Student Loan Repayment as an Employee Benefit

Goodly Aims to Simplify Student Loan Repayment as a Benefit

Goodly, a San Francisco-based startup established three years ago, is growing its operations with a lean team of five and limited initial funding. The company secured $1.5 million in 2019 and subsequently received an undisclosed investment from Beth Axelrod, Airbnb’s global head of employee experience and a veteran HR executive.

Profitable and Well-Positioned

The startup focuses on streamlining the process for companies to offer tax-free student loan repayment as an employee benefit. Goodly has cultivated exclusive partnerships with several brokers, including NFP and the larger firm, Willis Towers Watson.

Despite this strong foundation, demand for the product wasn’t particularly high during the pandemic. Businesses were primarily focused on adapting to remote work and supporting employee mental health.

A Changing Landscape in 2022

However, conditions are shifting as we move into 2022, for a couple of key reasons.

A provision within the Consolidated Appropriations Act of 2021 permits employers to contribute up to $5,250 annually per employee towards student debt.
These employer contributions are tax-deductible and excluded from employee taxable income, creating a significant financial incentive for companies.

Student Loan Relief is Ending

Furthermore, the 20-month period of temporary student loan forbearance is concluding on January 31st. This means federal loan payments, including normal interest accrual, will resume in February.

This resurgence of student loan obligations will likely elevate the issue’s importance, particularly in a competitive job market. Companies may find offering repayment assistance a valuable recruitment and retention tool.

Goodly’s Value Proposition

Goodly CEO Gregory Poulin, a former early employee at Rippling alongside co-founder and CTO Hemant Verma, presents a compelling case for considering their services.

Poulin emphasizes that while $5,250 may seem modest, its impact can be substantial over time. He notes that the average company contribution through their platform is around $100 per participant monthly, equating to roughly the cost of a daily coffee.

Addressing Compounding Interest

Applying employer contributions directly to the loan principal helps mitigate the effects of compounding interest, a major source of financial hardship for borrowers.

Goodly estimates it can reduce the typical 10-year repayment period by three to four years, depending on the outstanding loan balance. While repayment averages closer to 20 years, even a year of savings can be a significant benefit.

Platform Features and Functionality

The Goodly platform provides each user with a dedicated account for managing and tracking their student loans. A dashboard offers a centralized view of loan information.

Employees also gain access to resources such as financial wellness counseling and strategies for optimizing repayments.

Crowdfunding Option for Loan Repayment

A popular feature allows employees to invite friends and family to contribute to their student loans, functioning similarly to crowdfunding. This provides contributors with assurance that funds are directly applied to the loan.

Company History and Inspiration

Goodly participated in the Y Combinator program shortly after its 2018 launch.

Poulin was motivated to create the company following his father’s passing while he was a student at Dartmouth, which led to $80,000 in student loan debt.

He continues to make payments exceeding $900 per month.

The Burden of Student Loan Debt

Unfortunately, Poulin’s experience is far from unique. Last year, approximately 45 million borrowers in the U.S. collectively owed nearly $1.6 trillion in student loan debt.

This debt can create a disparity in the workplace, with those carrying student loans often lagging behind their peers in financial security. By age 30, individuals with student debt typically hold half the retirement savings of those without, delaying major life milestones like homeownership and starting a family.

Looking Ahead

Goodly aims to capitalize on the renewed focus on student debt in 2022, encouraging more employers to recognize the issue and provide assistance to their employees.

Pictured above, left to right: CEO Gregory Poulin and his co-founder and Goodly’s CTO, Hemant Verma.