Edtech Insiders

Reducing the Lifelong Burden of Student Debt with Laurel Taylor of Candidly

January 30, 2023 Alex Sarlin Season 4 Episode 21
Edtech Insiders
Reducing the Lifelong Burden of Student Debt with Laurel Taylor of Candidly
Show Notes Transcript

Laurel Taylor is the founder, CEO, and driving force behind Candidly (previously known as FutureFuel.io). 

Her mission is to address the unmet — and urgent — market need for smart solutions that support individuals and families through every step of the planning, borrowing, and repayment experience. Candidly works towards this goal by creating trusted, intelligent and comprehensive solutions that enable Americans to reap the rewards of that investment so they can build financial wellness and wealth.

About Candidly:

Candidly exists to crush student debt for America's 44M borrowers. On average, Candidly shave $15k and half of a decade off of a user's student loans, through a personalized Student Debt FinHealth platform that optimizes repayment plans, automates the management of unruly student loans, and gamifies rewards points and spare change across the household.

Resources:

- Get Candidly Blog on the Secure 2.0 Act (which Laurel calls "the most important workplace innovation since the 401(k)"

Alexander Sarlin:

Welcome to Season Two of edtech insiders, where we talk to the most interesting thought leaders, founders, entrepreneurs, educators, and investors driving the future of education technology. I'm your host, Alex Sarlin, an edtech veteran with over 10 years of experience at top tech companies. Laurel Taylor is the Founder CEO and driving force behind candidly, which was previously known as future fuel.io. Her mission is to address the unmet and urgent market need for smart solutions that support individuals and families through every step of the planning, borrowing and repayment experience for education financing. Candidly works towards this goal by creating trusted, intelligent and comprehensive solutions that enable Americans to reap the rewards of their educational investment and build financial wellness and wealth. Candidly exists to crush student debt for America's 44 million borrowers, on average, candidly shaves$15,000, and half a decade off of each user's student loan. Through a personalized student dead Finn health platform that optimizes repayment plans automates the management of unruly student loans and gamifies reward points and spare change across the users households. Laurel Taylor, Welcome to EdTech insiders.

Laurel Taylor:

Thank you for having me. Alex, I'm thrilled to speak with you today.

Alexander Sarlin:

Yeah, I'm excited to speak to you to your your focus on something that's so important in education and Ed Tech, but we don't talk enough about on this podcast. So first off, let's start with the origin story. You know, you moved into education technology and into addressing student debt from a career in sales and advertising at large tech companies. You are at Google, give us the origin story of how candidly came about?

Laurel Taylor:

I'd love to Yes, it's I founded candidly, because candidly, navigating education financing is extremely difficult and daunting. And I grew up in a household, much like I think most Americans where I knew I was going to college, and I knew how I was going to finance college, and that was through scholarships and grants and federal loans and private loans. And fortunately, I was able to do that. And I went to Texas State undergrad. And my dream was to go to school at MIT. My mom, who was a social worker, made $24,000, a year highly educated woman, she helped me go to Texas State, she took out a you know, a Parent PLUS loan at 9%, which is really kind of where they still are today. And we both spent about 10 years paying down student debt. When I went back to school and MIT as you mentioned, I was leading a global business unit for Google the healthcare division. And I had a credit score north of 800, I received a 9% interest rate on my student loan, and then I went to, you know, 20 different sites to shop for lower cost of capital. But really, that was the moment where for me, I realized, you know, how, how fortunate to be working at Google to be going to school at MIT. How fortunate. And if I was receiving 9% interest rates, what does everybody else getting? And so really, my observation was twofold. 131 point $8 trillion at the time was about 1.4. But still second largest liability in our country. Second only no mortgages, no digital experience, entire experience rooted in phone calls and fax machines with unsurprisingly terrible borrower and user outcomes and to, as I reflected on missing out on compound interest on wealth for the first 10 years as I started my career, and my mom missed out on it on the last 10 years of ending her career of two decades of compound interest on wealth lost across two generations of women. And we're not special. It's what 84% of those with student debt, do we pay down our student debt, and then we save for the future. So I believed that benefits that addressed student debt would become a new normal within the workplace, and that would be made possible through tax incentives and policy change. And so I'm just so thrilled today to have realised and come into a after many years of blood, sweat and tears coming to that. Those regulatory tailwinds, which I know we'll talk about today, which are so exciting.

