Gradifi is a Boston-based company with big ambitions: help 40 million people nationwide pay off their loans and fix the student loan debt crisis.
“The time has come for a private market solution,” says Tim DeMello, the CEO and Founder of Gradifi. The startup’s solution is called the Paydown Rewards program, featuring an employee benefit platform called the Student Loan Paydown Plan, or SLP Plan. Companies can use Gradifi’s SLP Plan technology to directly pay down their employees’ student loan principal.
“The SLP plan will be the precursor to the 401(k) plan for this generation,” says DeMello. “Recent grads are looking at company benefits and a lot of them are saying that companies offer 401(k) programs, but retirement isn’t my problem, I have to first take care of student loans.”
There are three SLP Plan Benefit packages. One option lets employers contribute a fixed amount on a monthly basis, increasing the amount contributed after a year of employment. The other two include a matching program and an option where employers pay a fixed rate towards the employee’s student loans every month with no increase after a milestone. Gradifi sells their SLP Plan platform to companies and then manages the technology for employers that sign on.
DeMello originally sketched the idea on a napkin when he met with a senior partner at PricewaterhouseCooper (PwC) to make his pitch.
PwC Vice Chairman Rob Gittings remembers receiving his loan payment information in the mail after graduation and he empathizes with his company’s youngest employees and their financial challenges. “Gradifi presented us with a great opportunity to address a problem our people were facing,” says Gittings. “Offering the SLP Plan helps us attract great talent and lets us offer them a way to pay off their loans — it’s a win-win.”
“It’s a great benefit,” says Gabi Gutierrez, a recent Virgina Tech grad who works as an associate in forensic services at PwC. “It’s great to have an extra incentive; the program will hopefully help me pay off my student loan debt sooner, before it increases too much with interest.”