Banking on Digital Growth
Banking on Digital Growth

Episode · 7 months ago

201) #ExponentialInsights - The Struggle to Pay It Off: Student Loans


Millions of Americans are drowning in student loan debt. With repayments resuming post-COVID, many borrowers are desperate to find a way to keep their heads above water.

My guest, Bobby Matson, founder and CEO of PayItOff, contends that a lack of clarity is the number one culprit hindering people from escaping the student debt abyss. While several opportunities for repayment assistance exist, a complex system has become its own worst enemy.

Bobby believes that most borrowers can regain their financial footing - they just need a guiding hand to show them how.

Join us as we discuss:

- Common roadblocks preventing borrowers from moving forward [3:12]

- Opportunities for the workplace to assist indebted employees [13:53]

- Steps servicers can take to help relieve their constituents’ financial stress [23:41]

Check out these resources we mentioned during the podcast:


- @bomatson

You can find this interview and many more by subscribing to Banking on Digital Growth on Apple Podcasts, on Spotify, or here.

Listening on a desktop & can’t see the links? Just search for Banking on Digital Growth in your favorite podcast player.

People are going to be looking at that payment resumptions and saying like, how am I going to make that work, and have to be very diligent about it. There's less of that cash flow available. You're listening to banking on digital growth with James Robert Laigh, a podcast that empowers financial brand marketing, sales and leadership teams to maximize their digital growth potential by generating ten times more loans and deposits. Today's episode is part of the exponential insight series, where James Robert Lay interviews the industry's top marketing, sales and FINTECH leaders, sharing practical wisdom to exponentially elevate you and your team. Let's get into the show. Greetings in Hello, I am James Robert Lay and welcome to the two hundred first episode of the banking on digital growth podcast. Today's episode is part of the exponential insight series and I'm excited to welcome Bobby Matts into the show. Bobby is the CEO and founder of pay it off, a venture back team automating every aspect of student loan repayment for financial brands, fintext and workplace providers. You see, bobby built the pay it off algorithm originally to avoid paying seventy eight thousand seven hundred and forty three dollars in personal student debt, and he's now expanded access to allow borrowers to harness the power of the play form through financial brands, through Fintech and through workplace partnerships to save an average of over sixtyzero dollars throughout the life of a student loan. You know, this is something that I sure wish that I had back in the day, which is why I'm glad to chat with you, Bobby. Welcome to the show. It is so good to share time with you today. Hey, thanks for having me on. Absolutely before we talk student loans and the challenges and the problems and the anxiety that it all creates for so many of us, you've been there, I've been there. I know so many of our dear listeners have been there as well. Let's start off on a positive note. What's good for you right now? Personally professionally? It's your pick to get started. Yeah, I think it's just an exciting time and student loan land. There's a lot of different changes happening, potential cancelations being announced, lots of different you know, forgiveness program opportunities for bars. So what we're really excited about is just the opportunity for impact in the space, in our unique positioning to help financial apps get there and and capitalize on that reach. Yeah, you know, I think back when when I was a student and I was coming out of college and I had that anxiety, I had that stress of student loans, and I want to get your take on this. What's the number one obstacle facing student loan borrowers today, because it's a big problem. In fact it's a it's a one point eight trillion dollar problem confronting so many people. It's a great question. I mean, the number one problem facing borrowers is clarity. So it's clarity and what's my payment going to be? WHO's my service sir? Should I refy? What opportunities are available to me in federal programs? You know, six or seven years ago and my wife and I had six figure student loans, you know, keeping us from starting a family. I was used to answering those types of hard questions in my career. I worked on engineering gigs, a group on stitch fix, Fandango and prosper and I just, you know, dealing with millions of users and scaling infrastructure to them and answering the tough questions that they needed answered quickly. Yeah, and you know, software tends to be good at that. And that's when I noticed that, you know, so easy to buy insurance on lemonade, it's so hard to figure out your student loans. I got frustrated and built an engine for us that coutified a lot of the legs. You know, stayed up nights doing that, moon lighting it, until...

