Student debt shouldn’t exist. That said, student debt in the U.S. has reached well over $1 trillion. And to pay off the price of education, both parents and former students set aside career and life goals.
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Goodly, a company which participated in Y Combinator‘s summer 2018 cohort, is aiming to lessen that burden by enabling employers to offer their talent a loan repayment assistance benefit. The team is announcing today that it raised $1.3 million in a seed round led by Norwest Venture Partners. Other participants included ACE & Co., Arab Angels, and Zeno Ventures.
“It’s really difficult to do things like save for retirement to start a family or save to buy a house when you’re paying down such huge student loans,” Goodly CEO Greg Poulin told Crunchbase News in an interview. He himself experienced the pressure of paying off $80,000 in student loans for his Dartmouth education after his father passed away unexpectedly while he was in school.
Poulin said he and his cofounder became interested in offering repayment specifically as a benefit like any commuter or wellness benefit while working at another HR and employee startup, Rippling. The need was there, but the technology wasn’t, said Poulin.
“All the existing solutions were really kind of clunky, enterprise-grade software that were really expensive, took a long time to implement, and didn’t integrate with payroll and HR systems.” Poulin said.
He said the Goodly service, which costs $6 per employee per month, integrates with both brokers’ systems and companies’ existing payroll systems. The system allows employers to make monthly payments of a specified amount directly to their employees’ student debt accounts.
According to the company, 70 percent of individuals who attend college graduate with debt, and the average time it takes to pay off loans is 22 years, with 37 percent of people having missed at least one payment.
Goodly, which also participated in StartOut GrowthLab, an accelerator for LGBTQ founders, is also focused on student debt because of its links to diversity and inclusion, according to Poulin. He pointed out that women hold two thirds of student loan debt in the U.S., black and Latinx Americans have 31 percent higher student debt on average than their peers, and on average LGBTQ borrowers owe $16K more than the general population.
“The result is that the underrepresented employees are starting their careers with larger loan debts to repay, lowering their ability to… accumulate wealth compared to their peers who either didn’t borrow or carry lower debt balances,” Poulin said.
Various startups we’ve covered at Crunchbase News are offering benefits ranging from fitness to gifting to prepaid benefit debit cards. Student debt, a long-discussed policy issue and a mounting problem among graduates and individuals interested in higher education, is one area where employers could relieve a lot of stress.
Illustration Credit: Li-Anne Dias