Transcript
Hi there, Mary Wisniewski here, Cornerstone Advisors editor-at-large.
On the show today, I speak with Laurel Taylor, the founder of Candidly, which is a fintech company focused on helping people eliminate their college debt.
The platform is offered through employers as a benefit, and the list of companies offering the perk includes banks.
Today on the show, we explore innovations in consumer debt, the opportunity created by the passage of policy called SECURE 2.0, and the emotional side of student debt.
There’s a lot of shame tied to it, of course, and we also talk about the joy of accomplishments.
Here’s the conversation.
Laurel, thanks so much for joining me on the show, Money Isn’t Everything. It’s wonderful to have you today.
I’m thrilled to be here, Mary. Thanks for having me.
Yeah. I wanted to cut right into your company’s name change because I think it’s telling of a bigger truth.
Let’s go from what the name began with to what it is now and why that was.
Love to.
When I founded the company in 2016, the name was FutureFuel, and it was really with a dual purpose of fueling the future of our economy, our market competitiveness, our ability to compete globally in terms of our human capital, and the ability to fuel the future as American workers for our own financial health and wellness.
The central theme was really through the power of education, where we as a country want to be in terms of our ability to compete globally, and what it means for employees, for workers, for Americans to increase our lifetime earnings over time through the power of education.
FutureFuel was a love-hate.
Some individuals loved the name, and others thought we were a biodiesel company.
So, the confusion really was an opportunity to reflect further around the problem that we’re solving, and then, at the time, really who we had become as an organization over time and what we had learned.
What we learned was that most hardworking Americans, the 70% of us who graduate with student loan debt, have a lot of shame and feel a lot of shame around our student debt.
Culturally, we have this kind of bizarre treatment where it feels as though, to many Americans, the expectation is to work and pay for your college through your summertime jobs.
The reality is, that may have worked 30 or 40 years ago, but with the cost of education outstripping inflation by fourfold, that really is not pragmatic.
Just as we finance a mortgage, the cost of education is the second-largest liability and investment that we will be making across our lifetime.
We wanted to change the name to really shine a light on that shame and to normalize and recognize that financing education is a part of going to school and increasing your lifetime earnings.
Rather than student debt sitting outside of the financial services landscape, really acknowledge it’s right at the center.
It’s how the vast majority of us begin our journey in the world of financial services.
Again, to normalize that and to move from shame into feeling empowered.
I want to get into the shame thing because it is so important.
I think it’s just coming out more and more, even in financial services circles, even traditional bankers finally saying, “Hey, there’s a deep emotional component to this. No wonder why our budgeting tool is not working.”
But with the name, I mean, Candidly, like candid, what you’re saying is an open conversation about this enormous debt.
Yeah.
Candidly, most American households are not able to finance college through cash.
Candidly, it takes the average American 17 to 20 years to pay down their debt.
If you are a woman or a woman of color, it will take 24 to 28 years.
Having a candid conversation around what that means for the long-term implications of paying down debt, and how to balance that with building wellness and wealth.
Because of the very strong emotional attachment that we have to student debt, over 80% of Americans who have student debt only direct their dollars to pay down student debt.
Only once 100% of that debt is paid down do we start saving for the future, emergency savings, retirement savings.
That was published by the MIT AgeLab and TIAA.
TIAA happens to be my alma mater and one of the partners that we serve to serve hardworking Americans at scale.
I founded the company because I was that person who felt shame about the amount of debt that I had and then realized, wait a second, I’m not the minority.
It’s the majority of those who are going to school.
This is a majority issue across all ages and wages of American households.
Let’s unpack that because I think that’s so important, that this is something you experienced in a personal way.
It sounds like you felt alone.
What was that moment when you were like, “Hey, no. Maybe not as many people are talking about this, but this is a reality”?
Yes.
I think the reality for many, I am so data-centric in how I make decisions, and because historically it’s been a bit taboo to discuss student debt or finances more broadly with your friends, there really hasn’t been a lot of conversation around it.
