, Meet The Startup Dismantling America’s Trillion Dollar Student Debt Crisis One API At A Time, The Nzuchi News Forbes

Meet The Startup Dismantling America’s Trillion Dollar Student Debt Crisis One API At A Time

, Meet The Startup Dismantling America’s Trillion Dollar Student Debt Crisis One API At A Time, The Nzuchi News Forbes

As Americans continue to struggle to get back on their feet, one daunting question that continues to riddle the U.S. is “what holds a person back from building wealth to begin with?” While there are arguably many factors at play, one critical area that continuously headlines the national news is student loan debt.  While it has become the norm for higher education, student loan debt can be crippling and is often a barrier for young adults to start properly saving for the future. According to Education Data, student loan debt impacts over 43 million Americans, totaling $1.73 trillion. It’s also growing at a rate six times faster than the nation’s economy and has increased about 8.3% since the pandemic hit in 2020. 

While it may seem like solely a financial problem, studies have shown that it’s deeply rooted in America’s societal issues. A staggering 65% of today’s college students graduate with student loan debt, and it disproportionately falls on minorities. Almost 60% of all student debt is held by women and almost 50% of Black college students graduate with student loan debt.

Like millions of others, Danielle Pensack graduated with a “small fortune” in student loans. Realizing there was no streamlined technology to simplify or automate the repayment process for individuals, Danielle and her co-founders set out to build Rightfoot, a student debt repayment API platform, working to make repayment transparent and easy. 

While Rightfoot doesn’t directly work with individual borrowers via a consumer-facing app, they think the biggest impact can be made with a “middle layer” approach, where they provide third parties the infrastructure to help customers pay off debt. To do this, they sell into companies that sell into employers. These include financial institutions, benefits and payroll companies, 401K firms, and fintechs, who can use Rightfoot to embed debt payments into their applications, bringing to life self-driving money experiences, micro-payments to loans, embedded tax-free student debt benefits, and more, into their user experience.

“Ultimately, our mission is to maximize wealth for underrepresented populations and tackle the fourteen trillion dollar consumer debt crisis in the U.S. With our sights set first on addressing the nearly two trillion dollar student loan crisis, we’ve mastered our understanding of how student debt behaves to build the most effective infrastructure,” Danielle said.    

MORE FOR YOU

Right now, many borrowers track their own debt using spreadsheets and set up manual calendar invites to remind themself to make a loan payment, avoiding autopay in fear of overdrafting their bank accounts. But imagine if you could just Venmo $20 to your highest interest student loan or send a small percentage of your income to the highest student loan, saving $9 in interest along the way. Danielle further explained that in thinking about the gig economy, “We found people would tip servers about 30% more if they knew it would go directly towards their student loans. There are so many different use cases that you can enable with this infrastructure.” 

, Meet The Startup Dismantling America’s Trillion Dollar Student Debt Crisis One API At A Time, The Nzuchi News Forbes

Today, Rightfoot launched a self-service portal allowing developers to bypass the Rightfoot sales team and get set up with the API all on their own. 

While power players in the payments space like Stripe are known for charging a certain percentage per translation as their pricing model, Rightfoot isn’t following in those footsteps. “We tried to make transaction costs for customers with the most volume as low as possible, and include a small SaaS fee. Ultimately, micro transactions to debt is something our platform is able to power for the first time, so we want to align pricing to encourage these micro transactions. For example, sending a few dollars to a debt repayment whenever possible.”  

During the pandemic, student debt became a hot topic among lawmakers. President Biden put a pause on student loan debt interest and expanded employers’ ability to make tax free student debt contributions on behalf of employees. Additionally, some officials are trying to cancel $50,000 of debt for every borrower. To that end, Danielle believes, “A lot of people are really hopeful about student debt forgiveness as a whole. But when politicians talk about the idea of getting rid of it, it’s often harmful to borrowers. In the past, we’ve seen borrowers stop paying their student loans and tank their credit score because they’re holding onto this hope of forgiveness. It’s unlikely that $50,000 worth of student debt will be forgiven overnight, and we want to help set borrowers up for success.”

Rightfoot competes with companies like Tuition.io, FutureFuel.io, Gradifi, and Peanut Butter, all of which focus on the employer benefits side of the problem. Danielle explains that Rightfoot “flips that model” in order to reach scale, quickly. “By instead selling its embeddable technology to companies well positioned to roll out this benefit, such as payroll and benefits firms. This enables companies to launch an in-house student debt benefit in under one week.” 

Rightfoot’s long-term vision is to be this holistic debt repayment API to maximize wealth for underrepresented across the board. This quarter, the team is expanding to service credit card debt repayment, and is already seeing similar demand for other forms of debt including personal, mortgage, and auto loans.

More Stories
What Israeli-Palestinian Conflict Does – And Doesn’t Mean For The Abraham Accords