Student debt?
There’s an
app for that
Student loan debt has become so
widespread that it’s seen as just
another monthly payment, like rent or a
phone bill, that will always be burning a
hole in your pocket. But what if saving
your loose change could help your
loans disappear?
That’s the concept of an up-and-coming app
that has already saved borrowers a combined $3
million on their student loans.
Launched in 2017, and boosted by an investment
from Mark Cuban after an appearance on Shark
Tank last year, the loose change app ChangEd is
rapidly growing into a mainstream money-saving
strategy. The format is simple: Connect a checking
or spending account to the app and it rounds up
your transactions to the next dollar, then puts the
extra change into a savings account within the
app.
Once that savings account reaches $100,
ChangEd sends a payment to your loan company
on your behalf. While the app does cost $1 dollar
per month to use, it allows users to make an extra
payment on their loans every couple
of months. At that rate, a borrower
with $37,000 in student loans could
cut 8 years off their repayment and
reduce the total balance they would
pay by $14,000, ChangEd estimates.
Early reviews for the app were
mixed, mostly stemming from
glitches associated with users trying
to connect their bank accounts to
the app. Those problems have since
been fixed, but some users have
also expressed concerns with privacy and security
because the app requires bank login credentials.
Banks usually frown on providing this information
to a third-party app, but ChangEd says it uses an
encryption service and it doesn’t ever see users’
account information or store personal data.
ChangEd has also added several extra features
since launching. The “boost” function allows
users to put an extra $5 to $20 toward their loans
whenever they please. There is also a “family and
friends” function that allows others to link their
spending accounts to the user’s
student loans. A young married
couple could work together by
connecting both of their checking
accounts to the app and directing
the apre change toward one of their
loans, for example.
“Our intention wasn’t to change
(users’) behavior but to align with
their behavior for the betterment of
their financial health,” ChengEd cofounder
Nick Sky told Money.com.
Sky and his brother, Dan Stelmach, founded the
app after Stelmach had monthly payments of $850
for his students loans and barely saw a dent in his
balance after three years of payments. Their longterm
goal for ChangEd is for it to grow into a hub for
all things students loans. The app already contains
a directory of loan terms and explanations of
different types of loans. In the future, they hope to
add tools for student loan refinancing and helping
young parents save for their children’s college
education.
©ChangEd
Image via Adobe Stock
QNS.COM
SUMMER 2019 9
/Money.com
/QNS.COM