...we figured out how to get how to get clarity, you know, how to basically understand our student loan situation and best at how to best act on it. And that led to friends and friends of friends adapting that same clarity, wanting to run their numbers and, you know, me committing to a full time you know, quit my job and go full time into that problem space because I just understood the anxiety. It's a very emotional debt. So with all the uncertainty involved with this type of debt, which is, you know, used can be very commonly in the six figures. Yes, very hard if you don't have clarity. It's very hard to take on a mortgage or, you know, take on another loaner at even open a credit card, start a family, even a lot of your life goals are impacted by this step. It really is, and you know, I think that I did that one word right there, clarity. What is the antithesis of that? It is confusion, it is complexity, and that complexity then leads to what? That leads to conflict, that conflict that you know repeated, you know, in a time and time again manner. Well, then it's just a constant state of just chaos. And I've been there, you know, my wife and I, we were six figures, pretty much half a million, you know, if you're just going to throw the number out on the table, and that's after we started a family. So I know what it feels like to, you know, be in that that see of chaos, almost drowning in debt. And and if someone would just provide some guidance point us in the right direction, I think we would all feel much more confident in taking care of this. And and I want to dive a little bit deeper into your background, because you and your wife, you paid off a significant chunk of change. You stayed up late night codifying this building the methodology. Friends of friends, network effect. What were you hearing from others, not just your own experience, but the experience of others, of gaining that clarity, building that level of confidence and ultimately, you know, moving down a new path with courage? Yeah, a lot of what we would hear and sort of the early feedback was wow, I didn't realize that I had that opportunity, or sort of like this wow, that actually kind of changes the way I think about this. I thought I was like in a hole, but actually I'm not, and you'll he'll hear that a lot from, you know, doctors in a residency right, you have six figure student loans. You know, like you mentioned, the half million cases where you're making k year in a residency. You have to offer federal program and if you don't know about it or you suddenly refight, you're in a really tough situation. So all sorts of people. Or if you're somebody who only has K and loans but you're making sort of minimum wage and you it's the same problem for you. You know you need the leverage federal programs, and so access to that type of information, it's contextual and based on your situation, ends up being a very powerful motivator, and so that's what we kept hearing. Wow, this leads to action if you do it in a few clicks, you know, and I think that was that was the insight that drove the business use case in the early days. I think it's the contextuality of providing guidance around someone's unique situation that I am encouraged and excited about, because this gets into something that I teach. Help first, sell second, and if we can provide that guidance, you know, I want to dive deeper into this because, as I mentioned before, the antithesis of clarity is confusion. It is complexity and there are a lot of different moving pieces in the student loan industry. Let's break down some of that complexity for the dear listener so that we can start journeying towards simplicity together. What where is the complexity here? Because it is a big industry. Yeah, I mean the most of student loans are federal, so the complexity is largely around federal programs. There's...

