Overlooked Ventures invests in College Cash, a FinTech app for reducing student loan debt with everyday behaviors
Financial institutions have carved little to no consumer innovation in the last 30 years, aside from introducing ACH digital payment transfers. Lagging 10 years behind the latest financial technology, banks and private lending institutions created a massive chasm in the financial landscape. The rise of Financial Technology (FinTech) consumer SaaS startups is filling the hole left by these institutions. Whatever problems our largest banks and private lenders create for consumers, FinTech startups are stepping up to the plate and solving them.
In line with our investment thesis, Overlooked Ventures takes a particularly strong interest in the broader banking and lending landscape. Studies show widespread discrimination in the financial sector towards overrepresented and impoverished communities. More specifically, a large discrepancy exists within the student loans industry.
Black student-loan borrowers default on their loans at five times the rate of white graduates. Though just six out of every 100 college degree holders fail to pay back their loans, Black borrowers are much more likely to default. In fact, 21% of Black grads default on their loans, which is 17% greater than white borrowers, according to Brookings (Business Insider).
The reason behind this discrepancy? Black college graduates face an unparalleled amount of discrimination and substantially less opportunity for progression in the labor force compared to their white peers. Despite having the same amount of student loans as their white counterparts. The ability to pay back loans is a steeper battle for Black loan borrowers and increases their chances of defaulting.
Higher education financing has been centered around over standardized thinking from the industrial age and has not considered inequalities described above. All loans are expected to be paid back in a standard fashion, however, not all people have the same opportunities to pay back their loans. It’s clear that the approach to student loans and repayment is stuck in the past. Consumers are in need of a more modern approach to education financing, which is challenging the financial sector to develop more creative and equitable payback mechanisms.
Technology enables us to crack traditional financing challenges created by institutions that need to time their cash flows in order to make money. Instantaneous ways to make money should mean that there are instantaneous ways to immediately pay down loan balances. And, most FinTech startups aim to take advantage of interest rates and the time between loan and repayment, further exacerbating income inequality. It’s clear that there is an opportunity in this market to shorten that gap.
That’s where College Cash comes in.
Overlooked Ventures is excited to announce our investment in a technology-enabled solution that provides a modern, flexible, and creative way to pay back student loans.
Meet College Cash
College Cash is disrupting the traditional student loan payback model with an app. With college cash, anyone can use everyday behaviors to reduce debt, no matter your occupation, health, financial status, identity, or ethnicity. Underrepresented groups are often blockaded from higher-income opportunities and College Cash is focused on enabling a stream of savings / passive income to go toward student loans debt repayment.
College Cash is connecting companies to consumers who are providing gig services in exchange for Debt Payment Funds (DPFs) that are directly applied to their existing college loan debt.
Here’s how it works: Companies and brands can work work with College Cash to grow their brands by running user-generated content campaigns. As a borrower, you can participate in these campaigns and whatever compensation you earn goes directly to paying down your loans. If your content gets selected for the campaign, your account automatically gets credited for DPF’s that will go towards paying down your student loan debt. This creates a special tax-advantaged micro-gig economy where behavior as simple as posting an image on social media reduces student loan debt.
But that’s just part of what College Cash does to help individuals put money towards their student loans. College Cash also offers a Gig-economy API, where gig-economy platforms in categories like ridesharing and food delivery can give their contractors the ability to use their tips to pay back their student loans. More traditional employers can also participate in an Employer Student Loan reduction plan as a benefit to increase retention and recruitment. Employees can work with their employer to earn tax advantages by choosing to switch parts of their compensation to DPF towards their student loans.
Let’s take a deeper look at the solutions College Cash provides to individuals, gig platforms, and companies.
User-Generated Content: Passive Income for Student Loans
You’re on your way to work and you stop by your favorite coffee shop to pick up the new seasonal coffee. As part of their effort to promote the seasonal coffee, they’ve listed their campaign on the College Cash app. The coffee shop promises to pay off $2,000 of student loans for 6 people who record and submit a review of the seasonal coffee. That’s it. You can earn an additional $2,000 by recording a video on your way to your job. Of course, you can only use this directly to pay your loans.
Micro Gig-Economy: A Savings Vehicle
Let’s say you’re a rideshare driver in Los Angeles, CA. For each ride that you complete, you can have your rider directly deposit money into your account that would serve as a way to pay back student loans. Once again, you can only use this directly to pay your loans. The idea here is to replace tips for rides with DPF’s or build this feature on top of existing payouts for good drivers.
Employer Partnerships: Tax Advantageous
The College Cash team is additionally exploring potential partnerships with companies to let your company pay out some of your paychecks in the form of DPF’s. Since it would not be classified as income, there would be untaxed dollars that be being put towards paying off an employee’s student loans.
College Cash was founded by Demetrius Curry, a United States Marine Corps Veteran with extensive experience in benefits management and marketing. He founded College Cash after experiencing the effects of debt with no degree himself and realizing the negative effect that debt has on so many recent grads trying to establish themselves in life. Demetrius is hands-on tackling the student loan debt crisis with College Cash. In the last few years, he has been dedicated to building the platform, forming partnerships, and raising capital. Prior to starting College Cash, Demetrius had a successful career in finance, which he began after returning from serving in the military. Demetrius currently resides in Texas, where College Cash is headquartered.
The College Cash team is exploring new business opportunities and partnerships and with decades of financial experience, we could not be more excited about working together with the team to bring creative solutions to light in a critical industry. His round is closing soon so be sure to reach out to Demetrious or the Overlooked team for more information in getting in now!