding up to opportunity for some
entrepreneurs. Sylvia Hall reports.
loan payments. So says the New York Federal Reserve Bank. But as bad as
these numbers may seem, they’re adding up to opportunity for some
entrepreneurs. Sylvia Hall reports.
HALL: There’s no doubt college holds the key to the future for those
who attend. But for many people, rising student debt makes that future a
lot more complicated. Entrepreneurs like Mike Cagney are getting creative
and turning the problem into opportunity.
who attend. But for many people, rising student debt makes that future a
lot more complicated. Entrepreneurs like Mike Cagney are getting creative
and turning the problem into opportunity.
MIKE CAGNEY, CEO, SOFI: It’s just a trillion dollar market, but a
market that we consider broken. There’s no government underwriting.
There’s huge defaults. There’s lots of problems in the structure of the
student loan system.
market that we consider broken. There’s no government underwriting.
There’s huge defaults. There’s lots of problems in the structure of the
student loan system.
HALL: His company, Sofi, takes a small, school-by-school approach to
solving the problem. The company allows a university’s alumni to invest in
a student loan payment pool. That pool funds loans for new students and
loan refinancing for qualified graduates. The alumni investors get the
returns on the loans and the company takes a small cut in servicing and
management fees.
solving the problem. The company allows a university’s alumni to invest in
a student loan payment pool. That pool funds loans for new students and
loan refinancing for qualified graduates. The alumni investors get the
returns on the loans and the company takes a small cut in servicing and
management fees.
CAGNEY: It was a really elegant application of social, where you get
a pool of alumni who care about their school. They care about their
students. They invest in a fund. The fund lends to students and in doing
so, you create an explicit social contract between those students and those
alumni investors.
a pool of alumni who care about their school. They care about their
students. They invest in a fund. The fund lends to students and in doing
so, you create an explicit social contract between those students and those
alumni investors.
HALL: Sofi started at Stanford and has quickly expanded to top
schools like Yale, Harvard and Columbia. Tuition.io is another business
that’s taking off. It’s a free online portal that helps students track all
of their loans. Borrowers can see their total debt, payment options for
each loan and total interest. Founder Brendon McQueen built the site to
solve his own problems. Now, he hopes to partner with loan companies and
servicers.
schools like Yale, Harvard and Columbia. Tuition.io is another business
that’s taking off. It’s a free online portal that helps students track all
of their loans. Borrowers can see their total debt, payment options for
each loan and total interest. Founder Brendon McQueen built the site to
solve his own problems. Now, he hopes to partner with loan companies and
servicers.
BRENDON MCQUEEN, CEO, TUITION.IO (BY TELEPHONE): If you’re able to
like, simplify that like payment process, A, the servicers will make more
cash. And on the borrower’s side, it will just be so much easier. So
we’re looking at like payment.
like, simplify that like payment process, A, the servicers will make more
cash. And on the borrower’s side, it will just be so much easier. So
we’re looking at like payment.
HALL: In New York City, Sabrina Norrie and Kelli Space have an idea
of their own, called Zero Bound. If students are struggling to pay debt in
dollars, why not pay it through community service? They’re still raising
money, but once it’s up and running, the company will help borrowers get
donations in exchange for volunteer work.
of their own, called Zero Bound. If students are struggling to pay debt in
dollars, why not pay it through community service? They’re still raising
money, but once it’s up and running, the company will help borrowers get
donations in exchange for volunteer work.
SABRINA NORRIE, CO-FOUNDER, ZERO BOUND: I thought, there’s got to be
a way we can get creative about this. And being involved in volunteer
work, I thought, let’s see if we can invest that education of their
students and alumni back into the community through volunteering.
a way we can get creative about this. And being involved in volunteer
work, I thought, let’s see if we can invest that education of their
students and alumni back into the community through volunteering.
HALL: Innovations like these have the support of the Federal
government. In a report last month, the Consumer Financial Protection
Bureau said if they work, these sorts of businesses could play an important
role in helping student borrowers pay down their debts. Sylvia Hall, NBR,
Washington.
http://tuition.io/
government. In a report last month, the Consumer Financial Protection
Bureau said if they work, these sorts of businesses could play an important
role in helping student borrowers pay down their debts. Sylvia Hall, NBR,
Washington.
http://tuition.io/
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