Over the past year, student loan benefits have gone from being virtually unheard of to being deemed "the hottest new employee benefit" by Bloomberg, Entrepreneur, and many others. As an employer fighting to attract and retain top talent, you may be wondering just how these relatively unknown employer benefits took shape and why they're so popular.
Student loan benefits have arisen out of a dual sided need:
On one hand, human resources professionals fight each day to win the war for top Millennial talent, a difficult challenge that requires re-thinking compensation and benefits packages. On the other, graduates are increasingly plagued with mounting student debt due to the rising cost of higher education and they're looking to their employer to help them get on the path to financial wellness.
So it's no surprise that CommonBond's innovative student loan evaluation tool was founded by recent graduates who struggled with student debt and knew there had to be a better way to manage it. CommonBond acquired the personal finance startup Gradible in 2016 and has since incorporated the technology behind its student loan evaluation tool into its employer benefits platform, CommonBond For Business. This tool can help the 44 million Americans struggling with student debt identify the right repayment options for their specific financial situation.
Read on in an interview with Gradible co-founders Grant Biles and Pete Wylie to learn how they created the technology for CommonBond's Student Loan Evaluation tool and how it can help your employees more effectively repay their student debt.
Q: How did you come up with the idea for Gradible, the tool that is now CommonBond's Student Loan Evaluation tool?
Grant: My own struggles with repaying my student loans were a big motivator for starting Gradible and developing a student loan evaluation tool. After graduate school, my student loan monthly payments were so high that I was struggling to get by, and I had no idea about all the repayment options available. My student debt was the single biggest financial issue I was facing at the time and I had questions but couldn't find the answers. My frustration grew when I realized that my lenders provided limited customer service and few resources – it was just incredibly difficult to get a clear idea of what my repayment options truly were.
As student debt across the US climbed to $1.1 trillion dollars in 2013, I shared my frustrations with my childhood friend, Pete Wylie, as we watched friends and family struggle with the exact same issue. We knew there had to be a solution, that it shouldn't be so difficult for folks to understand their options when it came to the single biggest financial issue they were facing. So we created our student loan evaluation tool.
Q: Tell me more about the tool and the information it provides.
Grant: The student loan evaluation tool helps every single user with student debt, regardless of lender, income, or credit history, understand their different options and opportunities to pay off their student debt. It provides information about state and federal government programs like Income Based Repayment and loan forgiveness and points users in the right direction, based on eligibility. In doing so, it solves the very same issue I was facing when we began building the tool.
Pete: The power of the evaluation tool is that any borrower can provide minimal information and receive a personalized output that distills the dozens of repayment options down into only the ones for which he or she is eligible. This prevents the user from having to become a student loan expert, which most people just don't want to become, and it accelerates the process of determining the right repayment strategy. In fact, we found that 99% of all users were presented with at least one way they could amend their student loan repayment strategy to better reach their own personal goals.
Q: What was the impact the evaluation tool had on users?
Pete: We're proud to say that thousands of users have evaluated their loans through CommonBond's Student Loan Evaluation Tool.
The types of repayment options our users received varied, and users typically received more than one option. At a high level:
- 44% qualified for a Federal Income Based Repayment or Pay As You Earn plan
- 45% received a recommendation to consolidate their loans
- 11% received a recommendation to consolidate their loans and then enter a Federal Income Based Repayment or Pay As You Earn plan
- 52% received an option to refinance to take out a loan with a lower interest rate, shorter pay off time, or both
The tool's goal was to provide a list of possible options for users so they could choose among them. Personal preference and consumer choice are critical considerations in any financial decisions. If borrowers want to pay less interest over the life of their loans, the tool presented those options. If others want lower payments each month as opposed to lower payments over the lifetime of their loans, the tool presented those options. Whatever the consumers' personal preference, our tool provided a simple and quick way for borrowers to see all the information they need to make an informed decision.
Q: How has coming under the CommonBond umbrella helped you to better achieve your mission?
Pete: Joining forces with CommonBond enabled us to create a suite of student loan benefits that allow employers to provide financial benefits to any employee with student debt. CommonBond For Business leverages the technology from our original student loan evaluation tool, along with student loan refinancing and an employer contribution option, to enable our 100+ employer partners to attract, retain, and engage top talent.
As CommonBond for Business' adoption among employers continues to grow, we're excited to be part of the solution that enables millions of people to more effectively repay their student debt.
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