Goodly, a three-year-old San Francisco-based startup, has gradually grown its business with a team of five and little funding – $ 1.5 million secured in 2019 and more recently, an undisclosed amount of funding from Beth Axelrod , long-time HR manager and global head of employee experience at Airbnb.
The startup, which aims to enable businesses to offer tax-free student loan repayment as a benefit to employees, is profitable. She maintains exclusive relationships with numerous brokers, including insurer NFP and the larger Willis Towers Watson. Yet his product wasn’t exactly a priority during the pandemic, when companies focused on working remotely and trying to ensure the mental well-being of their employees.
Sailing in 2022 could change and for two reasons. One relates to a provision in the Consolidated Appropriations Act of 2021 that allows employers to contribute up to a maximum of $ 5,250 per employee to pay off student debt. These company contributions are both tax deductible for employers, but also excluded from taxable income for employees, which will apparently give companies a much greater financial incentive to provide these benefits as they can do so at the same time. a much lower cost.
Second, after more than 20 months of temporary student loan bans for millions of student loan borrowers, student loan relief ends at the end of January, which means that starting in February, federal loan payments will pick up with their normal (and normally onerous) interest rate. This means that an issue that has been on the sidelines for a while will suddenly become a priority for many people, and in a competitive job market, companies would likely be smart to take notice.
Certainly, Goodly CEO Gregory Poulin – who was an early employee of Parker Conrad’s Rippling, along with co-founder and CTO Hemant Verma – has a compelling case for them if they decide to dig deeper into their research. As Poulin told us earlier this week, while $ 5,250 doesn’t seem like a lot, it can surprisingly add up over time.
“For the average business we work with, we typically see around $ 100 per attendee per month being the most common contribution,” he says, comparing the cost to a cup of coffee per day. But taking that employer contribution and applying it as a payment directly to the principal of the student loan also helps solve the problem of compound interest over the life of the loan, which is where people really have problems. .
Poulin says the typical repayment period is around 10 years, and Goodly can reduce that repayment period from three to four years depending on an employee’s outstanding loan balance. This doesn’t exactly match the data we see that shows the payback periods are on average closer to 20 years, but obviously if Goodly can help someone save even a year’s payback of ready is something that employers can use as a sweetener.
For what it’s worth, the startup’s tech is pretty straightforward. Each Goodly user has their own account, where they can manage and track their student loans from their dashboard. From there, employees can also access content such as tips for financial well-being or the best strategies to optimize reimbursements.
Poulin adds that a particularly popular feature is the ability for employees to invite their friends or family to contribute towards their student loans, which works the same way as crowdfunding, in which a parent or grandparents can make a one-time or recurring contribution. . “And of course this contributor has peace of mind knowing that the payment is for this student loan and is not being spent on anything else,” he says.
Well went through Y Combinator shortly after launching in 2018. Poulin says he was inspired to start the business after his own father died suddenly while a student at Dartmouth, after which he moved on. found having to borrow $ 80,000 in student loans.
Years later, he says his payment is still over $ 900 a month.
He has a lot of company, unfortunately. Last year, 45 million borrowers collectively owed nearly $ 1.6 trillion in student loans in the United States, and it’s too much, it can get overwhelming. “It really creates a two-tiered workplace where those with student loans are in many ways second-class citizens,” says Poulin, “because by the age of 30 people in debt hold about half their peers’ retirement savings. without student loans ”, forcing them to delay homeownership, marriage and having children.
If Goodly gets its way, when student debt comes back to consciousness in 2022, more employers will begin to recognize the problem – and do more to help their employees mitigate this cycle.
Pictured above, left to right: CEO Gregory Poulin and his co-founder and CTO of Goodly, Hemant Verma.