Alexander Sarlin:

Yeah, absolutely. And it feels like education, financing and student debt has been And then sort of problematic for a long time. But recently, it's become very visible, I think people really understand how much this is holding so many people back from accruing wealth from sort of moving into their careers that they want to do from going into the types of schools they might want to go to. So let's start by zooming out, you've spent a lot of time on this. And let's talk about, you know, debt and financing, education financing, sort of as a phenomenon. You mentioned that, you know, it's a second leading cause of debt, we see an average of around$30,000, a student in the US with many, many paying more than that, give us a little bit of a history, you know, how did we get here, as a country where student debt is such an enormous issue for so many of our citizens?

Laurel Taylor:

Indeed, well, it's a complex issue with a long back history. And I think kind of the bottom line of where we are today, with the cost of tuition outstripping inflation by fourfold is, you know, back in the day, and I think there's a little bit of myth busting here. When I say back in the day, I'm really speaking to an audience that may be in their 50s or older, and they can go to college, and emerge debt free. Today, the cost of education. It's a big business, it's a big business in our country. And it is unreasonable for us to expect hardworking American families to which 60% do not have $1,000 in savings, to avoid financing education for their children or for themselves. That's an outdated frame of reference, which is very legitimate, you know, the cost of education previously, it was possible today, it really is not possible. Most of the users we speak to, you know, the two or three jobs while they were in school. It's just, it's one of the largest financial expenses that most families and individuals will experience in their lifetime. And so, you know, given the kind of supply and demand and the cost of education, and yet, the data, which is very clear that the ROI on education is compelling in terms of increasing lifetime earnings with each degree earned. This is the way of socio economic mobility in our economy. And so I sadly expect the cost of education is just going to continue to rise.

Alexander Sarlin:

I always think of this phrase, when I think of this particular part of the world where higher ed has had a monopoly on social mobility, they've been really the only path to entering the middle class or staying in the middle class. Or you may argue there is no middle class. And it's the only path to sort of stay out of poverty in the US. And as such, the ROI is always there. But it means they can continue to pump up the tuition and have for so many years to a state that's really unbelievable, and the ROI is still there. So families will still pay it. Why has the tuition continued to go up for so long?

Laurel Taylor:

I think it is if I took in a inefficient market. And when we think about, you know, I often share my own experience right at my choices. I grew up in Azle, Texas, in a small town in Texas. And I had two choices, I could go to college, or I could work at McDonald's. And there's nothing wrong with working at McDonald's, it was not the choice, the only choice that I wanted for my life. And so that really means that we are very price insensitive, we will pay whatever we need to pay, to go to school to get the degree to get the job and to escape from poverty. And, you know, sadly, the average pay down now is 17 to 20 years, you know, 17 to 20 year pay down of student debt. And that's if you're Caucasian borrower, by the way the takes much longer if you are African American, Black, Latino Latinx. The data is very clear that it can take 24 years or more, which you know, we're going to dive into, but I'm excited about progressive employers who are really rethinking job requirements. We need alternative forms of education, we need trades, we need skilled workers in computer science and data engineering. And so I I am excited about thinking about alternative forms of education that enable multiple pathways to success if we define success as increased lifetime earnings and financial resiliency.

Alexander Sarlin:

Yeah, that idea of alternative pathways and alternative credentials that actually have a career benefit has really been thriving in parallel to the tuition crisis and the debt crisis. We've last few years, there are more and more and more options. Just this week, credential engine came out with a report that there are over a million credentials that can be earned that are sort of, you know, career focused or college degrees, that includes all college degrees and boot camps and MOOCs and everything but a million different certificates. That did not used to be the case. So that is potentially exciting. But it's still such a complex landscape that I think for the people you're mentioning it, whether it's McDonald's or college, they don't always realize that there are all these other options. It's I think it's still very unknown and not very well publicized. Yet, a few things have broken through, but I'm looking forward to there being more alternatives. You mentioned, the racial component of student debt. And I wanted to dig into that, you know, student debt is disproportionately borne by people of color. There's a Brookings Institute report, it's really interesting specifically refers to a black student debt crisis, and naming that, you know, four years after graduation, the average black college graduate owes $52,000, compared to 28,000, for the average Caucasian, white college graduate. So that is a huge difference you just named the huge difference that this leads to in the payback schedule and takes you know, much longer to pay it back. Tell our listeners how you think about this racial component, and what candidly sort of does to try to address it.

