A Fast Company article about the shifting definition of The American Dream
, published in July, reminds us that student loan debt repayment, as a hurdle to every other major life goal, is omnipresent for many people.
How can young graduates entering the workforce, or post-graduates aiming to give their career a boost, expect to build wealth if they have an average of $37,000 in student loan debt
Two Tampa natives with their own challenging student loan debt situations have developed an innovative tool to help their colleagues, friends, and fellow borrowers. Spared.com is an app with a simple but powerful function: For everyday purchases, it rounds the total up to the next whole dollar and applies the change to a user’s student loan principal.
Spared also allows family members and those connected with users to match their repayment contributions, for even faster debt elimination.
On average, Spared will make additional payments of $30 to $50 on loans each month, above and beyond any payment already being made by the borrower. In the end, this process reduces the interest owed and lowers total repayment costs.
It sounds straightforward enough, but the app also integrates with users’ checking accounts and numerous loan providers, in order to automatically round up and make payments with the change.
CEO Ryan Lockwood (Jesuit High School class of 2006) says he long ago lost count of the hours used to develop Spared. A graduate of the University of South Florida
with a BA in Marketing, Lockwood completed his MBA in entrepreneurship studies at the University of Tampa
“We founded the company in late 2016, brought on our CTO Kenny McGarvey [of Houston TX] shortly thereafter, and were lucky enough to snag Kathryn [Reina, Academy of the Holy Names class of 2006, now living in Los Angeles] in May of last year. We’ve all put in 100s of hours. Plus, buckets of metaphorical sweat, a few actual tears, and small amounts of blood commuting to/from the office by bicycle.”
Once the app is beta tested, the team will do a hard launch.
“Down the road, we’d like to expand into other forms of debt (credit, auto, mortgage). We really want to drill down on student debt first, though. Much of the team working on Spared labors under its yoke, but, more importantly, our entire generation is struggling with this.
"We’re all extremely motivated by the opportunity to alleviate that burden for so many of our friends and family.”
Two things the team is watching closely are H.R. 795
and risk-sharing proposals for higher education.
H.R. 795, or the Employer Participation in Student Loan Assistance Act, would allow employers to make up to $5,250 in tax-free contributions toward employees’ student loans. The bill also proposes to make this benefit pre-tax. Currently, employer contributions to student loans are considered post-tax, so aren’t particularly advantageous for either party.
If it passes, companies get a great employee attraction/retention tool, borrowers can get some much-needed assistance from their employers. And, it presents a good opportunity for Spared to be a part of that solution.
There are also several risk-sharing in higher education proposals in front of Congress.
Their intent is put institutions of higher education partly on the hook for the success or failure of their students. Not only does this stand to increase the quality of education, but it also represents an opportunity for tools like Spared.
Many of the proposals suggest using either the repayment rate or default rate as the measure of institutional performance in this matter. Spared can help institutions of higher education remain below these thresholds for “punishment.”
Visit the Spared website
to sign up for beta testing ahead of its official release on iOS and Android platforms.