A new generation of tech-enabled startups are beginning to reimagine how students finance their education. Higher ed’s transformation is fueling a..
Remember when big banks used to offer high-interest but well-branded credit cards to college students? The “10 CDs for a penny” scam? Or worse, student loans marketed to a sophomore mulling a spring break trip who wound up saddled with decades of debt?
You’ll be glad to know that after a sustained regulatory assault (and, perhaps, a wiser generation of college students), 1990s-era on-campus marketing by credit card companies and financial institutions has been, largely, cleaned up.
Of course, that doesn’t mean that the risk — and opportunity — for students and financial institutions has diminished, as college is likely the second-largest expense for a person (after buying a home) and will drive their financial future for a generation.
Nearly half get their first credit card before turning 21. Twelve million Americans take out student loans, which now exceed credit card debt, each year. Recent graduates frequently check their student debt status more than once per month, providing loan servicers with unprecedented insight into the financial habits of tens of millions of young Americans.
As a result, a new generation of tech-enabled startups are beginning to reimagine how students finance their education — and make the financial transition from college to career. Higher education’s transformation is, in turn, fueling a trillion-dollar convergence of fintech and edtech that aims to blur the line between learning and earning — and will force students, colleges and financial institutions alike to think differently about return on education investment. Here are four mega trends driving the shift.
Gone are the days when students read through college guides or US News and World Report to find the right college match. More than a million students have downloaded the Schoold app, which allows them to do their college searches from their mobile devices. Soon, high school students will be using smartphones to compare post-graduate salaries, by major, by school.
Raise.me , which raised $4.5 million in 2015, helps high school students choose which courses (and extracurricular activities) to pursue to earn-down the cost of college by telling colleges enough information to underwrite a scholarship. Full financial aid forms are being filled out on SaaS platforms like CampusLogic , which radically alter the loan experience by allowing schools to, for example, recommend how much debt is appropriate for each degree program.
These new apps are quickly changing the dynamic of the customer relationship away from banks and financial institutions and toward companies at the intersection of edtech and fintech.
Loans are no longer the only option for how students can pay for college. Students now have an equity alternative.
