Tech startup Goodly jumps into student loan benefit market
A new technology company is staking its future on the growing popularity of student loan repayment benefits.
Silicon Valley startup Goodly recently jumped into the student loan benefit market with a platform that it says makes it easier for companies to get the benefit up and running. Even though the company launched just this month, it already has signed up a number of startups, primarily in San Francisco and New York, and is working with several other employers.
Among the startups that it has attracted to its platform are HireArt, a staff outsourcing company in New York, and Splish, a San Francisco-based social media application.
The two companies “were interested in offering a benefit that would help them stand out and differentiate themselves among other startups and tech companies,” says Goodly co-founder Gregory Poulin, adding that the system can be implemented very quickly.
Poulin is seeing strong interest among companies ranging from mid-market enterprises to large well-known companies and brands, driven in large part by robust employee demand for student loan benefits. In addition to employees clamoring for the benefit, potential recruits at job fairs are asking employers about it.
The demand is not just among the millennial set, Poulin says. Even older adults, struggling under the weight of student loans taken out late in life as part of career transitions, are itching for the benefit. Some 7 million adults between the ages of 40 – 49 are paying off significant debt totaling more $30,000 from their undergraduate and graduate studies, according to Poulin.
In addition, many older adults who have taken out “Parent Plus” student loans on behalf of their children are also interested in student loan repayment assistance.
“We’ve seen folks of all ages being affected by student loan debt,” Poulin says.
In Poulin’s experience, the problem is not restricted to white-collar employees with MBAs, law degrees and other advanced professional training. Student loan debt is just as likely to impact individuals who work in retail or even “hourly folks” who aren’t full –time employees, he says.
As employers compete for talent in a tight labor market, companies increasingly are adding student loan assistance perks to their benefits packages as a recruiting tactic, say industry observers. Estee Lauder, for example, announced earlier this year that is now makes a $100 monthly contribution to employees’ student loans, up to a total of $10,000. PURE Insurance, insurance broker Crystal & Company and more recently clothing retailer Carhartt also announced similar plans.
An IRS ruling this week allowing an unnamed company to tie 401(k) contributions to student loan repayment contributions is likely to further accelerate the adoption of student loan benefits among employers, a fact that excites Poulin even more.
The tech entrepreneur pitches student loan benefits — and his platform — as more than a recruiting tool. It’s a way for employers to retain restless employees, he says, explaining that companies that offer the benefit see about 50% higher retention among millennials.
Some companies, he says, increase their monthly contribution each year to “incentivize employees to stay with the company longer.”
Poulin enters a market that has relatively little competition, with Gradifi and Tuition.io being his two primary rivals. The entrepreneur touts Goodly’s flexibility, simplicity and pricing structure as differentiating factors that he says sets it apart from competing platforms.
“We designed our software and our platform to support companies of all sizes and budgets,” Poulin says.
Goodly is also price competitive, he claims. Unlike his rivals, Goodly charges only a monthly fee per participating employee ranging from $6 - $12. The $6 monthly fee is standard for most companies, but it can be higher if companies choose additional features, such as plans with different contribution amounts that vary by employee tenure.
“With our system, we never charge any kind of annual fees or implementation fees. We just charge very simple pricing for each employee participating in the benefit," he says.
Poulin is betting that the pervasiveness of student debt is not about to be resolved anytime soon.
“We’ve been blown away by the number of companies,” he says of the varied enterprises looking to implement student loan benefits.