The College Financial Counselor in Your Pocket

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Right now, high school seniors across the world are wading through dense financial aid packages before making a decision that will impact the rest of their lives: if and where they should go to college. Should they take out a loan? Can they renegotiate the financial aid offers they’ve received? Is there a scholarship opportunity they missed?

The realities of the cost of college cast a somber shadow on the decision. Student loan debt is collectively at an all-time high of nearly $1.4 trillion—the second largest class of consumer debt after mortgages. More than 40 percent of student loan borrowers are either in default, delinquency or have postponed repaying their student loans.

Many low-income high school students lack the guidance they need to calculate the cost of college and plan for their future. The national ratio of guidance counselors to students at large public high schools is nearly 500 to 1, and 20 percent of high schools have no counselor. That leaves hundreds of thousands of students on their own to apply for financial aid and understand how it will impact their future.

“Financial aid offer letters are incredibly misleading and very confusing,” says Kelly Peeler, founder and CEO of NextGenVest, a New York-based company focused on improving student financial literacy.

NextGenVest is among a crop of new apps and services that aim to help students make smart decisions about financing their education. Its “College Money Mentors” platform is a free, text-based service that connects students to a human advisor at any hour of the day. The mentors on the other end of the line, of which there are about 10, are college students who have gone through the financial-aid application process and are trained by NextGenVest to answer users’ questions. They help students negotiate financial aid packages, interpret award letters and prepare for student loan repayment.

“With these Money Mentors and our data we’ve been serving sometimes as students’ college counselors, sometimes their parents, providing a positive encouraging voice,” says NextGenVest founder and CEO Kelly Peeler.

High school students left as much as $2.7 billion in free financial aid on the table in the 2014-15 academic year, according to a NerdWallet analysis. That’s mainly because they didn’t submit Free Application for Federal Student Aid (FAFSA) forms or they filled them out incorrectly. Peeler says NextGenVest’s goal is to reduce that figure. “We want to have that money go into students’ pockets instead of just sitting there.”

The company started in 2014 as a financial literacy platform sold to high schools—17 states require these types of courses—and it’s currently working with about 600 schools across the country. In January, NextGenVest launched an earlier version of Money Mentors that texted auto reminders about deadlines to students. Yesterday it introduced the version that includes human help. "The biggest thing we’ve learned is over-emphasizing that these are real people on the text messaging," Peeler says.

NextGenVest Money Mentors are available to answer students' financial aid questions 24/7. Image Credit: NextGenVest

NextGenVest isn’t the only company helping students make sense of college financial decisions. A new app called DREAMer’s Roadmap, launching today, helps undocumented students find scholarships. Many of these students don’t qualify for FAFSA and other financial aid because they lack Social Security numbers.

The free app aims to give them information about scholarship opportunities that are available for undocumented students. It currently has 500 scholarships in its database, and it lets users find and share scholarship information via text, email or social media. The company aims to help 10,000 students access scholarship opportunities in its first year.

Securing scholarship money is only half the battle of financing an education. Once they’re in school, students have to manage that money wisely, says Ted Gonder, co-founder and CEO of Moneythink, a Chicago-based organization focused on spreading financial education to young adults. “If low-income students are using money from their scholarships to cover basic day-to-day expenses, then they end up at the end of the semester unable to cut a full check for tuition,” he says. “Those day-to-day issues are often not highlighted in discourse but are ones that really need serving.”

Gonder says that more and more students are becoming aware of scholarship opportunities and loan options, but they need help on the whole road to graduation. Thirty percent of student loan borrowers drop out of college before getting a degree, largely for financial reasons.

If the first step is helping students realize they can afford college, the second—and equally important—is building their knowledge of how to make it through, Gonder says. “Even though you can afford college, even though it is possible, let’s have a realistic and sobering conversation up front about what it’s going to take. How many hours a week are you going to have to work? How’s that going to affect your ability to study for tests and keep your scholarships? How many loans are you going to have to take out on top of that?”

Peeler says that eventually NextGenVest wants to be a part of that conversation, helping students with questions once they’re enrolled. “If they’re lucky enough to go to college, we don’t want them dropping out and still owing money.”

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