As student loan payments resume, private sector sees an opportunity
As student loan payments resume, private sector sees an opportunity
This month, people who owe money on their federal student loans have to restart paying it back. That means that borrowers who haven’t had to deal with student debt for more than three years are trying to figure out exactly what the next step is. And a number of companies are vying to help them figure it out.
Now that student loans are due again, it’s creating a lot of anxiety.
“The words ‘overwhelmed’ and ‘anxious’ pop up a lot in our email,” said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit that helps borrowers manage their debt for free.
She notes that many of them are trying to figure out exactly how much they owe and if there’s any government forgiveness plans they qualify for.
“It all falls down to them not being sure what payment plan to pick and wanting to be sure they’re not missing something,” Mayotte said.
There are also companies working in this space. There’s been nearly $1.2 billion invested in student loan management startups in the past year, according to PitchBook.
Some startups work with borrowers directly; others contract with companies that want to offer student loan advice as a perk to their employees.
Jenny Abramson leads the venture capital firm Rethink Impact and has invested in this space.
“We like the idea that employers can play a role and, frankly, that they’re financially incentivized to play a role in relieving this stress,” she said.
Employees are better able to focus on their jobs when they’re less worried about money, Abramson added.
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