- This April, a San Francisco-based startup called Goodly launched as a part of Y Combinator’s summer batch.
- Goodly aims to help companies help their employees pay off their student loans, by making regular matching contributions – kind of like a 401(k).
- Greg Poulin, co-founder and CEO, was motivated to start Goodly because of his own experiences in paying off $US80,000 in student debt.
- Poulin believes that the budget for common company perks such as gym memberships and massage chairs can be better used for helping employees pay off student loans.
While Greg Poulin, co-founder and CEO of Goodly, was attending Dartmouth, his father passed away unexpectedly. On top of the emotional toll, he also ended up having to borrow $US80,000 in student loans to pay his tuition.
Poulin has since moved to San Francisco, the thriving-but-pricey hub of the startup world, and he’s still chipping away at his loans with a monthly payment of about $US900 a month. Frustrated by his experiences, he founded Goodly, a platform for companies to offer employees assistance with their student loans as a benefit.
Goodly allows companies to make a monthly contribution to their employees’ student loans, similar to how companies often match 401(k) contributions. Based in San Francisco, Goodly was founded just this April, launched with a $US120,000 seed investment as a part of the summer batch from famed startup program Y Combinator.
“Most employers don’t know that student loan benefits exist. It’s both a challenge and an opportunity for us,” Poulin told Business Insider. “It’s helped us completely define a new category of benefits.”
Companies often offer perks like gym memberships, massage chairs and snacks, but the money can be better allocated to helping employees pay student loans, Poulin says. That way, student loan repayment won’t be a large expense for companies. This benefit, he says, could help with both recruiting and retention.
“The problem is those employees are saddled with crippling student loan debt,” Poulin said. “Gym memberships aren’t going to cut it when it comes to recruiting employees.”
Hemant Verma, co-founder and CTO of Goodly, also had to pay off debts from his own education in India.
“This is a massive problem for people,” Verma told Business Insider. “It’s the biggest problem our generation is facing…This was a mission we were energised with.”
The scale of the problem
Today, 70% of college students graduate with debt, and over 44 million Americans collectively owe $US1.5 trillion in student debt. An American Student Assistance survey reported that 76% of respondents said student loan repayment benefit would be a deciding or contributing factor to accepting a job offer.
“For millennials, they bear the grunt of student loans,” Poulin said. “It’s an issue where we see people of all backgrounds.”
This could potentially impact diversity and inclusion at companies as well, as student loans disproportionately affect women and people of colour. For example, research shows that women carry two-thirds of the nation’s student debt load, and that African American students are four times more likely to default on their student loans than their white peers.
Poulin has seen Goodly’s customers make contributions of $US25 to $US300 a month to repaying their employees’ student loans. On average, employers contribute $US100 a month.
“We’ve had companies of all sizes reach out to us,” Poulin said. “We’ve been really blown away by the interest of companies we’ve seen. It’s not surprising when so many are leaving the company in debt. This is a problem they have struggled with. It’s exciting to see companies that are working to proactively help their employees solve this challenge.”
Get started early
For Poulin, one thing that has helped him was making bi-weekly payments instead of monthly payments.
“Over the course of the year, you’ll make an additional payment,” Poulin said. “It could shave off two years over the repayment period.”
Still, student loan repayments can impede employees from making future investments such as graduate school, buying a house, marriage and retirement. Poulin sees investing in retirement as his biggest challenge, especially when he first started working after graduation.
“I was contributing very little, if at all,” Poulin said. “Student loan debt is a major barrier. When you delay contributing to the 401(k), there’s a large compounding effect.”
Having faced the issue of paying off student debt themselves, Poulin and Verma hope Goodly can help people slash the amount of time it takes to pay off loans.
“We want to make student loans obsolete,” Verma said. “Student loans get a bad rep for most people. In terms of investments, it’s still a good thing basically. You’re able to upgrade your life. Our goal is not to get rid of it completely, but make sure you can pay it off as fast as possible.”