A flurry of recent activity around student debt repayment, including government policies such as the SECURE ACT 2.0, passed by Congress in December, created provisions for employers to match student loan payments for those in debt while adding to retirement accounts.
At the end of February, the The Supreme Court heard arguments related to a lawsuit seeking to block President Biden’s debt relief program. Updates related to this that have taken place over the past week suggest that the Supreme Court can rule against the program.
However, some fintech startups have not only stepped it up a notch to provide some relief options, but are also offering employers a way to lighten some of the burden while also providing a recruiting and retention tool. These include good, highway benefitsCandid and Summerwhich secured $6 million in additional Series A funding.
General Catalyst, QED, Flourish Ventures, Partnership Fund for NYC, Story Ventures, Gaingels, Calm VC and Avidbank participated in the funding round, which marks Series A funding from certified B Corp. to $16 million, and $18 million in total funding.
Will Sealy, co-founder and CEO of Summer. Image Credits: Summer
It is common knowledge that nearly 47 million student loan borrowers owe about $1.8 trillion, and when the global pandemic hit in 2020, the federal government halted federal student loan payments that have now stretched for three years, said Will Sealy, co-founder and CEO of the Summer.
“The challenge for borrowers is that there have been more changes to student loan policies and rules in the past year than in the entire decade before,” Sealy told businessupdates.org. “The changes are confusing and highly tailored to the type of loan you have, which is perhaps a dozen loans for the average person: some from private banks, some from the federal government, and some given to you as a borrower by your parents . ”
While the moratorium on payments has helped, Sealy noted that the average loan payment is about $700 a month, and that it’s “unnerving” not knowing when payments will resume, meaning the payments will likely hit millions of people at once . .
Sealy, a former policy analyst and assistant to Senator Elizabeth Warren, and a veteran of the Consumer Financial Protection Bureau, started Summer in 2017 with COO Paul Joo, who has previous experience at the U.S. law firm and Boston Consulting Group.
When businessupdates.org reported on Summer’s $10 million Series A in 2019, the company was really just getting started with its approach to helping borrowers get a full 360-degree view of their current student loans, and provide options for repaying them in the most financially efficient way possible.
Now, four years later, Summer works with financial institutions, employers and other organizations to help employees plan for college, learn ways to reduce student loan debt and optimize retirement savings through employer matches.
It has also forged partnerships with companies, such as Fidelity Investments and Intuit, and expanded its work with the American Federation of Teachers to put Summer in front of tens of millions of employees. To date, the company has generated more than $1 billion in total projected savings for borrowers in the United States, Sealy said.
Meanwhile, the new funding will allow Summer to roll out new products and services and hire Leigh Gross as chief revenue officer. Gross, who joined the company from Array, a credit data access company, will be charged with leading Summer’s sales, business development and revenue stream growth initiatives.
“We’re helping employees enroll in federal and state loan programs to reduce debt, and we’re working with employers to pay off that debt even faster so employees can take advantage of those kinds of job perks,” Sealy said. “In addition, new legislation ensures that any employee who is currently paying student loans or continues to do so in the future will have the option to adjust those payments to their retirement plan. Borrowers no longer have to choose between saving for retirement or paying off debt.”