...hundreds of loan assistance programs. There's over a dozen repayment options of our where can opt into, and the default play in your shown is the highest monthly payment plans to standard tenure when you graduate. So I remember that complexity when I first graduated Michigan and I was, you know, couldn't I was starting my first business at that time. My incomes basically zero. Yep, and I get this email, and I'm sure you've gotten the email, and you're like, you know, wow, that's a huge payment, you know, and I call my servicer and there's they say, you know, you can pause your payments and say that sounds great, super cool, but they didn't really have any sort of mechanical way to get me into a program like an income driven plan or something that was a little better for me. I ended up in forbearance. So it was an expensive phone call. I did the math laters with like K that I could have saved by entering an income driven plan at that moment, and that's there's a lot of factors lened that complexity. Now servicers typically, you know, get a lot of the brunt here in right, but the system itself is the complex part. It's all of the various regulatory nuances that servicers have. Have a lot of difficulty in their original contracts with Edward. You know, they there wasn't a lot of factory in these unknowns and that it's very difficult to provide guidance for a service or who maybe doesn't know about your loans. It known that they just know about the loans of Mohila, so they can actually give you full guidance. So I think the position services, as you know, have been in as they've been painted very much as the villain when really they've been, you know, trying the obviously there are edge cases and lawsuits and evidence of other things, but in the in general and that industry, we actually find that they've typically wanted what's best for the bar is. They've just been really hamstrung by the regulatory nuances. So, you know, one of the things we've noticed is just the system is really the issue. The complexity of the system is what's driving the confusion. Yes, what drove it for us, and it's which row drives it from any bars. Is the heart of the hard questions, not oh you should, oh, go refy and like read about it and build a bunch of spreadsheets tailor to you and maybe you know you can, maybe you'll get the right answer and do it over months of period of time and then you have to check again next year and it's like no one has time for that, like yeah, well, you know, it's impossible. This is where I start tying financial services into healthcare, because you can go out and you can google symptoms and self diagnosed posts, but that almost you're not a physician. You don't have the once again, the contextuality into what's going on behind the scenes here. And you know, I greatly appreciate the positioning on the home page of the PAYDOFF's website because in big bold letters it reads give your customers, like the student debt, guidance they need. And in banking on digital growth, I wrote and shared what I call the story selling methodology, where a financial brand or a fintech takes on the roll of the helpful and epathetic guide in the stories that they tell, stories they tell internally, stories they tell externally, through their positioning and and thinking about the complexity of the student loan industry. And and now, with student loan payments resuming in May of two thousand and twenty two, what is pay it off doing to help guide people beyond that complexity by providing a sense of clarity? Yeah, so our position is mainly around you know, our position in the market is automating every aspect of debt management for financial apps. So we are be tob business where are more similar to a plaid than anything else. For you plug us and will allow a bar to link their loans. But what's key is that not only do we do that, we provide much better fidelity data than any other provider out there, but we will automate the guidance part so they're there's a lot more than refi or prepayment for student loans. There's...

...all the things I mentioned that you need to automate, like the federal programs that half of bars benefit from. So you can't ignore those, and a lot of companies that we interact with have a fiduciary duty to show those options before option offering a refi. Otherwise you're you may be hurting the bar, or in many cases you are, because you're you lose those benefits when you ready. So we have that holistic picture for the bar where we're introducing all sorts of other debts on top of that to look at a holistic, even more holistic picture, and then we automate the actions. So performing the refi and rolling in the federal program all of the actions based on the guidance are also something we can either our partners leverage in a prebuilt you I. In there brand or through our API, or a mix of the two. We're sort of like legos. You could build your own kit or you can build get the Star Wars Lego Kit and have it all prebuilt. So that's kind of the way we interact with financial applications. I really like that analogy of legos because it makes a ton of sense. I mean, this is the whole you know, banking as a service, open banking model. That is just it's growing louder and louder and louder in such a tremendous amount of opportunity. Let's dive deeper into the opportunity for maybe financial brands or even for Fintech to empower student loan barers to overcome their overwhelming loan situations. What might be one or two opportunities that you see from the work that you've been doing that they could either, I call it the three three sees. They could create something new, they they could capture some opportunity that is there but they're not fully realizing, or they could collaborate and in really tie something together through partnership. Where's the opportunity? Yeah, a lot of the opportunity is we see a variety of use cases, but the biggest opportunities we see are in the workplace and in any director consumer financial services APP. So you know, right now we're automating guidance where bars are saving to forty a month on average. So that's to forty a month. That is life changing, yes, and it's also freed up cash flow and we're able, because we're Legos, we can help put any of our financial partners navigate a value creation event that betters the bar was financial outcome alongside to forty a month, whether it's saving for, you know, particular goal they have, or five to nine, or you're directing the funds in a place that has economic impact for the art but also a huge financial impact for the the bar, or so we do see a lot of those types of use cases. We see a lot of use cases for recent grads of setting what we just talked about. When you recently graduate. You know, and this is more in the capture category, where you have a bar where that you want to say pay through the checking account that you offer when they graduate. You don't want to lose them when they leave campus. Will help them set up their payment and then they are able to enroll in it by setting up auto pay and they're paying their loans through the servicers. So that works a lot for folks that are focused on centrality. But workplace is huge. I mean the reality is you have tax, bet tax rebnefits and student loan land. Now. I mean you're talking about a law large portion of student loan contributions from employers that are tax deductible up to two fifty a year, and so that's something that's a huge tail and in that industry and employers are getting much more active. So we see workplace and the directest consumer opportunities as really big, important use cases and student loans. But there's a lot more, even even beyond that that, that folks use leverage are type for digital growth is a journey from good to great, but sometimes this journey can feel confusing, frustrating and overwhelming. The good news is you don't have to take this journey alone, because now you can join a community of growth minded marketing and sales leaders from financial brands and fin text...

