A flurry of recent activity surrounding student debt repayment, including government policies, like the SECURE ACT 2.0, passed by Congress in December, created provisions for employers to match student loan payments for those with debt while also adding to retirement accounts.
In late February, the Supreme Court heard arguments related to a lawsuit trying to block President Biden’s debt relief program. Updates related to this that occurred in the past week suggest that the Supreme Court may rule against the program.
However, some fintech startups have not only stepped up to provide some relief options, but also give employers a way to help relieve some of the burden, while also providing a recruitment and retention tool. Those include Highway Benefits, Candidly and Summer, which grabbed $6 million in additional Series A funding.
General Catalyst, QED, Flourish Ventures, Partnership Fund for NYC, Story Ventures, Gaingels, Calm VC and Avidbank participated in the financing round, which brings the certified B Corp.’s Series A funding to $16 million, and $18 million in total funding.
It’s widely known that nearly 47 million student loan borrowers owe around $1.8 trillion, and when the global pandemic hit in 2020, the federal government put a pause on federal student loan payments that has now lasted three years, according to Will Sealy, co-founder and CEO of Summer.
“The challenge for borrowers is that in the last year there have been more changes to student loan policy and student loan rules than there have been for the entire decade before,” Sealy told TechCrunch. “The changes are confusing and very bespoke to the type of loan you have, which for the average person, might be a dozen loans: some from private banks, some from the federal government and some issued to your parents.”
Even though the moratorium on payments has helped, Sealy noted that the average loan payment is around $400 per month, and it is “nerve-racking” not knowing when payments will resume, which means the payments are likely to hit millions of people at once.
Sealy, a former policy analyst and assistant to Sen. Elizabeth Warren, and a veteran of the Consumer Financial Protection Bureau, started Summer in 2017 with Paul Joo and Vincent Tran.
When TechCrunch reported on Summer’s $10 million Series A back in 2019, the company was really just getting started with its approach to helping borrowers get a full 360-degree view of their current student loan situation, and providing options for how to repay it in the most financially efficient way possible.
Now four years later, Summer works with financial institutions, employers and other organizations to help employees plan for college, learn ways to reduce the student loan debt burden and optimize retirement savings through employer matches.
It has also secured partnerships with companies, like Fidelity Investments and Intuit, and expanded its work with the American Federation of Teachers to put Summer in front of tens of millions of employees. To date, the company has delivered over $1 billion in total projected savings for borrowers across the United States, Sealy said.
Meanwhile, the new funding will enable Summer to roll out new products and services as well as hiring Leigh Gross as chief revenue officer. Gross, who joined the company from the credit data accessibility company Array, will be charged with leading Summer’s initiatives around sales, business development and revenue stream growth.
“We are helping employees enroll in federal and state loan assistance programs to reduce the debt, and working with employers to pay off that debt even faster, so that employees can benefit from that type of perk in their job,” Sealy said. “In addition to that, new legislation allows for any employee who is currently paying their student loans or continues to do so in the future, that their employer will have the ability to match those payments to their retirement plan. Borrowers will no longer have to choose between saving for retirement or paying off debt.”