But when I looked at the data and saw that it was the fastest-growing form of debt, second to mortgages, and then again the studies produced by a number of organizations, that was really when I realized I wasn’t alone.
That empowered me to then have a discussion and jump in to solve the problem.
This is a nice segue to the one segment we do on the show, which is “That’s What You Said.”
You said this on another podcast, which I think is super important.
Let me make sure I’m saying it correctly, but you said, “I really dislike the term student debt. It’s very distracting. It is mom debt, it’s dad’s debt, it’s spousal debt, it’s grandparent debt. It’s everybody’s debt.”
You’re nodding your head, so I assume this is still a strong belief.
But it does seem like perhaps mainstream is not accepting it that way.
Is that how you feel?
I think we are myth-busting every day.
We as Candidly exist to crush student debt and to enable hardworking Americans to go beyond debt into savings and retirement savings as a workplace benefit and/or in partnership with the bank they’re already doing business with, so that the bank can address and help this user population address their student debt as part of their value proposition of the banking experience that they’re serving their consumers or their members.
What I see and experience on really a daily basis is the assumption around who has student debt and who is affected by student debt.
What is so powerful is when we actually look at the data across the population that’s being served.
For example, we pulled data in partnership with Fiserv across 268 banks in one of their cores that they have on the back end, one of many cores.
What we saw in the data was, across these 268 banks, they had billions of dollars in student payments that were occurring, which was really surprising.
So, when we look at the scale of dollars being directed to student debt, that’s a surprise.
Then, when we look at the age and the wage cohorts, what we see across the landscape that we serve, it’s actually the highest outstanding balance is held by those over the age of 50.
Wow.
Because these are individuals that have Parent PLUS Loans, or they are co-signers on a private student loan.
Within the workplace, as a workplace benefit, these are executives that have $97,500 of student debt on average across a population that ranges between 21 to over 65, $177,000 in income to well over $300,000 in income.
When you really dissect the age and the wage and even departments, from product management to engineering, and within those departments who is leveraging the Candidly platform, two-thirds of debt is held by women and people of color.
So, it’s no surprise that our platform is heavily utilized by women and people of color because this is an issue that disproportionately impacts them, again, of all ages and wages.
As you shared, you mentioned you have a partnership with Fiserv.
I know you have partnerships with banks.
This is such a, I’d still call it a novel perk.
A lot of banks and credit unions struggle to recruit young staff. I hear it all the time at trade shows.
This is a perk where you can be like, “Hey, here’s a perk.”
Tell us more about this perk because it’s very interesting, and your timing here is pretty perfect.
Well, thank you.
You’re welcome.
To arrive at a place, yes.
I mean, big policy changes, and I think we should drill into them.
Absolutely.
As a founder and CEO of a new category, you really hope and pray for a little luck along the way because timing is so important.
Where we are right now, when I started the company, offering student debt, so we’ll first talk about it as a workplace benefit.
As we think about community banks, banks, credit unions, and how they’re really struggling to attract and retain talent, there’s one dimension of the problem that we solve.
Then the second is, how do we continue to modernize the digital experience that community banks, banks, and credit unions are offering to their customers?
If we first look at workplace benefits and employee benefits, what is so thrilling about 2024 is the passage of policy called SECURE 2.0, Setting Every Community Up for Retirement Enhancement.
It was passed on December 29th of 2022, which was truly one of the most rewarding, exhilarating days of my life.
It was a day that broad bipartisan support across both sides of the aisle recognized this is a major problem, and student debt is obfuscating the ability for American workers to save for the future.
So, what makes common sense? What can we do to help solve this problem?
Let’s allow employers to offer a retirement match based on student loan payments workers are making and treat those student loan payments as if it were the employee’s own deferral into the plan.
It provides parity for employees who are taking advantage of their employer’s retirement match.
It enables those who are already invested and taking advantage of that retirement match to potentially maximize.
What we see in the data are employees who are participating but not able to maximize. They have student loans.
Now they can defer into the plan, but then get an employer match also on their student loan payments to maximize.
Then there are the vast majority of workers who are just completely on the sidelines.
That retirement match, although it’s really compelling, it also means taking away cash flow from my wallet right now for a future state that could be 20, 30, 40 years from now.
What we see in the data is that those who have student debt are very sensitive to cash flow.
Even though there could be a match, and it’s super valuable, it’s a blocker.
Now financial institutions can offer a retirement match to this population that’s sidelined and missing out on that awesome value proposition that their employer is offering.
So, that went into effect on January 1, 2024.
Employers and FIs can offer this benefit, even getting their plan design, which we help with, as late as December 31st.
So they can deploy anytime this year.
They can still do it?
They can still do it for open enrollment.
What we see in the data is that employers who offer a contribution in connection with student loans, when they help pay down the student debt of their employees, which is tax-free up to $5,250 a year, an employer can actually help pay down and accelerate the paydown of student debt.
We facilitate that full benefit offering.
We see a reduction in turnover by 76%, which is staggering.
That also holds true in the healthcare vertical, so extreme hypermobility and burnout in these industries.
Then, for that retirement match, it’s too new to have the data on retention, but we’re expecting it to be between 40% to 76% reduction in turnover.
So, all FIs can offer a benefit to their employees that’s tax-advantaged, that enables them to do something they’re already doing, which is a retirement match, and make it available to a broader population.
Yeah.
I want to go into that point of the psychological issues that are like, “I need to deal with my cash flow on a day-to-day basis,” versus longer-term.
I can go back.
I was lucky in that I didn’t have too much college debt, but I had a job that didn’t pay much, and I lived in New York City.
I remember thinking, “Oh, I can’t afford to put this in retirement.”
I had a boss that was like, “Put it in retirement.”
I’m like, “Well, I don’t know.”
Luckily, I think a couple years in, it was something that just automatically was happening for me, and I hadn’t even realized it.
So, I mean, I could have.
I was just one of those people.
It’s a mental hurdle when you’re like, it’s very hard to pay rent and the other bills, so you’re thinking this wouldn’t do well.
I’m really intrigued by this as a benefit, but have you seen any of the corporations you’re working with, because sometimes these perks get buried.
They’re just buried, and you don’t really know they exist unless you’re really digging in with the HR person.
Have you seen any really good examples of someone you partner with where you’re like, “Yes, if you made this perk available, this is how you would present it”?
Yes.
It’s really exciting.
We are deployed across about 1,400 employers.
Wow.
Of all different sizes.
How does that feel, by the way? That’s a remarkable sentence to be able to say.
Thank you.
We started with very small employers, or micro employers, then small-medium business, then mid-market, then enterprise.
Today, our average employer has 22,500 employees, so we’re in what they call the mega-jumbo-ultra space.
What a name.
I know. I know.
So great.
It’s incredible.
We are largely distributed by partners in the financial services, 401(k), financial wellness, life insurance space.
We are an embedded finance solution where we’re integrated into, for example, Empower’s experience and Vanguard and several Lincoln Financial Group, OneAmerica, and a number of other truly great education partners.
As they deploy across the employers that they serve, we’re a part of that offering, which makes that offering inclusive for 100% of wellness within the workplace.
We have a proven playbook, we call it our proven playbook, for communications.
One, in terms of, if you build it, they will not come.
That’s true both for market adoption, where you go out and you make it happen, and you get that momentum, and you get the early adopters, and you move from novelty into new category into new normal.
We are in that transition from new category to new normal.
Ninety percent of the pipeline that we receive from our partners with whom we have the privilege of working, some of the firms that I just mentioned, that’s like the Olympic sport of enterprise partnerships, to work with these organizations.
When we deploy, what we see for those receiving a contribution to help pay down their student debt, we see like 99% adoption within the first...