...who are all learning collaborating and growing together. Visit Digital growthcom slash insider to learn more about how you can join the digital growth insider community to maximize your future digital growth potential. Now back to the show. I'm curious what roadblocks might stand in the way, and we're going to come back to the workplace, because I you know, as you're talking through this, I'm seeing opportunity being created in real time, particularly for community financial brands. I want to own a table. That will come back to that. What are the road blocks that could prevent bank accredit union of Fintech from capturing some of the opportunities that you're talking here? What stands in their way? What could hold them back? They probably need to be aware of that could trip them up as they move forward to try to eat some of this financial stress around student loans. Yeah, I think the well, before we were around, it was really on the regulatory uncertainty. So you know now, when you don't know when payments are going to resume, it's hard to time a marketing message, for instance. So that's the main challenge we see. We know that when payments resume it's a once in a lifetime financial services event. Right, you have only ten percent of payments flowing right now. So it's ten x the volume and everyone asking what do I do about my student loans? So timing that is a typical challenge, but at the same time it's still an opportunity to get engaged now so that you're ready for that. Of them. It's going to happen. So I think there's a little bit of that that we see and that the regulatory environment is at this point, in this moment, in this month, probably the most complex it's been. So thankfully there are there companies like us out there that can guide through actually going into this. We started as pure technology provider and we find ourselves offering lots of regulatory guidance. One of our advisors is the head of the student and Servicing Alliance, Scopuchanan, who's, you know, they are the liaison between Ed and the servicing community and student loans. So we're often able to at least make sure our system is very much in tune with what's happening in the servicing environment in a way that other providers can't, and we're we know about change as well, ahead of them happening, and so that our system is able to at least give, you know, the clarity and not and an adapt to the environment that's changing very often. Yeah, that's a big, big part of the value add. Yeah, IT'S A it's a proactive measure. I see there's a lot of you know, you you either react to something are you respond, and when you respond you're getting ahead of the situation as much as possible. I want to come back to this idea of the workplace, because if you're a bank, if you're a crediting in particularly at a community level, you probably have some type of a commercial business there and I could almost see your servicing both sides of that commercial relationship now, and what I mean by that is those commercial accounts, particularly SMB's, have employees. So how many of those employees have student loans? And so not only are you helping the business grow on the commercial of the SMB front, you're now helping the students or the employees who are student who have student loans at those businesses, you know, elevate their lives. And there was a study that was done by the Federal Reserve that found employee financial stressed costs employers an average of five thousand dollars per employee per year in lost productivity. Now, consider it's an organization with a hundred people. Let's say twenty of them have student loans. That's a hundred thousand dollar a year issue right there, and so we're like your be to be. I almost kind of see this now being a be to be to see play for those financial brands, community banks, credit unions, commercial banks, you know, working with the commercial side, smb side, but then also providing a solution to consumer, maybe in a not so...

