Alumnus Business Gradifi Debuts Solution For $1.3 Trillion Student Loan Debt Crisis
Gradifi, a Boston-based startup, today announced a new program designed to significantly pay down student loan debt. Gradifi will provide a free platform for the 40 million people impacted by student loan debt where they can earn Paydown Rewards™ through a variety of ways that will then be automatically used to pay down their student loan debt. As part of its platform, the company will also debut an innovative employee benefit called a Student Loan Paydown Plan, or SLP Plan™, where businesses now have the opportunity to help pay down employees’ student loan debt, and drastically shrink the $1.3 trillion graduates are saddled with today. Companies like PwC are signing up to pay it down – and rid employees of this trillion-dollar financial burden – by potentially shaving 3+ years off a ten-year loan.
Why It‘s Needed: Student Loan Debt & Employee Retention
- 40 million people in the U.S., including 70% of recent college graduates, carry $1.3 trillion in student loan debt – an amount that will continue to increase and impact the entire economy.
- Lack of employee retention is costing companies $11 billion annually due to employee turnover.
- Millennials expect more from employers than ever before (1 out of 3 (33%) expect their employer to help repay existing student loans). With so many competitively qualified millennial workers entering the marketplace (they’ll make up 75% of the workforce by 2025), it’s crucial to find ways to not only attract them, but keep them happy – through options that matter most to them.
“Student loan debt has become a major societal issue that now impacts many constituents beyond recent college graduates. Our mission is to provide a solution to empower our members to tap into their value and apply that to paying down their major pain point of student debt,” said Tim DeMello ’81, founder and CEO of Gradifi. The company also sees a major opportunity for employers to play a key role in attacking this societal issue. “The 401(k) transformed retirement planning for an entire generation of workers, and we are doing the same for student loan debt with our introduction of the SLP Plan. This country’s private sector is faced with a great opportunity to solve a crippling problem, while at the same time, recruiting and retaining top talent.”
PwC has signed up to offer Gradifi’s SLP Plan and will begin offering the program next year to its 46,000 U.S. employees who are beginning their careers and have outstanding student loans.
“We are excited to be on the forefront of offering this important benefit program to our employees – and doing our part in reducing the trillion-dollar student loan debt burden,” said Tom Codd, Vice Chairman, US Human Capital Leader, PwC. “We believe that employers play a critical role in helping to solve this challenge facing so many college graduates nationwide today.”
How It Works
Gradifi has developed a number of ways for its members to earn Paydown Rewards that then turn into extra payments to reduce the $35K in student loan debt carried by the average American graduate today. At the cornerstone of these offerings is the SLP (Student Loan Paydown) Plan which companies can offer as part of employees’ benefit packages. Through the SLP Plan, companies contribute directly – through structured and secured channels – towards their employees’ student loan principal on a monthly basis. These contributions can take years off student loan balances.
DeMello adds: “For many graduates, it can be incredibly hard to focus on the future when you’re mired down with tens of thousands of dollars in loans. We want to change the conversation from one of burden to one of opportunity by helping them capture the value of their education.”
Corporations can begin adding Gradifi’s SLP plans to their benefits packages starting in 2016.
Founded in 2014, Gradifi is a Boston-based startup debuting a solution to the nation’s $1.3 trillion student loan debt problem. By partnering with companies to develop employer SLP™ plans, rewards programs and brand loyalty programs, Gradifi is shifting the focus on student loan debt – from burden to empowerment.www.gradifi.com or twitter.com/gradifi.