The Student Loan Market
In the U.S economy one of the major trends that is coming to the forefront of our news is the burgeoning size of the student loan market. Americans owe over $1.2 trillion in debt spread out across 44 million borrowers. To put that into a more tangible sense, that is equivalent to the total population of California and Oregon combined. The average individual making up the class of 2016 graduated with over $37,172 in student loan debt. That number is up 6% from the previous year’s class average.
Within that pool the delinquency rate has been 11.1% despite many existing programs initiated over the last several years to combat this and tame any bubble concerns.
Student Loan Hero
CEO of Student Loan Hero, Andy Josuweit, is personally familiar with the challenges and obstacles that make up this gargantuan market. It is through his own adversities of self-managing his student loan debt that he became aware of how underserved the borrowers were. He saw how his debt that started at $74,000 quickly ballooned up to $107,000 within a three-year span. Adding to the financial injury was the challenge within those years of dealing with conflicting advice, unhelpful loan agents, banks and debt collectors, all which led him to believe that a better way was needed. That is what fueled him to create Student Loan Hero.
Student Loan Hero offers a suite of tools that helps borrowers begin the difficult task of collecting disparate loan information into one integrated place. Their dashboards allow their clients to begin visualizing the various loans held in a more cohesive manner, as well as explore different repayment strategies to better self-manage and save money over time. The built-in calculators and integrated access to repayment plan options that Student Loan Hero provides make creating an optimal repayment path clearer and streamlined.
Besides the ability to gather and assess student loans in one easy package, Student Loan Hero is constantly adding features to better serve their clientele. They understand that beyond paying off existing debts other milestones ahead are being focused on. To provide for that they offer a comprehensive assortment of access to other types of loans and credit lines.
Whether a client is considering a mortgage, needing a personal consolidation loan for outstanding credit cards, looking to start a business or planning to travel, Student Loan Hero proactively focuses on their demographic’s needs in a conscientious way. As COO Max Spiegel says they consider a large part of their mission to be:
“…trying to educate people on the best financial products available. Helping them find the best financial products out there.”
Partnership with EGFS
As a service-first oriented startup, Student Loan Hero knew from the beginning that their energy and drive was best focused on their clientele and product development. While understanding fully well the importance of well-organized recording and tracking of finances, they also recognized that managing this internally would consume time and resources better spent on product innovation. That is what led them early on to partner with Early Growth Financial Services to handle the back end operational activity as needed.
As Max Spiegel, has said when asked about the collaboration with Early Growth Financial Services:
“[Our] business is not dependent on the back-end. The financial reporting, whether to the government and the taxes we pay or other concerns, was taking away from the innovation of the product and being able to help our customers. Having [EGFS] take on that function allowed us to not worry about that, so we could focus on the most important thing, our customers.”
From the launch of Student Loan Hero’s partnership with Early Growth Financial Services they grew and scaled in meaningful, and measurable ways. At the beginning, they were made up of 3 people working to keep the overhead as low as possible while spread throughout the US, currently they are at 30 and growing. Early Growth Financial Services nationwide network could support them in every market they grew into.
With the time savings of working with an outsourced CFO they are currently drawing in 10x the amount of revenue as compared to from where they started. A large part of that is their focus on relationships as they believe strongly in running a referral-based business model.
Advice for Early-Stage Entrepreneurs
Student Loan Hero now runs its financial management in-house as they have grown solidly beyond where they started. They continue to strategize on building a world class experience as a financial portal serving students and their ever-widening needs post-college. Looking back on the experience of working together with Early Growth Financial Services, Max Spiegel offers these final words of advice to others launching a company.
I know firsthand that it takes a lot to process these things. The extra cost upfront is worth it to effectively scale your company. That is a main driver of why we hired Early Growth.”