Laurel Taylor:

Two thirds of student debt is held by women and historically underrepresented minorities, black and brown users. Our primary way of serving, which is language that we use very deliberately, internally serving users is through the workplace. We meet users where they work, where they bank, and where they experience financial services within the workplace. In particular, as we talk about benefits that address student debt, we're really shining a light on financial inclusivity. And the benefit stack is actually biased within the workplace to those who are already well, those who are contributing to 401k those who actually do not tap into tuition reimbursement cuz they're not going to go back to school, because already have the degree in their debt avoided at that point. And so to really address the full spectrum of wellness within the workplace, it's important in from a diversity equity inclusion perspective to realize that those who are women and people of color have Indu place disproportionate value on benefits that address their needs. And student debt is a top three requested benefits within the workplace today. But specifically, when we think about the lack degree earning households, on average have a net worth that's $332,000, lower than the average for white degree earning households. And, you know, as we look at almost half of African American and black students, 49% are likely to borrow federal student loans as opposed to about 29% of Hispanic or Latino students. 21% of Asian students and black student borrowers are more likely to struggle financially because of their debt. And sadly, 66% of Black borrowers report that they regret having taken out their student loans at all. Now, when we look at the highest rate of default, kind of the story becomes more dire. As we look at the highest rate of delinquency and default is the delinquency and default is highest among those who have less than $10,000 of student debt, which is generally as a result of debt and no degree. But it's also because it goes back to your point around awareness. There are several incredible federal programs like income driven repayment programs, that enable borrowers to lower their monthly payment commensurate with their income. The problem is, there are a lot of them, it takes a PhD and six months of your life to figure out how to get into them, if they're super difficult to fill out. There's a lot of human error, frankly, on both sides on both borrower as well as the student loan servicer or their NPR did an investigative report on that earlier this year, around income driven repayment programs and public service loan forgiveness. So as a country, we haven't done ourselves any favors by isolating those who are most vulnerable with zero digital experience and solutions which are accessible through mobile phones. alternative is you find a fax machine, I mean, where I Okay, it's and then you have to have transportation and get in your car and like go to a Kinkos the whole system is just ridiculous. And it's systemic inequality. It's the wage gap. It is the additional debt that's taken out above Then beyond those of their Caucasian peers, and you have multiple, converging conflict factors.

Alexander Sarlin:

Yeah, I love your point. Obviously, this is an ad tech podcast. And we haven't talked much tech yet. But you've been mentioning the digital component to this, as well as the idea of meeting learners where they are their employers or financial institutions, both as ways to improve access and improve usability and reduce error and all of the things that can make these programs just not work nearly the way they were intended. And I think we'll get into some of the features and the sort of digital aspects of candidly, but this is such a rich topic, just that student debt is so top of mind for so many people. So I have one more question just about it in general, which is, you know, we're recording this in December of 2022. The student debt loan forgiveness plan that Biden administration has had pushed through before the midterms has now been blocked by a set of I believe governors for quite a while and it's making its way slowly through the courts. You mentioned that after many years regulation, and policy is sort of finally really moving in the direction of forgiveness. I'd love to hear you talk about that regulation. Do you think it's going to go through? Will it have a meaningful impact? We know it's, you know, $10,000 for most borrowers and 20,000 for Pell Grant recipients. I'd love to just hear you talk about that. And where do you think that's going?

Laurel Taylor:

