In a Nutshell: In today’s professional job market, a college degree is all but mandatory, and, for many young professionals, student loan debt is also a fact of life. But ChangEd, an app designed to help borrowers pay debt down with their spare change, is showing people with student debt the light at the end of the tunnel. The app links to all your spending accounts and student loans, builds a repayment journey that aligns with your budget, and rounds up your daily purchases to the nearest dollar with the difference deposited to a ChangEd account. Once the balance in that account reaches $50, it’s used to make additional payments on student loans. The app states it can pay off your loans 30% sooner and help you save on potential interest costs.
Dan Stelmach is one of those rare individuals who managed to balance full-time work and his studies during college. He graduated, kept his sales job, and, after a few years, began looking into buying a house. The problem was that he’d taken out $70,000 worth of student loans to pay for school, and he knew he couldn’t afford a mortgage in addition to his monthly loan payments. Like most of his friends and family who carried student debt, he had no game plan for getting out from under the debt faster.
So Stelmach and his older brother, Nick, brainstormed a solution. In late 2016, they began working on an app called ChangEd to help users pay off their student loans faster. They launched a beta in 2017 and quickly realized they were on to something when Stelmach and his team got the break all developers dream of — ChangEd appeared on the front page of the Apple app store and had the opportunity to pitch on Shark Tank where they landed an investment from Mark Cuban.
“We had thousands of downloads, and we truly felt we were hitting a pain point many people face,” Stelmach said. “Debt repayment lacks clarity, and it’s hard to manage because it doesn’t make you feel like you have your finances in order. We wanted to change the relationship people had with debt and we’re doing so.”
So how does ChangEd help people eliminate their debt sooner?
- First, you connect your loans and ChangEd will help with recommendations to choose which debts to pay off first based on your goals. Set it, forget it, and make an impact on your finances.
- Then, ChangEd will work in the background and automate savings such as rounding up your daily purchases and using that “spare change” to send to your debt of choice. Additional payments are automated, so you don’t have to lift a finger.
- Finally, ChangEd will project how fast you can pay off your debt and show you how much time and money you’re saving with each penny. You make progress everyday living your life while becoming debt free.
“We sent over $20,000,000 in student loan payments to date and have helped people save an additional $17 million in potential interest costs,” Stelmach said. “Student loan payments have been on pause for most borrowers with federal loans, but with Joe Biden finalizing the last payment freeze, 40 million people need to resume payments come May of 2022. ”
ChangEd is free to download and charges users $3 per month to contribute to the company’s operating costs. Most users save over $700 per year toward additional payments and the interest cost savings alone can pay for years worth of the ChangEd platform just by sending one additional payment.
ChangEd is also working on offering other debt repayment features for credit cards, auto loans, mortgages, and personal loans. If you don’t have student loans and you’re interested in using ChangEd to pay off other debts, you can sign up to their waitlist to be notified when it’s launched.
Changing Attitudes Toward Repaying Student Loans
Despite their apparent financial drawbacks, student loans are still a strong investment. Although graduates may leave school with tens of thousands of dollars of debt, or more, that debt pays off in the long run. Stelmach said that the average college graduate makes $2.5 million more than a non-college graduate over their career lifetime. The difficulty lies in those first few years after leaving school, when graduates are finding jobs and building careers while living with significant debt.
“Student loans are a sour subject, but we’re getting people excited to make loan payments with our app,” Stelmach said.
Paying off loans faster means long-term savings, but people often assume putting more money toward payments means living lean in the short term. The ChangEd app proves that proactively tackling debt doesn’t mean putting your budget in a vise grip. The app’s purpose is to decrease the impact of additional loan payments.
“It’s something that doesn’t have to change someone’s lifestyle drastically,” Stelmach said. “People want to pay down their debt, but there’s always a struggle of adjusting your lifestyle and setting up a strict budget — it takes a lot of time, determination, and encouragement. We try to make it as low-touch as possible, so you don’t feel small transfers coming out of your day-to-day living expenses.”
ChangEd strives to have a positive effect on making student loan payments. Rather than letting debt repayment remain a depressing surrender of borrowers’ hard-earned dollars, the app gives users a well-deserved morale boost.
“There’s no encouragement or a pat on the back for debt repayment. If you went onto your student loan servicer’s website and you paid an extra $100 on your $50,000 loan, all you’d see is $49,900 plus whatever interest charges are there,” Stelmach said. “Our app projects savings, on every single payment you make, how much time and money you’re saving if you stick with it.”
ChangEd’s projections are based on user payment history and habits. They also put interest accrual and savings into perspective by showing the positive impact additional payments can have. By illustrating how much users save over the long term when they dedicate spare change to paying off debt, ChangEd brings some much-needed positive reinforcement to the realm of repayment.
“These extra dollars you’re using today are going to make a difference tomorrow, and we try to show that within our app,” Stelmach said. “That’s the most compelling thing we offer our users — encouragement that you don’t get anywhere else.”
Features Help Borrowers Achieve Financial Stability
Student loan debt is a unique type of debt because people take it on to better their lives and earning potential. It can also involve more family members than other types of debt, as parents often cosign for their children’s loans.
For that reason, ChangEd supports collaborative repayment. Family members and spouses can sign up under their own names and link their account to their loved one’s student loan. The ChangEd experience is precisely the same for them as it is for the borrower; their transactions will be rounded up, and the difference goes toward paying down the debt. With multiple people contributing, the loan can be repaid even faster.
Other expense accounts, including credit cards, can also link to ChangEd. ChangEd does not bill the credit card; it only reads the transaction data to coordinate small transfers from the linked bank account. You can also schedule transfers for set dollar amounts using their savings Boost feature which allows you to save on your terms.
Users carrying multiple student loans can target specific loans they want to pay off faster. They can choose the loan with the highest interest rate, the highest or lowest balance, or whichever criteria they wish to prioritize.
So if you would like to be debt free sooner we recommend you check out ChangEd and see how much time and money you can save off of your loans.
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