Beautiful, a three-year-old San Francisco-based startup, has steadily grown its business with a team of five and little funding — $1.5 million secured in 2019 and most recently an undisclosed amount from Beth Axelrod , a longtime HR executive and the global head of employee experience at Airbnb.
The startup, which aims to make it easier for businesses to repay student loans tax-free as a social benefit, is profitable. It has exclusive relationships with many brokers, including insurer NFP and the much larger Willis Towers Watson. Yet his product wasn’t much of a priority during the pandemic, when companies turned to remote work and tried to ensure the mental well-being of their employees.
In 2022, this could change for two reasons. One relates to a provision in the Consolidated Appropriations Act of 2021 that allows employers to contribute up to an annual maximum of $5,250 per employee to pay off student debt. These company contributions are tax deductible for employers, but are also excluded from taxable income for employees, which seems to give companies a much greater financial incentive to provide them.
Second, after more than 20 months of temporary student loan forbearance for millions of student borrowers, student loan relief ends on January 31, which means that starting in February, federal loan repayments will resume. with their normal (and normally expensive) interest rates. . This means that an issue that has been on the sidelines for a while will suddenly come to the fore, and in a competitive job market, companies would probably be wise to take notice.
Certainly Goodly CEO Gregory Poulin – who was among the first employees of Parker Conrad’s Rippling, along with co-founder and CTO Hemant Verma – has a compelling case if they decide to investigate further. As Poulin told us earlier this week, while $5,250 may not seem like much, it can surprisingly add up over time.
“For the average company we work with, we typically see around $100 per participant per month as the most common contribution,” he says, likening the cost to a cup of coffee a day. But taking that employer contribution and applying it as a payment directly to the principal of the student loan also helps solve the problem of compound interest over the term of the loan, which is where people really get into trouble.
Poulin says the typical repayment period is about 10 years, and Goodly can reduce that repayment period by three to four years depending on an employee’s outstanding loan balance. That doesn’t exactly match the data we see that shows repayment periods are on average closer to 20 years, but obviously if Goodly can help someone save even a year of loan repayment , it is something that employers can use as a sweetener .
For what it’s worth, the startup’s technology is pretty straightforward. Each Goodly user has their own account, where they can manage and track their student loans from their dashboard. From here, employees can also access content such as financial wellness tips or the best strategies for maximizing reimbursements.
Poulin adds that a particularly popular feature is the ability for employees to invite friends or family to contribute to their student loans, which works similarly to crowdfunding, in which a parent or grandparent can make a one-time or recurring contribution. . “And of course that contributor has peace of mind knowing that the payment is being directed to that student loan and not being spent on anything else,” he says.
Goodly came to Y Combinator shortly after it launched in 2018. Poulin says he was inspired to start the company after his own father died suddenly while a student at Dartmouth, after which he left. is found having to borrow $80,000 in student loans.
Years later, he says his payment is still over $900 a month.
He has a lot of company, unfortunately. Last year, there were 45 million borrowers who collectively owed nearly $1.6 trillion in student loan debt in the United States, and for too many of them, it can become overwhelming. “It really creates a two-tier workplace where those with student loans are in many ways second-class citizens,” says Poulin, “because by the age of 30, people with debt hold about half of their peers’ retirement savings without student loans,” forcing them to delay homeownership, marriage, and childbearing.
If Goodly has his way, when student debt returns to its place in 2022, more employers will begin to recognize the problem and do more to help their employees ease the cycle.
Pictured above, from left to right: CEO Gregory Poulin and his co-founder and CTO of Goodly, Hemant Verma.