In 2020, student loan debt reached a record high of $1.57 trillion -- a 12% increase compared to 2019. For reference, between 2015 and 2019, loan debt grew on an average rate of just under 6%.
New York-based fintech company Frank is a four-year-old financial wellness platform designed for college students. The platform streamlines the financial process surrounding college and university.
According to Charlie Javice, CEO and founder of the company, when she started Frank, the market was filled with a lot of solutions for college graduates, but not for the before and during stages.
“The market was very much concentrated on financial wellness and financial products for college graduates, but there really wasn't much out there for people that were in the process of going to school,” said Javice. “Yet, that was the time that people made the most important financial decisions that could impact the next 50 years of their lives.”
Frank’s goal is to provide more of a holistic solution to college students. It started out with focusing on student loan applications. Users fill out a series of questions surrounding their FAFSA application, and the platform then takes care of the rest based on those answers.
It then expanded to include other services as well. Its Aid Appeal service helps users determine their eligibility and then connects them with an expert to discuss their options and tactics for appealing. Its scholarship tool matches users with their appropriate scholarships. Its Classfinder offering helps users choose the most affordable courses.
The company also focuses on the post-college stage. According to Javice, there are several income driven plans for paying back student loans. These plans tend to be more affordable -- they can help save up to $250 a month in cash flow. Still, only 13% of those who are eligible for these plans are actually enrolled in them. Frank’s platform helps users discover these plans.
Frank makes money through partnering with financial institutions, schools, and governments. In addition, a couple of its tools are paid services, including Aid Appeal and Classfinder. While Aid Appeal itself is free, access to its financial aid experts costs $114.95. Classfinder’s cost for users depends on the course.
The company saw significant growth following the first year of the pandemic. In May, it announced it’s serving 5 million US households, 1.5 million of which were added during the pandemic.
Inclusion is in, it seems. ESG funds made up around 25% of all the money poured into the US stock and bond mutual fund last year -- more than double compared to 2019. JPMorgan Chase is buying OpenInvest, a fintech startup that helps clients create values-based portfolios. And while the OCC is still weighing whether or not to allow fintechs the opportunity to get a banking license, one of the pro-arguments is their potential for building financial inclusion.
And Frank seems to be a company that’s inclusion-driven. According to Javice, Frank’s customers are 30% to 40% minority and 60% women. Almost half are first-gen college students.
It may pay to be inclusive. Frank’s mission remains rooted in helping college students -- pre, during, and post. That’s where Javice says the company is ‘laser focused’.
“If you try to screw over students, your company dies,” she said. “The reputational risk is too big.”
According to Javice, as digital banking solutions and financial service apps become more ubiquitous, the companies that will come out strongest will be the ones that have kept the customers in the forefront of their services. Baking the bread, then finding out your core customers are gluten intolerant won’t benefit you in the long run.
“Once you own the customer relationship and have built that trust, it gives you a platform to expand and add embedded financial services to, which is where we're going with Frank,” said Javice.