There is more than $1.5 trillion in outstanding student loan debt in the US. Today, more than half of students leave college with student loan debt. However, students are eligible to get more than $400B of their debt forgiven, but only 3% of that has ever been claimed according to Savi Financial.
Determining debt forgiveness program eligibility is a complicated and time-consuming process leaving borrowers stressed. This is where Savi, a Washington, DC-based fintech startup steps in. Savi automates the student loan forgiveness process by matching a student’s loans with their database of 150+ forgiveness programs. Savi uses technology to apply and manage the forgiveness program for each user. On average, Savi users lower their monthly payments by $156 and are projected to have $28K forgiven over the life of their loans.
When the Department of Education expanded the eligibility and loosened rules to qualify for student loan forgiveness last fall, Savi kicked into high gear. The new Public Service Loan Forgiveness (PSLF) program expires on October 31, 2022 leaving a limited window to scale up quickly. Savi quickly pushed major improvements to its platform to allow borrowers to track every step of the PSLF process. As a result, tens of thousands of borrowers used Savi to receive $10,000 to $20,000 of their student debt canceled through this one-time program.
Savi is a benefit-as-a-service platform used by hundreds of Fortune 500 employers, membership groups, financial institutions, and nonprofit organizations that provide Savi to their employees or members. Savi charges a subscription fee to actively manage a user’s student loans, automating loan forgiveness paperwork. The average borrower saves $156 per month while paying a $5 monthly subscription fee.
Many borrowers are woefully undereducated about the number of loan forgiveness programs they may be eligible for. There are hundreds of programs tailored for specific jobs like health professionals and public-interest careers or specific situations like loan forgiveness for people laid off due to the pandemic. Savi not only automatically matches borrowers to the right programs but they ensure their users follow the often complicated rules and paperwork of the program so they don’t lose eligibility.
Founded by Aaron Smith and Tobin Van Ostern, Savi is a public benefit corp to ensure each dollar of revenue also served a social purpose. Even though Savi is a high-growth fintech operating in the trillion-dollar student lending market, the founders come from social impact roots. Smith previously co-founded the Young Invincibles, one of the largest youth advocacy and policy non-profits in the country. Van Ostern was the National Director of the Student Engagement Program for President Barack Obama’s 2008 campaign. Afterward, he became the Deputy Director of Generation Progress leading work on a number of policy areas, including student loans.
Smith and Van Ostern work hard to maintain their DNA as a social impact startup committed to serving borrowers and tackling the student debt crisis in an entirely new way. They sought out investors like Temerity Capital Partners, NYCA Partners, AlleyCorp, 9Yards Capital along with Michelle Kang, Catherine Reynolds and Sheila Lirio Marcelo that shared their ambition and passion for the mission.