Tuesday, March 8, 2016
How Tuition.IO Is Helping To Tame Student Debt, One Employee At A Time
Once upon a time, one of the best benefits that employers could offer up an employee was a company contribution to their retirement plan. However, for an entire generation of employees—particularly, those coming out of school now—saving for retirement is completely overshadowed by the far more pressing, crushing burden of student debt. Santa Monica-based Tuition.IO has s created a way for companies to both help their employees tackle that mound of student debt, as well as attract better and more loyal employees. We spoke with Brendon McQueen, founder and CEO of Tuition.IO, to hear more about the company. Tuition.IO is venture backed by MassMutual Ventures, Wildcat Venture Partners, and Mohr Davidow Ventures.
Thanks for the time today. Tell us what Tuition.IO is all about?
Brendon McQueen: Tuition IO is an employee benefit that allows employers to contribute to their employees' student loans on an ongoing basis, as a hiring and retention tool.
What was the idea that behind the company?
Brendon McQueen: The idea behind the platform, is that over 70 percent of college graduates today have college loans. There are 42 million Americans who have these loans, which total to about 1.3 billion dollars. We had the sense that employers could help address that pain point, in parallel with, or ahead of addressing a person's retirement, which might not happen for 45 years. Because the average student loan and debt is continually increasing, the payoff time now is literally an average of 21 years. It makes sense for employers to help their employees pay that years ahead of that, with this program.
What's your background, and how did you get into this?
Brendon McQueen: I graduated from Columbia in 2009, and was a first generation college graduate. I came out of school with twelve loans. I don't even know how that happened, who I owed money to, and if I could even pay off those loans. Plus, I graduated at the height of the recession, when job prospects weren't that great. I eventually ended up here in 2012, where the company came out of an incubator here called Launchpad LA. We launched the site to the public in 2013. It originally had been a consumer platform, to help people organize and optimize their loans, and it was only last April that we started looking at the enterprise market, and our employer facing platform was launched.
What helped you figure out that working with employers was a better approach to what you were doing with consumers?
Brendon McQueen: We just saw the kind of impact this platform could have on the larger, studen tloan crisis. On the consumer side, you can only have incremental consumer change. You can have that consumer increase their payment by five percent a month, which is great and very powerful, but if you can get their employer to contribute real money on top of your existing payment, the impact is just tremendous. To put that into context, an average person with loans comes out of school, can save three or four years on their student loan payoff horizon. If you take a big company, say someone that has 10,000 employees, and assume that 20 percent of them have student loans, that 2000 times four years, which literally saves 8,000 years worth of student loan payments for those employees. That's incredibly powerful.
How has the reception to this been on the employer side?
Brendon McQueen: It's been surprisingly strong. We have just under a hundred clients now, and we just launched in April. Some of those companies have been insanely huge. The employee reception has been almost miraculous, and the employees love this. Companies don't have to educate their employees on why they would want to pay off their loans, they just get it, and they love it. It's been amazing.
What is driving those companies to adopt your program for their employees?
Brendon McQueen: That's a great question. This program helps them support their hires, and helps them hire competitive. It's a very competitive hiring atmosphere, and we're bringing something new to the table that a candidate presumably has a lot of interest in. It's a great value proposition. On top of that, there is a big use case around employee retention. Because the employer contribution is ongoing, every month, the idea is that you will have less employee turnover, because you are helping them solve a pain they have, every month. The third thing, is around employee engagement. The moment an employer rolls this program out, the people who have students loans now say—hey, my employer and I are on the same page. We have an alliance here now, and hence I can be more engaged at work.
What's next for you?
Brendon McQueen: It's still early days, but the traction so far is astounding. I'm 100 percent focused on our company having a significant impact on the overarching student loan crisis. Plus I'm having my first kid!
Wow, a new kid and a new startup—how has that been?
Brendon McQueen: Anyone who has had kids knows it obviously introduces some challenges. But, I think the other side of the coin, is that having kids and a company like this is a great point of inspiration. At a startup, you have to work hard, but knowing that you're doing it for your kids certainly helps, at least for me.
Thanks, and good luck on both the startup and the new kid!