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Sootchy app makes college savings plan alternative to college debt

Until now there has been no easy or effective way to solve many families’ most severe long-term financial problem—student loan debt. The college savings plan is a long neglected but very effective tool that goes a long way in doing so. With the Sootchy app, the cumbersome 529 plan gains a sleek and well-engineered tech platform to help parents afford a great education for their child. 

Student debt is a problem I know intimately. When I came to America 30 years ago from Lagos, Nigeria, my only possessions were two suitcases full of clothes and $250 in rumpled dollar bills. I had no family, no friends and no job. Since then I’ve been fortunate to experience more opportunities than I could have dreamed, and one of the greatest was a Harvard MBA education. But earning that degree took working three jobs and taking on over $100,000 in college debt.

Education is the primary mechanism to give ourselves a better life than what we have today and to help our children have a better life than us. Yet 25% of Americans have less than $10,000 in wealth—meaning that many people can’t readily afford to send their kids to college without the burden of student loans. Kids whose parents didn’t go to college are almost certainly less likely to go to college themselves–and the generational cycle continues. 

Student loan debt widens wealth gap for minorities

Lifting others of such a burden has commanded much of my attention in 17 years as a financial adviser and much of my wealth as a tech entrepreneur. By liberating burdens on young adults, we invest it back into our communities. The underserved—Blacks, Hispanics, Native Americans and many whites who have been living paycheck to paycheck for generations—are all quickly falling behind. The wealthiest 1% of families in the United States hold about 40% of all wealth and the bottom 90% of families hold less than 25%. To me, a Nigerian immigrant, it sounds like a slow-moving but soon-to-be-permanent layer of financial royalty is being formed right here in America. 

Well-educated children have a chance to be anything they dream to be. Yet student loans can crush these dreams. Twenty years after starting college, Black borrowers typically still owe 95% of their debt. As a result, many Black middle-class parents, without the wealth of their white peers, see their adult children fall down the social ladder. Only in America do we saddle our children with debt the size of mortgages the day they leave college–a place that’s supposed to free their minds, not entrap their future goals and dreams. 

Sootchy the Dolphin dives into the student debt crisis

Enter Sootchy. He’s my long-lost cousin–a tenacious, cheeky but brilliant little dolphin—here to try to rescue your child from student debt.  Sootchy is the face of an app that creates a simple, easy way to enjoy the benefits of a college savings plan.

70% of Americans have never heard of this amazing financial product called a 529 plan. Congress created it in 1997 to help parents save for their child’s education. The few who do know about it have typically had only two ways to sign up for it. First, they could use the clunky state-owned websites—so frustrating for tech-savvy Millennials that they don’t sign up. The second alternative is equally exasperating—the paper-based and time-consuming college savings plans offered by financial advisors. No wonder 75% of financial advisors never even bring up 529 plans with their clients. That leaves parents to fend for themselves. 

Sootchy is diving into a $1.5 trillion-dollar task—46 million people, ranging from those just out of college to those who are surprisingly old, are stuck with student debt today. And another 50.4 million Americans will accrue college debt over the next 18 years. Those who use Sootchy as designed shouldn’t ever need to take out any college loans! But they must start early. For those who already have college debt, Sootchy can relieve their burden.

Sootchy’s superpower: Friends and family

How did we come up with the idea for Sootchy? The answer was very simple: the power of friends and family. The lucky ones among us have reconnected in these past 9 COVID-19-filled months with the values of friendship, love and family.  We are stronger as a community that helps and supports each other than we are when we walk alone. 

My team and I used the power of friends and family, sprinkled in with a healthy dose of state-of-the-art artificial intelligence, to build something we believe will make the lives of parents and children easier. Sootchy features an artificial intelligence driven platform to guide parents every step of the way to making sure college is fully funded and their child gets the opportunities he or she deserves in life.

Sootchy is built on the premise that wasteful birthday, holiday and special occasion gifts like toys, which depreciate in value, can be turned into an investment asset that appreciates in value to give the best gift money can buy: an education. 

The entire process takes under 5 minutes. Parents save friends and family the pain of searching for that perfect gift. Instead, they create an event by entering a few pieces of information, like event details, the dollar amount of the goal and a personalized message to guests. When guests get an invitation, they can send a gift in seconds using a credit card, a debit card, a bank account, Apple Pay or PayPal. It’s that easy. 

AI engages an expanding circle in child’s education

Most grandparents are never asked to contribute to their grandkids’ college savings plans, and the majority of them said they would be delighted to contribute if they were asked.  Aunts, uncles, cousins, godparents, close friends, neighbors, colleagues – dozens or hundreds of other people in a child’s life would love to give the best gift money can buy. All the parent has to do is ask.  

Sootchy’s AI helps identify these people and actively engage them in a continuously expanding community we call MyCircle. Just tell Sootchy a few things about you and your family, where you want your child to go to high school or college, and Sootchy does the rest. We help fund whatever goal the parent sets by engaging the unique characteristics of each person in MyCircle, channeling their love into a beautiful, debt-free college education.

While tapping the power of friends and family, the 529 plan provides tax advantages, security and protection from creditors. Most significantly, Sootchy starts to teach children at a young age the basics of money and investing early.

At Sootchy, we’re committed to putting our money where our mouth is and giving back to the communities we serve, which is why we’ve launched the Sootchy 529 Sweepstakes. We’ll be paying the full cost of one years’ tuition, up to $40,000 for one lucky student. For entrants already carrying student loan debt, the award is up to $40,000 to pay off college loans. Entrants who enroll at sootchy.com can also invite friends, family and other social contacts. The more who enroll, the more chances to win.

Together we will work to ensure no child in America ever has to take out student debt again.

David Adefeso is founder and CEO of Sootchy, Inc., an AI-enabled platform that helps children and parents save for college. This article is based on Adefeso’s presentation at TechCrunch Disrupt on September 15, 2020.