Indeed. So I think there are three things to talk about in terms of legislative change. One is forgiveness in the state of the address there to our new federal programs that create a more sustainable path forward. And then three, the secure act 2.0, which really addresses the student debt and savings crisis collectively, because they do go hand in hand. I think what's interesting is, as we look at our user population that we serve, 75% of all of our users are either historically underrepresented minorities, or they are female. And so 78% of our impact actually flows to women. And again, historically underrepresented minorities. So why do I share that while we're talking about forgiveness, because what we saw on platform, when Biden in the Department of Education announced one time forgiveness, as you articulated 10,000 or 20,000, for Pell Grant recipients, we saw an 875% surge in user engagement, which is actually sustained, much confusion, right, there's so much confusion and chaos and what's going on, and what does all this mean. But when we actually looked at the data, the users that we serve, that were most engaged in exploring, we launched very quickly what we call the federal forgiveness finder, because we can look into the data, of course permission by the user, always, we can help a user through the metadata that we pull into our platform, see if there are Pell Grant recipients see if they're eligible. So our users that were most engaged had $75,000 of student debt would be eligible for about $15,000 On average for forgiveness, which means we serve a heavy Pell Grant recipient population, which is, you know, pretty awesome, actually, and exciting, because that means one of the major missions of the companies to drive more diversity, and financial wellness and wellbeing into, you know, for all of hardworking Americans. Also, you know, of course, through the workplace, where we know, we don't have the diversity, equity inclusion that we should today. So what is going to happen with forgiveness? I think it's really difficult to predict. This is such an unusual situation in which, you know, this is going all the way to the Supreme Court. It looks like the February timeframe on you know, on the outer edges, we're looking at a decision no later than in the moratorium ending at the end of August. I really think it could go either way. I think that the supreme court could rule in favor of this one time discharge, I think it could also be blocked. So what that means is that 43 million Americans are not going to know until, you know, once again, I mean, we've been through already, I don't know, eight or nine extensions. It's, you know, it's been almost three years since borrowers have had to repay their student loans. So what really worries me and keeps me up at night again, it goes back to the most vulnerable borrowers who are unclear and probably pretty angry, you know, is it going to be forgiven is not going to be forgiven. It's very frustrating and real emotional high and low to go through. visualizing your future debt free, visualizing your future falling into default and delinquency again and destroying your credit. So what's important for borrowers to know is no matter what happens There are incredible programs that are available that can bring borrower payments all the way down to zero, there is a new the second point there is a new income driven repayment plan that's going through a negotiated rulemaking process that actually will enable borrowers to lower their monthly payment all the way down to 5% of discretionary income. So in the past, it's been 10%. So this would, on average, lower payments to $15 month to $45 a month now, the average borrower pays $393 a month. So that's life changing to have $350 back in your wallet. And that's a much more sustainable approach. The income driven repayment plan is a public service loan forgiveness programs that enable borrowers to kind of right size their payments based on their financial health and wellness context. And then finally, I'll also share even during this moratorium, we have saved the average borrow of $358 a month in six minutes. Because, you know, each time, the borrower thought they had 90 days on the moratorium, they wanted to get in the right plan to be prepared for the end of the moratorium. And so we've continued to see a surge of use of our digital capabilities. But what's also so exciting and this just really broke last night, and this morning, is the inclusion of the secure act 2.0 provision within the omnibus spending package. And this is legislation I personally worked on for years that enables employers to offer a retirement match to employees who are paying down their student loans. So quite literally able to make simultaneous progress on debt pay down while creating wellness and wealth via retirement readiness. So you go back to the story of me and my mom 84% of those who have student debt cites student debt as the number one blocker to saving for retirement, which means at the age of 30, those with student debt have half retirement savings of those who do not have student debt. This bill is the most transformative change to the Employee Benefits space since the introduction of the 401k and enables equitable access to retirement income, through enabling employers to just recognize student loan payments as if they were something called elective deferrals basically means as if that $300 a month and paying on my student loan as if I had put that $300 In my 401 K plan every month. So at the time of retirement. So quantify that for the average borrower, that will mean about $450,000 in retirement income, if they work for an employer for 10 years who offers a retirement match, even if they never put in a cent themselves into their retirement plan. Now, we juxtapose that to the average retirement income of boomers today, which was pre the advent of student debt, which is half of that. So this is a really, really exciting provision within the omnibus package that we our fingers crossed, you know, it's gonna pass literally today and tomorrow.

Alexander Sarlin:

That's an incredibly enlightening answer. And I want to just stop for a moment and paraphrase back and synopsize Because I think you expanded the scope of that question in a really amazing way. The Biden one off forgiveness that's going up and down in the courts right now, is really, as you mentioned, just one of the arms of student loan policy that is starting to go through sounds like these income driven plans that allow payments to go down from 10% to 5%, of discretionary income is much more sustainable, you know, that's something that would have much more impact by giving people a lot of money back every month, instead of having to put it into student repayment, student loan repayments. And then this secure Act, which is up for a vote, right, as we speak, probably will be already voted on by the time people hear this podcast is sounds incredibly transformative, because it's all about student loan payments being recognized by employers. And basically, I don't know what the word is subsidized, substituted sort of put into retirement income. And I know you focus a lot on this. And I want to ask you in just a moment, part of the problem with student debt, it isn't just that the payments are going out every month. And that's annoying. It's really about not being able to accrue wealth, and not being able to save for retirement. So candidly, is really a financial wellness platform that tries to follow people throughout their lives. So I know that you think very specifically about the relationship between student loans and retirement. Maybe you could talk a little bit about that. And then I want to talk about the partnerships that you do with employers and financial institutions.

