Every year in the US a staggering $2.9 billion goes unclaimed in students grants because the financial aid process has become tortuously complex.
Furthermore, the ratio of guidance counselors to students is 500 to 1 nationally, with 20% of high schools reporting no guidance counselors at all. In some cases there are as many as nine different forms for a student to fill in to even apply. When you’re only 18 or 19, and perhaps your parents don’t speak English, this is a daunting prospect.
And guess what? Those student loan companies have much easier forms to fill in…
The result of this debacle is that over 30% of students actually drop out of college before finishing their degree, often because of the sheer financial anxiety. The same financial anxiety that pushed you into a loan, makes you lose the potential earning power of a degree which would increase your employability. It’s a vicious circle. The average student debt at that point is $30k, so you might owe the value of a car before you even enter workforce.
Step in NextGenVest.
It’s setting out to help students manage the process of financial aid applications and financial management. Think: your friend who’s already done it all, checking out your forms and guiding you through the process.
The platform provides reminders, guidance and on-demand help over SMS text message and Snapchat (see examples below).
After conducting research, founder Kelly Peeler(who met with TechCrunch at the World Economic Forum in Davos), realized the best way to reach these kids was SMS and Snapchat.
“These methods had the highest engagement when we tested them. Kids don’t share on Facebook any more. Email is dead to them. They don’t Google for information or read blogs. So the service needed to be instantaneous. Even parents told us that their kids don’t even pick up phones, so they have to text them. Students choose these methods because it’s the quickest way to save time and solves complexity.”
NextGenVest’s platform allows them to customize a few different questions, pre-populate reminders for students and for bucketing common responses. The startup also brings in financial aid experts for more complex enquiries.
After running in Beta in NYC, it’s spread to 12 different states and 5 different countries, as it increasingly handles international students also applying for study grants in the US.
NextGenVest has raised seed funding from the Kauffman Foundation and angels. But it’s business model is grounded in the sector. High schools purchase their financial literacy platform (17 states require that students take a financial literacy course) and they plan to add extra premium features.
So why no native app? Peeler says they found with this audience (16 to 24 age range) that a native app wouldn’t be able to customise notifications as well, plus they wanted to reach beyond any particular wealth background. “SMS reaches all incomes and we wanted to be agnostic,” she told me. “’Hey Jane it looks like you applied’ etc sounds way better to that age group.”
What’s the long-term game plan here? Peeler says she hopes to build a long term business which is the “number one customer money brand for students” which is ‘set and forget’, works in the background and saves them time.
“We’re looking to build long term, just by helping them save time and get them more money out of a complex process,” she said. “There’s a huge lack of brand loyalty in this demographic with existing institutions. We want to be the money mentor, your cool older brother who guides you through it.”
Peeler recently spoke at a TEDx on the idea: