The average college tuition has increased over 1000% over the last 30 years; 4 times faster than the consumer price index. The difficulty in financing secondary education and subsequent employment is serious problem has led to the proliferation of a number of vocational schools and NYC Startup Climb Credit is a lending solution that allows students to finance these types of programs, based on actual outcomes of the program. Already at over 200 campuses and programs, the company makes lending more affordable and provides on-campus support, realizing that students are more than a mere credit score.
AlleyWatch spoke with founder Alexander Rafael about the company and their plans to expand to even more campuses.
Tell us about the product or service.
We’re a student lending company that expands access to ROI-driven education for the new economy. We work directly with schools ranging from IT, coding, and data science to healthcare, welding, teaching, and heavy machine operations. Our school partners include General Assembly, Northeast Technical Institute, Sage Truck Driving Schools, and American College of Education, to name a few. The company provides schools with the opportunity to offer affordable financing options to all students––regardless of credit profile.
Education is an investment and should be treated that way—with capital deployed smartly and the expectation that it will deliver a return. With that in mind, we identify, assess, and partner with schools offering the knowledge and skills required for jobs with strong growth opportunity in today’s economy. We provide accessible, affordable loans to attend these schools—and only these schools—which will likely improve their students’ earning potential. The average student’s salary increases by 66.7% at graduation from a Climb Credit financed education, based on program type and industry.
What market are you attacking and how big is it?
We’re part of the $1.2 trillion private student lending market.
What is the business model?
We are B2B2C. We partner with carefully-vetted schools that in turn offer our loans to their students, and we customize the loan products to meet the needs of each school.
We make money through origination fees on each loan which is typically financed throughout the loan term—as opposed to an up-front cost. This would be factored in to calculate the APR and generally depends on the loan size.
What inspired the business?
We launched in 2014 with the student loan crisis as our backdrop. We saw a market opportunity for students and schools that wanted alternatives to traditional and often overpriced higher education. Our first school partners were coding bootcamps. The ROI for a computer programing degree, for example, is high. You spend approx. $15K on a program and often graduate with a starting salary of $75K or higher. Since inception, we’ve expanded to support all types of education.
Your website indicates that rates range from 6%-14%. Isn’t that similar to the other loan providers that are considered predatory?
We do have low rates for the student lending industry, especially considering that the alternative options for many of our students are personal loans or credit cards with much higher interest rates.
We offer rate discounts when students opt into automatic payments, and we also have built-in payment structures that allow students to make small, interest-only payments while they are in school and a few months after graduation. This ensures that students are not accruing unnecessary interest in the duration of their program.
What are the milestones that you plan to achieve within six months?
In the next six months, we plan to expand our partnerships to additional schools and in new industries. Our ultimate vision is to align motivations between schools and students, and to allow schools with strong student outcomes to offer expanded access to their life-changing and career-growing education programs.
What is the one piece of startup advice that you never got?
Hire excellent executives early. The power of great management compounds, so get it into your organization as soon as you can.
If you could be put in touch with anyone in the New York community who
would it be and why?
I would want to meet James B. Milliken, the chancellor of The City University of New York (CUNY). He would be able to share valuable insights about how local education could be impacted on a large scale.
Why did you launch in New York?
New York is the ideal place to launch a lending or finance-related business. The concentration of talent, expertise, and capital is unlike anywhere else.
Where is your favorite fall destination in the city
Washington Square Park is my year-round favorite. The musicians, the dancers, the life.