Sites Target Helping College Grads With Empty Pockets
It’s no secret that there are many young adults graduating from college with little money and lots of debt. But rather than seeing the lack of financial independence as a bad thing, a pair of new startups — Tuition.io and Pave.com — are trying to find ways to profit from the potential success of college grads with empty pockets.
Dubbed a Mint.com for student loans, Tuition.io focuses on getting its users fiscally fit by giving students the tools to pay back their student loans.
Co-founder Brendon McQueen came up with the idea after graduating from Columbia University in 2009, during the height of the recession. With his film degree in hand, McQueen returned home to California with 12 loans, thousands of dollars of debt, and no clue how to start paying it all back.
“I just had the crazy problem of figuring out who I owed cash to … and if I couldn’t pay it, if I had any options,” he said in an interview. “I tried to find a tool out there that offered a comprehensive solution, and I couldn’t, so I said, ‘Well, let’s create one.’”
Birthed out of the Southern California startup incubator Launchpad LA, the company had its public beta in January, allowing users to manage their loans though easy-to-read charts and graphs, handy calendars that highlight when payments need to be made and to whom, and tips on how to save money. The graphic-heavy site gives a very visual and easy-to-follow way to craft a realistic loan-repayment plan.
Although there are plenty of other financial planning sites out there (Mint, Buxfer, ClearCheckbook, to name a few), Tuition.io sets itself apart by dealing with only student loans.
“They’re incredibly complicated,” said McQueen. “You have all these options that you don’t necessarily have when paying on a credit card.”
For example, most students are given a six-month grace period after finishing school before they are expected to begin payments on their loan. McQueen says that organization is one of the key benefits of using Tution.io. He adds that “about a quarter of users didn’t even know how many loans they had before they signed up for the site.”
With a similar goal of helping users improve their lives, the team behind Pave comes at it from a different angle. The site gives young “prospects” a team of backers to lend advice and financial assistance.
Started by Sal Lahoud (CEO), Oren Bass (COO) and Justin Mitchell (CTO), the idea was sparked when a friend who needed help to pursue a career as a designer asked Lahoud for money.
“It was a little bit of a weird situation for me,” Lahoud said. Realizing there was a possibility that his friend would not be able to pay him back, and not wanting to risk their friendship, Lahoud came up with a solution, making an agreement that he would invest if his friend agreed to share some of his success. However, if the friend made no money, there would be no need to pay Lahoud back.
And that’s how Pave works now.
Prospects create a profile explaining who they are and what they hope to accomplish. Backers can then choose a prospect to support by not only providing funding but mentorship and guidance, as well. In return, if the prospect is successful, they share a small percentage of whatever they earn with their backers — their team — under a 10-year agreement.
This concept of using a digital platform to raise funds to pursue a creative project seems similar to Kickstarter, while the search for professional contacts is reminiscent of LinkedIn. But Pave is trying to differentiate itself through its shared-revenue agreements between backers and prospects.
Lahoud wants to make Pave unique in that it “offers a social financial agreement that is really not a loan … every agreement is between a person and another person.”
Although Pave is open to anyone, its audience consists of young adults with big goals and the desire to get much-needed help to accomplish them.
Mitchell, who worked for Facebook before joining Pave as CTO, said he personally relates to the struggle many young people face when wanting to do something big.
“They have financial constraints, but they also have constraints in terms of not having developed a professional network or those contacts necessary to get things started,” he said.
Pave’s pilot program started with eight prospects — a diverse mix of people ranging from an aspiring musician to an inventor — paired with an array of backers just as varied. Since its public launch this past December, 30 other prospects have been given backers, and more than 300 people have applied to join during its first weekend. Their goal now is to have 100 teams by May.
It’s still too early to tell how much of an impact these sites will make for their users. The teams behind both Pave and Tuition.io are filled with young twenty- and thirtysomethings who used their lack of stability as a motivator to create something useful for others.
McQueen sums it up nicely: “I oftentimes think that the best products out there solve a problem you have.”