Laurel Taylor:

Yes, our perspective is that wellness cannot occur by ignoring the liability side of the balance sheet and the entire end industry is really focused on assets. And that's just not where most hardworking families are today, in their own personal financial management. If we start our journey within the workplace and in generating earnings, if that is contingent upon a degree, and that degree comes with debt, we are beginning the journey in debt for 70% 70% of borrowers are graduating with student loan debt today. Yeah, and that takes 17 to 20 years to pay down student debt. And so our philosophy is that debt is really the wedge into wellness, because if we ignore debt, we're asking users to self actualize, right? If we just think about Maslow's hierarchy of needs, we're asking users to self actualize when they're focused on food and shelter, right, especially in the beginning of your career, that is when your earnings is the most modest. And so what we see behaviorally, and what we see in the data is that those who have student debt are eight to 10 years, behind their peers in any sort of wealth accumulating activity from home ownership, to savings to retirement savings, and the behavior is sequential. Meaning that users will first pay down their debt and their credit card debt. And specifically to student debt, though, which is really interesting. Users will only say for the future when the entirety of the student debt is dismissed. So it doesn't actually matter to find really depressing, it doesn't actually matter if it's $60,000, outstanding, or $2,000, outstanding, the data show that users just want their debt to be done. And part of why it founded candidly, is because I made those mistakes, I wanted, I have this emotional, I just want it done, I want it over with and I heavily prioritize my student debt pay down at the unfortunately, you know, the trade off was those dollars were not being saved, or invested. And so you know, as we think about compound interest on debt on wealth, if we think about it mathematically, it's actually pretty complex. And so that is, the role of digital is to help provide guidance and help users from a Decision Assist perspective, in a way with there's like zero cognitive load on the user, where it might feel really good to be debt free. But if I could see myself 10 years from now, 510 1520 years from now, and it's a difference of, you know, yeah, I'm debt free, in that time horizon, but I have a million dollars more in retirement savings, then if I start, you know, 10 years later, or 15 years later. So really enabling users to, you know, we meet them where they are, which is indebted and have a candid and that's why we rebranded have a candid, authentic conversation about how do you build financial wellness, in the context of debt and consumer debt more broadly, let's not ignore it, let's integrate that into the plan. So the user can better understand next best action, how to allocate their hard earned dollars. And what we found within the workplace. Because we're a top three requested benefit. When I started the company, I had to do a lot of evangelizing and education of this is a thing like student debts really stressful. And it affects productivity and affects performance and absenteeism. And now we all know the data, right of financial health and wellness and mental health and productivity and performance. But now, what's happened is the market forces have pulled us in and it happened about 15 months ago, where there was just a profound shift in me, sharing and pitching and educating to employer saying, no, no, no, I get it. I know, like, I know, this. I know. And it's, you know, we got to do it. And it's a huge part of our talent acquisition and retention strategy. The same thing happened with banks, where it said, you know, that it is weird. The student debt is on the outside of the Financial Services experience given, that's where the journey begins. And like, we need to provide more value and we want to serve a younger demographic of user. And it turns out, they don't care about like our checking account, but they do care about saving $358 a month in their wallet. And turns out they really appreciate when we help them with this issue. Because we don't have a dog in the hunt. Like we don't have a student loan offering. And this is just pure kind of goodwill, and creating cash flow for the users we serve. It's been really exciting and channel partners. We are so privileged to serve the largest financial services companies in the world who have now bundled our digital experiences a technology enablement solution, like Vanguard and empower and Lincoln Financial Group and Transamerica and UBS to lead our Series A, because they know that their customer, which is the employer, and then ultimately the participant, it is table stakes now to address student debt within the workplace, and now with the passage of the secure act 2.0, it is necessary in order for those who serve employers to be competitive and to have elegant digital experiences that drive, you know, differentiated financial outcomes.

