Struggling to deal with student loan debt? You might be having a hard time finding employment or you might be underemployed despite having a college degree. Either way, you are not alone.
According to a June 2012 American Banker article, in the past five years student loan debt in the U.S. doubled to over $1 trillion and now exceeds credit card debt. At least one company is stepping up to try and help people manage their student loan debt…
Two Disturbing College And Jobs Trends
Have you ever heard of a college lowering it’s tuition and fees? Tuition always goes up. It’s like the healthcare industry but it doesn’t get the headlines.
Couple this fact with unemployment being high among young workers and you have a recipe for disaster. The result: a lot of young, educated, motivated people burdened with big student loan and credit card debt and unable to find a job.
This trend is partly due to a skills gap in America where companies (such as in the manufacturing sector) are in need of skilled workers, but the college educated job seekers are not a match.
New Bank Account Helps Pay Down Student Loan Debt
Startup company SmarterBank believes they can earn sticky relationships from people with student loans through an account that helps pay down student loan debt. SmarterBank was started by SimpleTuition, an online comparison site for federal and private student loans.
Customers earn rewards called SmarterBucks from using their debit card. The details include:
- earn half percent of each purchase up to $100 and 1% on larger purchases
- when a minimum of $15 in rewards accrues in a month, it automatically gets applied to student loan principal
- accrued rewards under $15 roll over to next month
- no limit on the rewards amount
- mo minimum balance requirement for the checking account and no fees as long as there is one transaction per month
Small additional principal payments add up. The SmarterBank website gives an example: “Chip in $25 per month. Repay 16 months faster! And save up to $3,150!” (assuming a 10 year, $8,500 loan at 6.8 %).
SmarterBank has a friends and family program in development for people to direct their rewards to another person’s account. This is similar to what Upromise does with shopping rewards (which can also be used to help pay down student loan debt). In addition, SmarterBank is developing a Upromise-like model to reward shopping.