This Millennial Is Revolutionizing The Student Loan Industry (And His Company Just Raised Millions)
Source: Forbes | April 28, 2016 | By Garret Gunderson
A new company based out of Austin, Texas is changing the way student loans are repaid while also showcasing some important lessons in entrepreneurship. Just this past February, Student Loan Genius raised $3 million in seed funding led by affiliates of Prudential and John Hancock. And looking at student loan statistics, it couldn’t have come at a better time. Student loans now total more than $1.3 trillion in the U.S. — surpassing both auto loan and credit card debt totals — and more than 40% of borrowers are behind on payments. It’s a problem that’s been waiting for the right entrepreneur to come along and fix it.
For Tony Aguilar, the CEO and founder of Student Loan Genius, necessity was truly the mother of invention. I recently spoke with Tony to learn more about the student loan business and entrepreneurship lessons he’s picked up along the way. Here are the highlights of our conversation:
“What got me interested in student loans was my experience,” says Tony. “I came out of school with $100,000 in student loan debt. Once I graduated, I was faced with $1,500 payments every month. And making $35k/year, there’s no way I could afford that.” Tony explored his repayment options but was frustrated with the process, “It shouldn’t be this hard to find different repayment programs, especially through the federal government.”
But it was when Tony started his financial planning practice for millennials that he realized how big the problem really is. Says Tony, “It’s not just a student loan problem. It’s affecting people’s entire financial picture because [student loan borrowers] are essentially putting their life on hold. I saw how people couldn’t save for a house, or an engagement ring or a wedding — or pay off credit card debt and ultimately save for retirement.”
The moment that sparked the creation of Student Loan Genius came when a customer asked Tony, “I have all this money in my 401k and I’d like to use it to pay down my student loan.” Unfortunately, 401k rules made that specific situation impossible, but the lightbulb in Tony’s head lit up.
“I thought, if companies will help you save for retirement with matching 401k dollars,” says Tony, “wouldn’t it be cool if they used those same dollars to pay down student loan debt? That was the spark. That was the idea 2-and-a-half years ago: a 401k for student loans.”
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