5 Startups Helping Manage Student Debt 🧑‍🎓

Student loan debt totals $1.71TR in the US and is growing 6 times faster than the economy. It’s also the second-largest type of consumer debt. In December, Congress extended tax-free incentives for employers to help with student debt repayment under the CARES Act, and the Biden administration said it would pause student loan interest and collections for more than 1 million borrowers in default on private lender loans.

But it still isn’t enough. Close to 8% of the nation’s student loans are in default, and one out of every 10 Americans has defaulted on loans. Now private startups are seeing new business opportunities in helping the continued student loan debt crisis, and investors are ready to fund them. 

• SoFi, short for Social Finance, is a private online lending company that helps with student loan refinancing. They also offer MBA loans and mortgages. The company announced it was planning a merger via SPAC with Social Capital Hedosophia V, the SPAC headed by the investor notorious for leading SPACs, Chamath Palihapitiya.
• Rightfoot takes the approach of student loan repayment through an employer’s eyes. It partners with employers to help their employees out of student debt, a movement that keeps the workforce happy. In February, it received its seed funding round of $6.5MM, led by Bain Capital Ventures. 
• Goodly takes a similar approach as Rightfoot by partnering with employers to offer student loan repayment as an incentive for recruiting and retaining talent. In a now remote workforce were doling out free food and unlimited cold brew isn’t feasible, paying off debt sounds like a great approach.
• FutureFuel focuses on building digital tools that can be deployed by employers as well as financial institutions to combat student debt. It raised a Round A funding of $10MM led by UBS in March. Notably, it is the only company on this list outside of California. 
• Acorns is a fintech startup that specializes in micro-investing and Robo-investing. It just acquired New York-based Pillar, another AI-powered startup that helps optimize debt payments, especially towards student loans.