Wow.
Which means employees, when they hear their employer is offering a contribution, they will move heaven and earth to get that contribution very quickly.
Very similar data on what we call a student loan retirement match, the retirement match on student loan payments.
But when we look at that data more deeply, what we’re seeing is a 133% lift in employee participation.
It could be the Mary that had the conversation with the HR person who is giving that great advice of, “Don’t leave money on the table. Take advantage of the match. Get into 401(k) savings before an auto-enroll,” which sounds like was the magic of getting you into that plan.
What we’re seeing is a 133% lift in employees getting into the game of retirement savings for the first time, which is really exciting.
Then we’re seeing a 27% lift in those who are maximizing.
But I think the data point that is most compelling beyond first-time folks getting into the plan and first-time folks maximizing is 95% are maximizing.
So, they’re going from zero participation into fully maximizing their benefit.
When we look at the time of retirement, that’s the difference.
Let’s imagine that an individual receives a contribution, a retirement match, from their employer for just 50%, half the time they’re paying down their student debt.
It’s $450,000 of retirement savings projected at the time of retirement.
That’s four times what boomers have today.
Wow.
From one tiny little provision in SECURE 2.0 called Section 110.
It’s always something obscure-sounding like that, right?
I think of 1033 for...
Yeah, that’s exactly.
Oh my God. I feel like the industry needs better labels.
I would agree with that.
Something better than that random number that no one knows what it means.
Well, Laurel, I’m thinking more of the consumer with this, but financial health, improving outcomes, it’s such a journey.
You get a little bit better, and you take a hit. Get a little bit better, take a hit.
You mentioned in the beginning shame and other things come up.
Do you have a strong opinion on what financial education might actually work for someone who wants to improve their financial health?
It might not be education.
I have a very strong opinion about this.
I think where much of the industry is today is in content and calculators.
Yes, calculators. People go wild for them and they use them. I have to say, I was surprised by that.
But they use them.
What we observe is the breakage between using them and taking action.
We’re in this time of tremendous velocity of what can be done in direct consumer experience and the kinds of innovations coming out through the use of AI.
What I’m observing is the deceleration of innovation within the B2B and B2B2C space and a massive increase in accelerating innovation in the direct-to-consumer space.
What I’m seeing overall is really a belief in content and calculators, which are critical complements and components.
But where the user experience is today is, I have a minute or two minutes.
Make it personal. Personalize it to me and serve up the action so that I can go from understanding.
If I’m a banking customer, my bank has this amazing, rich data on me.
For example, banks today are sitting on data about their customers.
We could pull an assessment and say, “Oh, your customer base has $500 million in student loan payments that they made over the last two years.”
We can see based on this person’s income, because we can see deposits, we can see transaction-level data, we can see spending-level data, that this population we could save on average $353 a month by getting them into one of these four federal programs.
We can see that this population could actually benefit, they’re prime or super-prime, from refinancing their student loans into a lower rate.
We can see that this parent just took out a Parent PLUS Loan at 9%.
Actually, the private student loan market can offer lower cost of capital than a federal Parent PLUS Loan right now.
What is so exciting about the opportunity, and it really is an opportunity, is that financial institutions have, the consumer doesn’t have to give information the first time in order to serve up a personalized opportunity for that user to benefit from a financial product.
The bank is already sitting on all of that data.
The question is, are they looking at the data, and are they making that data actionable in a way that drives value for the user?
Yes, in high-yield opportunities, but the lower-hanging fruit of an immediate painkiller is help them on the debt they already have to lower the cost of that debt, to liberate savings from the liability side of the balance sheet, and then you can get that into the asset side of the balance sheet.
Yeah.
I think that is so important too because there are a lot of budgeting apps that are like, “Here’s what you do.”
But it would be so easy for it to just say, “You have a negative net worth,” right?
Because of the debt.