...clear manner, is what we've had before. What's your take on this here? Yeah, I mean I think it's a huge opportunity. I think what you just nailed it with the fact that any of these SMB's could be offering benefits. What we are offering, though, in terms of our our value in the market, is that we can work, and we commonly will work with, say, a vendor that works with the credit unions. You know that already. They can offer us through that existing vendor because we're a technology layer. We're sort of the connective tissue between the APP and the and the the servicing layer. We're able to provide the lowest cost benefit to so I think that's also a position that as we see student loan benefits being more like a feow in k becoming a core benefit? yesing point. That's that's I think really yeah, it's just going to be an eventuality based on the regulatory changes that have happened in the past year. So you know, that's something that we're just, you know, very well positioned for right now and that's just a very common use case for us. We have we're seeing a lot of opportunities with vender consolidation. So you're five to nine provider and you want to bolt on student loan benefits, you know we can do that in no time. You know we've done it over and over against. I think that there's just a any sort of vendor who has the opportunity to offer this can. Yeah, I like to like the benefits perspective. It's a it's a tremendous opportunity, for sure. I want to look ahead. I would look ahead towards the future student loans. What are you feeling most hopeful and excited about for the industry at large? I'm definitely excited about the resumption because it's just, like you know, it's such a massive event. Yeah, a lot of things I've talked about the tax deductible stats massive. I mean there's it's been eight years in the making and lots of players involved in making that happen. So and I think we're just seeing visibility of student leans that we've never seen before. I remember pre pandemic, you know, US talking about federal programs and that being like I thought there was only refi. And now when we have conversations, federal programs are the number one thing and they're one of the most important things right now, given economic instability. So you know, obviously we have lots of uncertainty economically and people are going to be looking at their wallets. Inflations very, very in front of, very much in front. Absolutely. We have a war, we have all these other things going on. People are going to be looking at that payment resumptions and saying like, how am I going to make that work, and have to be very, very diligent about it. There's less of that cash flow available. So I think that that makes services focused on that type of guidance particularly important and for any financial APP whether you're a consumer bank in the top ten or you're offin tech WHO's trying to get your your your idea off the ground like these are incredible opportunities in this space, very much so, and it really is plays Nice into the financial well being aspect of it, because go back to those numbers. What was it saving an average of two hundred forty dollars a month, more or less. Or are you reframe that through the Lens of Behavioral Economics and say we're going to help you stop losing two hundred forty dollars a month because people are more likely to? It's loss of version theory. People are more likely to take action to avoid a loss than they are to achieve a gain. And then you take that to hundred and forty and then you flip it around and then you put that into some type of deposit investment account and then now it's almost like you're looking at this from a two pronged approach. I want to get real practical as we wrap up here, bobby, and has been a great conversation. All all future growth, all transformative future growth, begins with a very small and a simple step. Ford, what is what is one small recommendation that you would make for the dear listener from a bank accrediting an offin tech to continue to either continue or really maybe even begin, I think for a lot to probably to begin guiding people...

...beyond the stress of student loans. What's one small thing that they can commit to do next? I would say that the small step that we see starts many of the journeys for folks that work with us are planning to work with us. It's survey or customers survey what they want. Yes, get the insight you need to make the right decision. Use data to drive it, because a lot of people come to sinceday. We ran a survey and and we thought we were going to work and say auto land, but it turns out everybody cares about their student loan payment because they want to know what it will be and they want to lock it in now. And so I would say just listen to what your customers have a way in a mechanism to gather the feedback, to make those types of data to driven decisions, and then be picky with the vendor. Would be my next suggestion, and I think that on two sides. I think going all in on people asking first, listening, second and then third, learning through observation, because not everyone always tells you what they're really thinking or what they're really feeling. It's there. It's their actions that speak louder than words. And then number two, on vendor selection. I'm really making a lot of recommendations to aligne around organizations that are purpose driven. You share a similar perspective of why you do what you do and I think it's that alignment around purpose that creates an exponential growth path going forward. Bobby, this has been a great conversation. What is the best way for someone to connect with you to continue the conversation that we've started here today? Yeah, best ways just reach out on twitter, email. So I'm bobby at pay it off dot Ioh and just bow Matson on twitter. That's the quickest way. But yeah, or check out our site, you know, reach out to our team, you know, and we can have a conversation about the opportunities in use cases that can help drive new business. Connect with bobby, learn from Bobby, grow with Bobby. Bobby, thanks again for joining me for another episode of banking on digital growth. Thank James, appreciate it. As always. In until next time, be well, do good and make your bed. Thank you for listening to another episode of banking on Digital Growth with James Robert. Leigh to get even more practical and proven insights, along with coaching and guidance. This it digital growthcom slash insider to join a community of propminded marketing and sales leaders from financial brands and Fintax. Until next time, be well and do good.

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