Edtech Business

Silicon Valley Startups Are Tackling Student Loans—For High Earners

Feb 6, 2017

STARTUPS TAKE ON STUDENT LOANS: Some of the biggest venture funding rounds have gone to Silicon Valley startups that want to help ease the burden of student debt. SoFi and CommonBond have both raised over $1 billion in financing—in the name of offering students loans with lower interest rates than those the government assigns every year.

Yet these services may neither be as charitable—or equitable—as they seem, according to a Buzzfeed report. Instead, most of them are only interested in borrowers “who have no trouble paying off their loans in the first place: doctors, lawyers, pharmacists, and MBAs in their early to mid thirties, who went to good schools and have good jobs but are still paying off major loan balances,” the article reads.

Regulators and consumer advocates criticize the strategy as “cherry-picking” high earners from the federal loan program. But Dan Macklin, co-founder of SoFi (which Trump’s education pick, Betsy DeVos, has invested in) says the categorization isn’t fair. “Although SoFi borrowers earn salaries above the national average,” Macklin told Buzzfeed, “many of them live in expensive cities, so they are not as well off as they seem.”

Edtech Business

Silicon Valley Startups Are Tackling Student Loans—For High Earners

Feb 6, 2017

STARTUPS TAKE ON STUDENT LOANS: Some of the biggest venture funding rounds have gone to Silicon Valley startups that want to help ease the burden of student debt. SoFi and CommonBond have both raised over $1 billion in financing—in the name of offering students loans with lower interest rates than those the government assigns every year.

Yet these services may neither be as charitable—or equitable—as they seem, according to a Buzzfeed report. Instead, most of them are only interested in borrowers “who have no trouble paying off their loans in the first place: doctors, lawyers, pharmacists, and MBAs in their early to mid thirties, who went to good schools and have good jobs but are still paying off major loan balances,” the article reads.

Regulators and consumer advocates criticize the strategy as “cherry-picking” high earners from the federal loan program. But Dan Macklin, co-founder of SoFi (which Trump’s education pick, Betsy DeVos, has invested in) says the categorization isn’t fair. “Although SoFi borrowers earn salaries above the national average,” Macklin told Buzzfeed, “many of them live in expensive cities, so they are not as well off as they seem.”

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