Of course nobody wants to engage with that because that’s really upsetting information, and you’re probably really well aware of it.
Exactly.
What’s striking you in fintech?
Are there other innovations you’re seeing going on in debt?
Because it’s such an important area that I think has been a bit overlooked over the years.
It has.
I think it’s such a great and interesting question because the financial services industry really is organized on the asset side of the balance sheet, where the majority of Americans are at an all-time high in consumer debt and overpaying on consumer debt.
The average interest rate we see in the data, users that we serve, is a credit card interest rate of like 29%, 30%.
So right there, there’s an opportunity to help consolidate and lower the cost of debt by taking out a personal loan, paying off those high-interest credit card debts, in order to pay that debt down faster.
There is a huge opportunity to drive value in helping Americans better manage their wallet on where they are today and then help them make simultaneous progress on where they want to go tomorrow.
Because if we’re saving, let’s say you save $100 a month that previously was going to interest, that can now, for the bank, be interchange. It can be purchasing power. It can go into a number of other proprietary financial products that that financial institution offers.
I love that.
I just love that both things are so important. It’s just hard to have the beginning right.
Have the beginning.
That’s right.
Laurel, I just have a couple questions left for you, but I wanted to go back to the beginning.
We started with your story of how you got into this.
What kind of feedback did you get at the time?
You can’t see this audience if you’re not watching the video, but there was a look.
I’m going to say it wasn’t great.
Let’s confirm that.
How was the reaction to your pitch in the early days?
I think in the early days, and context matters, because the context when I’m pitching, there are a couple different audiences that I would be pitching.
One is the customer that we’re serving, really getting feedback and learning as quickly as possible where the product-market fit is and the problem that we’re solving.
Which really, for employers, is offering benefits that are going to drive love and loyalty.
They’re going to drive the ability to acquire talent faster and hold on to them longer in a five-generation workforce that overwhelmingly houses student debt.
It’s also in the investor community.
Creating a new category is hard.
It is hard.
There are a couple of factors around that.
1.6% of venture capital goes to women.
I was a first-time founder. I am a first-time founder. I am a woman.
So, the odds are not great. The numbers are not in your favor.
When I first started the company, when we were in this period of novelty, there was a lot of skepticism around, is it real? Is this going to be offered? Will it be adopted?
I believed in my heart and soul that, number one, this is how I want to spend my life and the problem that I’m going to personally devote my life to working on and addressing.
But number two, I really believed that there would be policy levers that would be pulled that would incentivize employers to offer benefits that address student debt, just like 401(k), just like tuition reimbursement.
Those two policy levers were pulled.
But it is, I call them the believers.
You’ve got to find your believers in the early days.
Those are friends. They’re fellow founders. They’re angel investors. They’re your first seed check, your first Series A check.
Because they have to be independent of the good opinion of others.
The good opinion of others is just a pass because to do something new is hard, and you’ve got to be willing to stick your neck out a little bit to join in that journey.
So, I’m just really grateful that I’ve had the opportunity to work with so many incredible customers, channel partners, investors who believed in the need and then saw the need and the data of who they were serving and the market opportunity, which is, we’re addressing two trillion-dollar markets, the student debt crisis and then debt more broadly.
What’s it like?
For me, I get so excited when I write a story, I freelance a story, and I always wanted to publish something somewhere.
I get such a thrill that I can’t find elsewhere.
I’m wondering, what was it like for you when you got that first check?
What was that feeling like?
Oh my gosh.
It is such a relief.
Thrilling.
It’s the dream. It’s the founder’s dream.
Not everybody has that opportunity. Not everybody gets that first seed.
The data is terrible, actually, in terms of diverse founders getting a seed check, getting to a Series A, getting to a Series B, massive drop-offs in between.
So, it gives you hope and the feedback you need, I think, at every point in the journey where you’re questioning the journey.
It’s the opportunity to continue on in that experience.
