Gradifi, a company that helps people pay down their student loan debt through an employee benefit program, has launched a new program to help students on the other side of the struggle: saving up for college in the first place.
The company recently launched the College SaveUp program for employers to add to their employee benefit packages. While Gradifi’s existing platform allows employers to contribute to student loan repayments, the new one allows those employers to contribute toward college savings. The new program is set to be piloted this month.
According to Gradifi founder and CEO Tim DeMello, Gradifi will work with employers monthly to contribute to employees’ 529 accounts. Employers will register a corporate account and decide their commitment term and the amount they wish to disperse into the 529s employees have registered on the platform. Whether employees use a 529 account in their own names or their children’s names depends on the employers’ restrictions, said a representative for Gradifi.
DeMello started the company in 2014 to combat the U.S.’s growing student loan debt and assist the more than 40 million Americans carrying it.
Before he started the firm, he said, he was sitting on the board of trustees at Babson College and he discovered the startling news that student loan debt had ballooned to $1.4 trillion.
“I wanted to help solve that problem,” he said, and that prompted him to start the business.
He piloted the student loan program with PwC, which has made the program available to approximately 22,000 of its employees. The company offers $1,200 per year to employees who have one to six years of work experience. According to Gradifi, assistance from the Student Loan PayDown program is in addition to an employee’s salary.
“As a firm that recruits more than 11,000 new hires off campus each year, this is an opportunity to differentiate ourselves with a key talent group—millennials—and provide a meaningful way to help reduce their debt,” said PwC’s vice chairman, Tom Codd, in a release.
DeMello felt that he could assist employers in also preventing student loan debt through the College SaveUp program.
Since its launch, Gradifi claims it has attracted more than 200 companies to its Student Loan PayDown platform. Gradifi also attracted First Republic Bank, which acquired it in late 2016.