A recent flurry of activity around paying off student debt, including government policies such as SECURE ACT 2.0, passed by Congress in December, created provisions for employers to match student loan payments for those with debt and at the same time increase retirement accounts.
In late February, the Supreme Court heard arguments related to a lawsuit seeking to block President Biden’s debt relief program. Updates related to this that occurred last week suggest that the Supreme Court may rule against the program.
However, some fintech startups have not only stepped forward to provide some relief options, but are also giving employers a way to help ease some of the burden, while also providing a recruiting and retention tool. Those include Goodly, Highway Benefits, Candidly and Summer, which raised $6 million in additional Series A funding.
General Catalyst, QED, Flourish Ventures, Partnership Fund for NYC, Story Ventures, Gaingels, Calm VC and Avidbank participated in the funding round, bringing the certified B Corp. Series A funding to $16 million and $18 million in funding total .
It’s widely known that nearly 47 million student loan borrowers owe about $1.8 trillion, and when the global pandemic hit in 2020, the federal government put a pause on federal student loan payments that has now lasted three years, according to Will. Sealy, co-founder. and Summer CEO.
“The challenge for borrowers is that in the last year there have been more changes in student loan policy and student loan rules than in the entire previous decade,” Sealy told TechCrunch. “The changes are confusing and highly customized to the type of loan you have, which for the average person could be a dozen loans: some from private banks, some from the federal government, and some made to you as the borrower by your parents. ”
While the moratorium on payments has helped, Sealy noted that the average payment on a loan is around $700 a month, and it’s “distressing” not knowing when payments will resume, meaning payments are likely to hit millions of people at once. .
Sealy, a former policy analyst and assistant to Senator Elizabeth Warren, and a veteran of the Consumer Financial Protection Bureau, began the summer of 2017 with COO Paul Joo, who has prior experience with the US Attorney’s Office and the Boston Consulting Group.
When TechCrunch reported on Summer’s $10 million Series A in 2019, the company was really just getting started with its focus on helping borrowers get a full 360-degree view of their current student loan situation and providing options on how to pay for it in the most financially efficient way possible.
Now, four years later, Summer works with financial institutions, employers and other organizations to help employees plan for college, learn ways to reduce the burden of student loan debt, and optimize retirement savings through matching contributions. from the employer.
He has also partnered with companies including Fidelity Investments and Intuit, and expanded his work with the American Federation of Teachers to put Summer in front of tens of millions of employees. To date, the company has delivered more than $1 billion in total projected savings to borrowers in the United States, Sealy said.
Meanwhile, the new funding will allow Summer to launch new products and services, as well as hire Leigh Gross as chief revenue officer. Gross, who joined the company from credit data access company Array, will be responsible for leading Summer’s initiatives around sales, business development and revenue stream growth.
“We are helping employees enroll in federal and state loan assistance programs to reduce debt, and working with employers to pay off that debt even faster, so employees can take advantage of that type of benefit at work.” Sealy said. “On top of that, the new legislation allows any employee who is currently repaying their student loans or continuing to do so in the future, for their employer to have the ability to match those payments from their retirement plan. Borrowers will no longer have to choose between saving for retirement or paying down debt.”