Have you found, what’s a calming thing for you to do when you’re maybe having a wild day and you’re like, “I’ve got to feel calmer,” if that’s possible for a founder or entrepreneur?
Yeah.
There are a lot of highs and lows, and the last four years have been very volatile in the student debt space.
Forgiveness, no forgiveness. Forgiveness, no forgiveness. Moratorium, on-ramp.
I mean, it was a moratorium that was extended nine times over three and a half years.
That is an extreme and excessive dynamic to manage.
Talk about a wild, on-again, off-again storyline with much higher stakes.
Yeah.
I think for me, what I have found works for me, and I think it is so different for every person and every founder.
I know what works for me.
I live a healthy life. I don’t drink. I work out every day.
I have to really get grounded in the day and do everything I can to ensure that when I wake up in the morning, I’m ready for it.
I’m ready for the day, and I’m ready for whatever it may bring.
Just staying rooted in that.
I will confess, I’m going to out myself.
This is something my team thinks is hilarious.
The certainty I need is that I’m going to have a beautiful cup of espresso in the morning.
No matter where I am in the world, I’m going to have a beautiful cup of espresso in the morning.
So, I travel. I refuse to check in my luggage. I’m carry-on only, and I have a traveling espresso machine.
Carry-on bag.
You know your needs, and that’s important.
You know, cup and my...
Yeah.
It’s the little things that create the delight.
Yeah, it is the little things that create the delight.
One last question for you, but before I get to it, I just wanted to open it up.
Where can people find you?
Any last impressions you want to share on fintech more broadly or student debt specifically?
Yes.
Student debt, you’ve got to address it.
I would say anybody listening to this, you’ve got to address it across your employee population, and you’ve got to address it across your customers, because if you don’t, someone else will.
It’s a top-three requested benefit. The adoption has really exploded.
From a digital banking experience, it’s low-hanging fruit of where you can deliver tremendous value to your customer base at a time they’re looking for guidance right now.
We’ve generated $1.8 billion in impact across the users that we serve, lowered the monthly payment by an average of $453 a month in less than 10 minutes.
What other financial services experience is going to give you like $5,000 back in your wallet on an annual basis?
It’s incredible.
Where people can find me, I’m mostly on, in terms of social channels, LinkedIn, because that’s where I find most of my customers are.
On LinkedIn.
I am there too, but doesn’t it always feel funny to say, “Find me on LinkedIn”?
I live in L.A., so people are like, “Please tell me you have another channel,” but it makes the most sense.
It does.
If anybody wants to connect, sales@candidly.com.
If we can help serve you in any way, your audience, that’s the best way to connect as well.
Well, wonderful.
Laurel, thanks so much for being on the show.
Before you go, the last question is, what is the photo on your phone’s lock screen?
Oh my gosh.
Okay.
The photo is my dog.
Yes.
And my husband and I. My dog primarily.
His name is Scampers because he scampers about.
No little ones did not name him. I did.
So, his name, yeah.
They can’t steal your thunder.
I love his name, and I stand behind it.
Yeah.
Good.
Well, Laurel, thanks so much for being on Money Isn’t Everything. I really appreciate it.
It’s been a true delight to have this conversation with you today.
Thanks for having me, Mary. I really enjoyed that.
Okay, so something I learned.
I too definitely want to start traveling with an espresso machine.
I also really love the idea of this perk.
When employees have sizable debt, it’s hard to focus on other things, and this feels like a solid retention perk.
As Laurel’s data shows, those with college debt include a much broader age range than just young adults.
Up next on our show is something really close to my heart.
It will examine the fintech happenings from a Detroit event.
I’m in conversation with Ben Maxim, the chief operating officer of the Reseda Group and a gentleman who really follows innovations in money.
In late September, it held a summit showcasing a bunch of promising financial health startups.
I was there.
It was the first event I’ve done in my home state. That means something to me, and something good.
Catch you then.
Enjoying Money Isn't Everything?
Subscribe on your favorite platform