Alexander Sarlin:

It's really an amazing model, when I hear you talk about how students will pay off all of their debt before saving anything, or how stressful it is, I just picture you know, being underwater, you know, it's like students feel like they've just come out of school, or they've dropped out of school. But if they've just finished school, they have this huge debt bearing down on them. And they're just trying to swim back to even right, they're trying to swim back to the surface so they can start. But as you mentioned, that takes 20 years, it takes an incredibly long time. And in the meanwhile, they don't think of it's a coordinated just to get back, they feel to get back to even so they don't think about checking accounts, they don't think about saving money, they don't think enough about 401k is, and this model that uses as you say, digital technology to help students navigate this students and adults and young adults navigate this incredibly complex, economic, you know, problem is so powerful. So you've mentioned some of candidly is big partners, UBS, he also work with companies like Salesforce guild education, which we cover a lot on the show, you mentioned that, you know, it's all about meeting people at their employers or the financial institutions break these use cases down a little bit for us, you mentioned a little bit about why and how these institutions want to offer student loan debt forgiveness or ways to get out of debt as a benefit. But I'd love to hear your talk about, you know, the two different use cases of employers, financial institutions and retirement funds.

Laurel Taylor:

Absolutely. Yes. So we started the company working with employers directly. And this we've created a new category within the market. And so as the founder and CEO, the first data point that I needed to evidence to the market more broadly, is that this was actually a thing. And that employers would include solutions that address student debt and savings within the workplace as a standard part of their benefits offering and this was pre tax incentives. So employers we continue to work with employers directly we work Salesforce has, you know, it's a privilege to serve Salesforce and their employee population. We've worked very closely with their employee resource groups, their er G's, to also have additional outreach to their diverse employee population, as we've spoken about the tremendous impact that we've we've generated for the users we serve. Today, we've saved users$550 million of projected lifetime savings on student debt, which is just thrilling, and we are expected to 10x that next year, which is even more exciting, that the employers that we serve, they are really acknowledging, again, the full spectrum of wellness within the workplace, and that seven out of 10 are graduating with student debt. So to be competitive, and really appeal to five generations of talent. It's important to address this need it is student debt is aged and wage agnostic. And so I the term student debt, I actually find really distracting because it is mom debt, it's dad debt, it's spousal debt, it's grandparent debt, it's everybody's debt. And when we look at the data, employers are generally surprised to see the highest outstanding balance is actually those over the age of 50. Right now, because they have Parent Plus loans. They are co signers. And so again, we've got the bookends right of you know, beginning your career and then potentially preparing for retirement. So we enable employers to offer an incredibly compelling solution to this problem. I'll also share the Cares Act passed in 2020, and then it was extended via the Consolidated Appropriations Act. This enables employers to actually tap into their tuition reimbursement budget, and to provide $5,250 of tax free contributions to pay down student debt. Now what we've seen in the data of our own launches, employer launches 66 Zero 60% of our launches now are launching with employer sponsored contributions that are now tax free to the employee. II in tax advantaged the employer. So that has been just took a took about a year and a half for employers to see the legislation come out to actually budget right to amend something called a section 127 plan, which we help employers amend, and then actually get those those dollars, you know, put them to work. So that's employers, by the way, $100 monthly contribution from an employer, on average shaves six to seven years off of the life of the student loan paid on race, and because it's compound interest on debt, and those additional dollars accelerate the ability to become debt free, and also avoid unnecessary interest over time, which is really cool. So for financial institutions, financial institutions, and community banks, credit unions to the top 10 banks are, are acutely aware that today, student debt is part of the composition of finances that their users are managing. And it is a gap within the digital experience that they are offering to consumers, as they're focused on checking in APR and kind of other investment opportunities, that there is an opportunity if the average borrower's monthly payment is$393 a month, and we enable borrowers to save $358 a month, the question is what happens to that $5,300 a month, you know, rather than just sitting in an account, which is a big win, versus going you know, that putting that money to work. So again, getting as you were talking about underwater, right getting those dollars working on compound interest on wealth versus on debt, so that we can actually help those users repurposed the savings into wellness and wealth accumulation. And then finally, I think the third use case is the retirement industry. You know, there are 30 million Americans who have have access to a 401 K plan who don't contribute to it. And the data show that a quarter of those say in sight, student debt is the number one reason the number one driver and it is preventing them from participating in retirement savings. And so that is why the passage of the secure 2.0 this week as landmark legislation, will enable hardworking Americans, I believe, largely for the first time ever to receive a retirement match. And the key there is I know, we'll talk about like how we are enabling a very complex ecosystem between the record keeper and the payroll provider and the employer and then the employee. You we've already commercialized and operationalize this legislation to have a turnkey solution so that, you know, employers can just get launched and live and be responsive. That is also, you know, certainly true for channels, 401k, record keepers, payroll providers, all of the major actors within the ecosystem are going to be scrambling to add value to their customer, which is the employer and operationalize this legislation for easy and elegant digital solutions.

