With student loan debt in the U.S. now surpassing $1.5 trillion and a significant percentage of millennials reporting that paying off student loans gives them more satisfaction than buying a home or starting a family, advisor technology providers, large and small, are focusing their attention not just on reacting to the crisis but also getting ahead of it. This new crop of affordability forecasters aims to help students and their parents plan ahead—before a college loan is obtained—by gauging college affordability, scholarship availability and even if college is the right choice in the first place.
Founded by a group that includes two CFPs, College Aid Pro is designed to let advisors work with parents and their children to explore the predicted financial aid a potential college student should receive, based on the family’s financial situation. Not only is the generosity of a college revealed, but the tool alerts users to available scholarships and the school’s selectiveness, as well as the expected salary any particular degree will provide after graduation.
The tool is already being used by 110 firms, said Joe Messinger, one of the four co-founders of the company. It was the culmination of 18 months of development, and it was first made available to advisors in October 2018.
“We think it’s overdue,” Messinger said of the technology. “There is a huge crater between investment firms that help with accumulation and lenders that help with loans.” Historically, there has been no way to monetize that “crater,” so it was left up to parents and students to navigate it, he said. He expects his company to change that.
College Aid Pro could be added onto financial planning software like Envestnet’s MoneyGuide or eMoney Advisor, he said. It could also be used by credit unions and community banks to attract new customers or serve as a risk mitigation tool. He said the firm has already had informal talks with representatives of student loan refinancer CommonBond, as well as advisor tech providers Envestnet and eMoney.
The tool has already been recognized in tech events twice in the past month. College Aid Pro received an honorable mention at XY Planning Network’s fintech competition in St. Louis and was later named Best of Show at FinovateFall in New York City for its “innovative technology.” The firm has individual licenses starting at $69 per month and also offers enterprise licenses.
On the B2B2C side, Edmit is another firm that’s captured the attention of financial advisors. Similar to College Aid Pro, Edmit charts the financial aid provided by colleges, based on inputs provided by users, and returns the expected income of college graduates with particular majors.
While advisors using College Aid Pro can provide financial guidance around debt management and other strategies for maximizing financial aid, Edmit is designed for direct-to-consumer use, said Sabrina Manville, a company co-founder. Advisors can sign up for the service and provide it to their clients as a co-branded experience, and parents and their children can gain insight on college affordability by entering their information and exploring their options.
“We love working with financial advisors,” said Manville. “We like the idea of working with a trusted individual.” Advisors aren’t the majority of Edmit's clients, however, and integration with other financial planning tools hasn’t been a focus for the firm, she said.
Edmit has a free and a paid version. The paid version, which costs $99 a year, includes a 30-minute phone consultation with an "Edmit Advisor," who "can help answer questions and give recommendations at any stage of the process, [such as] finding schools, building your [college] list, comparing your options [and] appyling for financial aid," noted Manville. The Edmit Advisors are former financial aid counselors, college advisors and former admissions officers, she said.
Advisors should expect familiar financial planning names to begin getting into the college affordability scene, too. MoneyGuide is working on a November release of a financial planning feature designed specifically for high schoolers, confirmed Tony Leal, president of the Envestnet division. Called Kickoff, the feature is meant for use by high schoolers to inform them of the cost of college and even whether a trade school or entry into the military might be a more sound objective.
Kickoff will be unveiled as one of the financial planning “Blocks” the firm is developing as easy-to-use financial planning modules. It will combine publicly available data with users’ inputs, explained Leal.
This is uncharted territory for the folks at MoneyGuide. Children will self-register for the module using a link provided to their parents by their parents’ financial advisor, according to plans shared by Leal. Teenagers will then complete the module, which can be shared with the parent only if the advisor or child chooses to share the results.
“Financial planning, a lot of times, is geared more towards people coming close to retirement, because that’s where a lot of the money is,” said Leal. But in the last two years, MoneyGuide has switched gears to focusing more on people in the “earlier phases” of their careers, he said. The financial planning division is building out a suite of such modules under the name Financial Freedom, and will include features like college loan repayment planners, among others.
Even without concrete data indicating a desire among advisors, clients or their children for a module like Kickoff, Leal is confident there’s demand. He envisions Kickoff making its way not just into advisors’ hands, but even being extended to employees through their company's benefits package. For advisors, all financial planning "Blocks" are included in a package that starts at $1,400 per year per advisor.
“We’re committed to the product, itself. We know that space needs help and we’re going to help them,” he said. “This product is needed. There’s no doubt.”
As Americans struggle to pay for higher education and take on increasing amounts of college loan debt, tech providers are confident that clients will be turning to advisors for help. Vendors are aiming to give their users the latest information on college affordability, so advisors can guide parents and their children to the best financial decision.