Personal blog of Yzmir Ramirez

There are better employee perks than a ping-pong table. Seventy percent of Americans graduate college with student loan debt. That’s 45 million people who owe $1.6 trillion. So when employers use Goodly to offer $100 per month in student loan payback for a $6 fee, talent sticks around. The startup found 86 percent of employees said they’d stay with a company for at least five years if their employer helped pay down their student loans. Yet employers break even if workers stay just two extra months, and get a 5X return if they stay an extra year because it costs so much to hire and train replacement staff.

Now, Y Combinator-backed Goodly has raised a $1.3 million seed round led by Norwest. The startup hopes to capitalize on corporate America waking up to student loan payback as a benefit, which is expected to grow from being offered by 4 percent of companies today to 32 percent by 2021.

Goodly co-founder and CEO Greg Poulin knows the student loan crisis personally. “When I was in school, my father passed away very unexpectedly due to a heart attack. I had to borrow $80,000 for college at Dartmouth,” he tells me. His monthly payment is now $900. The stress that debt creates can poison the rest of your life. He says 21 percent of employees with student loan debt have delayed marriage, 28 percent have put off starting a family and 1 out of 8 divorces is now directly attributed to student loan debt. “I’ve seen first-hand how challenging it is for employees to save for retirement or start a family” when they’re strapped with debt, Poulin says.

He met his co-founder and CTO Hemant Verma when they started working at Zenefits’ founder Parker Conrad’s new employee onboarding startup, Rippling, in 2017. That taught them how simplifying the benefits sign-up process could become its own business. Typically it requires that benefits be integrated with a company’s financial software, like payroll, and be set up with proper provisioning access. It’s enough of a chore that companies don’t go to the trouble of offering student loan repayment.

Poulin and Verma started Goodly to create a “set it and forget it” system that automates everything. They charge $6 per month per participating employee and typically see adoption by 30 percent to 40 percent of employees. Rather than help with their monthly payment that includes interest, Goodly clients pay down their employees’ core debt so they can escape more quickly. Employees get a dashboard where they can track their debt and all of the contributions their company has made. Goodly hasn’t had a single customer churn since launch, demonstrating how badly employers want to keep job-hopping talent in their roles.

“We found that our people put off contributing to their 401ks and buying a house because of their student loan debt. We thought that offering a Student Loan Repayment Benefit would be a great low-cost and high-impact benefit to attract and retain talent while alleviating some of the stress and the financial burden on our employees,” says Kim Alessi, an HR generalist.

Goodly’s founders and first employees

The business opportunity here is relatively young, but there are a few competitors. Boston-based Gratify was acquired by First Republic, which Santa Monica’s Tuition.io pivoted to offering student loan benefits. But Goodly’s connection to so many potential clients plus its new funding could help it make student loan repayment a ubiquitous perk. Along with Norwest and YC, the funding comes from ACE & Company, Arab Angel, Zeno Ventures and angel investors, including Optimizely’s Pete Koomen, DreamHost’s Josh Jones, ShipStation’s Jason Hodges, Fairy’s Avlok Kohli and Telly’s Mo Al Adham.

Beyond improving talent retention, Goodly may also help erase some of the systematic discrimination against minorities in our country. Women hold 66 percent of all student loan debt, black and Latinx Americans have 31 percent more student debt than their peers and LGBTQ borrowers owe $16,000 more than an average member of the population. Convincing employers to address student loan debt could give everyone more freedom of choice when it comes to what they work on and how they live their lives.

As employers duke it out over hiring the best possible candidates, especially ones coming out of school, they are starting to get a little bit more creative with their incentive packages — and that includes offering an option for paying down student debt.

Goodly is a new startup that’s looking to help those employers offer that as a benefit. Smaller companies without the resources to create complicated incentive packages especially need tools that help shortcut the process of offering those benefits. It’s following a similar playbook of companies looking to make it easier to get the tools they need in place and focus more on the set of products that are going to make it an actually differentiated company. Goodly is launching out of Y Combinator’s summer class this year.

“We found it to be a really great tool for recruiting and retaining,” co-founder Gregory Poulin said. “When people hear student loan benefits, they instantly think it’s very expensive. You can offer student loan benefits starting $25 to $50 per employee per month, up to $200. Our system is completely flexible. You can offer any company size for any budget. You can offer meaningful benefit for less than the cost of a cup of coffee a day. For the average borrower, when they have an employer contributing an extra $100 per months, it could help your average employee get out of debt almost a decade faster.”

There are more common benefits like stock packages, 401(k) matches, insurance, better time off policies, or others along those lines. But as student debt increasingly becomes a factor in a candidate’s decision on where they work, it’s another way that companies — ones without larger compensation packages or very aggressive recruiting operations like, say, Google or Facebook — can still get the attention and interest of good candidates coming out of school. Like other companies (like Human Interest for 401(k)s, for example), the goal is to make it easy to get started and maintain the whole process.

Employees connect their student loans to Goodly, which takes a few minutes to verify them before setting up the contribution plan. Goodly integrates with payroll operations and gives companies and employees a pretty flexible way to set their spending schedule. Then, it goes from there, without the employees having to manage it on a per-period basis. While it might have the robust tax incentives in place like a retirement plan, it’s still a way to help companies offer some way of showing employees that they’re invested in their employees’ future success, which is another way that those companies might be able to retain that talent. Goodly then brings back detailed reports on the company’s implementation to help it better understand whether the policies are working for their employees.

It’s certainly an area that’s attracted interest — and funding — from a number of startups like Tuition.io which look to help employers get a little more creative about their benefits. Much like contributions to retirement plans, it’s another way to offer employees a way to invest in their future by reducing the financial stress they have through some of their biggest financial decisions like where to go for college. Poulin also said it’s a way to help discover a more diverse talent pool as it surfaces up underrepresented parts of the population that are acutely dealing with student debt as a factor in their decision-making.