Alexander Sarlin:

I mean, a theme that I've been hearing and a lot of your answers that I think is so exciting is that, candidly, is striving to sort of simplify the complexity of this system that lands disproportionately on those who are the most burdened with that, and then uses digital technology to make it accessible to make it easy to make it something that fits into their lives, and basically makes the legislation which is all very well meaning but often doesn't get used in practice, actually use you know, all of the Cares Act on that 10 to 5% of income, you know, people may not read that particular piece of news and realize that that's happening. And you know, the ability for it to just update and say, here's the new law, and here's how it's going to work and employers can put tax free money in students can move money into savings. There's something about sort of translating the very high minded but abstract policy into daily life that feels really compelling. And I'm sure your users I really love it. I we've talked all this time about debt. I don't think we've gotten very concrete about candidly itself. So I'd love to ask you first off, you know, give us a little walkthrough. Imagine I am a student with you know, $28,000 of debt. How am I going to hear about candidly through my employer or financial institution? And what would it be like to set up within a system like this and how do you use digital technology to make it easy?

Laurel Taylor:

Yes, really exciting question. And you nailed it really the we're we are user first in everything we do design and deliver. Because the better we serve the user, the better we serve the Enterprise who got us to the user, whether that's an employer or whether that's a bank, or whether that is a major distribution partner who is placing us across their very precious customer base, right, the better we serve the user, or the better, we serve the ultimate enterprise customer. And so because student debt lives across every age and wage, and because it is so complex, this is a really exciting problem to solve through data science and digital to simplify. Our platform is capable of surfacing 3 million unique combinations of solutions. And our job is to simplify that into three simple micro actions and transactions to transform outcomes, like the easy button. So a user would become aware of us through either their employer outreaching to say, congratulation, Alex, for the first time ever, we're offering a benefit to crush your student debt, or a bank saying, congratulations, Alex, you have an opportunity to lower your monthly payment I saved $358 month or what we've learned from our users is that what they really want is to explore student loan forgiveness and savings options in less than a minute whether you make $70,000 a year, or $350,000 a year. And so there's some sort of communication that you receive, probably via email or slack or for your banking experience. So kind of off platform and on platform within experiences where you already live, you are going to receive awareness about candidly is offering and then once you come into our experience by just clicking on a link, in two minutes, we're going to ask you three to four questions, to then surface those three simple actions that will then take you into those three primary tools to guide you into a better outcome based on what goals you shared. So for example, if you share with us, I'm struggling to make my monthly payments, I never set aside for savings, I have not refinanced and I'm not ready to enter back into repayment, we're really going to focus very heavily on helping you discover, select and enroll in income driven repayment plans that lower your monthly payment. If you come in and say you know what, I've been making my payments for the moratorium because I love putting it to principle, I regularly set aside for savings. But I just want to get this done faster, we're actually going to, for example, enable you to gamify, your wallet, which means connect your spending account, like your credit card, connect where your earning points, connect your funding account. And we will provide the ability to sweep spare change up to the dollar on your everyday tech transactions, which we call round up, sweep that spare change to your student debt, we have something called Auto crash, which takes surplus out of your wallet, the average user spends 40, you know, since $45 a month to their student debt through auto crash, it turns out that that can save you know two to four years off the life of your loan just through this 25 to $50 of extra payments month. So depending on what your needs are. Now, if your employer is providing a contribution, we're not even going to talk about those other things yet, because you're there to claim the contribution. So we're going to help you do that in 60 to 90 seconds. And then we're going to explore the next best action after you've claimed that contribution or after you're receiving that retirement match. So all of that means it's personalized to the user based on the channel in which we reach you. And based on the benefits or solutions, right. Because if you're working for an employer who's offering a contribution, you're gonna have a different experience than if you experienced this through a bank, where there is not a contribution being made. But that's the power of technology and configuration at scale, is we can launch across hundreds of institutions, employer bank that serves millions of users on a daily basis. And that is the power of digital and technology.

Alexander Sarlin:

The way you describe it, all these configurations really make it we love to use the word and attack, you know, personalized. And I think you really actually come through on that promise where just with a few upfront questions and getting somebody's situation, you can give them really meaningful advice. And you've mentioned it a few times in this call how these relatively small amounts of money now have outsized effects on people's you know, financial well being at retirement or their ability to pay off the loans. And I think just that fact alone is so hard to grasp for moms, dads, students, you know, anyone that it's really especially young people because they have more time to compound it Anytime you say this amount of money, you know, $50 a month that will save you two to four years, $300 a month will save you so many years, seven years, whatever it is, it's like, it's really inspiring. And I think getting that information to people, I'm sure is exceedingly motivating, as well as these UX components like gamifying, making it, you know, set it and forget it, and auto crash and all of these great features. I wish we had more time. But I want to ask one more question. One of the things I find really interesting about your model is that you don't focus in necessarily right on that student loan moment, you really think about the whole lifecycle the whole lifetime of financial wellness, and you have this model of, you know, planning, funding, repaying, and then building wealth, I imagine. And they're all built into the platform using all these customizations. I'd love to hear your talk through those four steps and sort of what that means for students.

Laurel Taylor:

Awesome. Yes, we have focused very much on you have debt, how do you get out of it? And it was very intuitive and natural for our customers and users to ask us, How do I avoid it in the first place? Right, so we broadened the platform to manage the entire lifecycle of education financing this year. So we now enable families to plan for college, what's the cost of college gonna look like? How do I access scholarships and grants? How do we think about 529 savings plans, we also enable families to pay for college. So back to that 9% interest rate that I received. And then, you know, spent a lot of time hunting different siloed experiences, that's ideally suited for a marketplace experience, where we've curated lenders, to enable the borrower to borrow on their terms, versus the bank's terms and get the lowest cost of capital that the market can and will return. Because that particular point in time, there's generally a gap of eight to $11,000, that has to be paid in order for kids to enroll in college. And so there's a very strong sense of urgency, but we want to ensure that families are making the best choice available to them. I'm creating visibility into that. And then of course, we talked about how to enable borrowers to become debt free and save for the future, as well. And, you know, I think it's that full lifecycle in one experience is really exciting.

Alexander Sarlin:

I agree. I mean, all four of those steps are very complicated. So the idea of simplify them into an app or digital experience, any one of them is powerful, putting them together, so you can actually follow it through the years is really powerful, too. It also speaks to something we talk about a lot on this show, which is the lifetime value. You know, I mean, with an app like this or service like this, students or people would use this for many years, they use it before college, they use it during college, they use it while they're repaying the debt, and continue to use it to build wealth and save for retirement. So it's one of these rare and tech models that actually can truly serve somebody throughout their lifetime, which is very exciting for a number of reasons. So we wrap up every podcast with two questions. The first is what do you see as the most exciting trend in the Ed Tech landscape that you think our listeners should keep an eye on?

Laurel Taylor:

Well, I'm obsessed with the secure act to point out because if we think about education, education should enable us to prepare for the future in all ways, including financial aid. And so let's keep a close watch this week on security point out. And if I could, because I actually have to run to a customer call because secure act 2.0 is happening this week, which means all of these amazing record keepers and 401k providers, and fourth freebie providers and wealth managers that we have the privilege of serving as customers want to talk today. Amazing. So I would recommend our candidly blog, get candidly.com for anyone who is excited about learning more about the topics that we talked about today.

Alexander Sarlin:

Fantastic. You anticipated my final question. That's fantastic. So thank you so much. This has been really, really informative. And I think our listeners understand the debt landscape so much better than they did coming in. I'm gonna go look at that secure act and I'll let you go. Thanks for being here. LAUREL Taylor, of candidly CEO and founder of candidly.

Laurel Taylor:

Thank you, Alex.

Alexander Sarlin:

Thanks for listening to this episode of edtech insiders. If you liked the podcast, remember to rate it and share it with others in the tech community. For those who want even more Ed Tech Insider subscribe to the free ed tech insiders newsletter on substack.