A FinTech Solution to Get out of Debt and Intelligently Automate All Your Loans
EarnUp helps the 200 million indebted Americans pay their $12-trillion in outstanding loans
Matthew Cooper and Nadim Homsany were working together in 2009 as they watched the country descend into the financial crisis. It was a difficult time for many Americans, and in this period they noticed each of their parents respectively were also struggling with mounting debt while retirement loomed. This didn’t seem right. While each had grown up in lower-middle income families, their parents always had enough money to pay their bills on time. “The fact that in both cases, our parents were heading into retirement with more debt than they had in their prime earning years is a major structural problem,” says Cooper, EarnUp’s co-founder. “This should not be the case.”
Homsany was astounded to learn that only a few weeks after his parents had taken out a new mortgage with a broker they chose and trusted, they got a letter in the mail letting them know their loan was sold to another company they’d never heard of. “We watched the insanity and frustration both our parents went through interacting with lenders throughout their lives,” says Homsany, “and then Matthew and I started to suffer the same confusion and abysmal customer service in our own lives.”
And what their parents experienced was hardly unique. According to the American Psychological Association, 73% of Americans are under psychological stress — and mounting debt is a major factor compounding that anxiety. To date, 200 million Americans – a whopping 80% — have outstanding loans that total $12 trillion, according to data from the U.S. Census Bureau and the Federal Reserve Bank of New York. “This is a nationwide problem that affects people across the credit spectrum,” says Cooper. “We took a step back and started seeing those experiences as really destructive.”
Most vulnerable to growing debt are those consumers who come from marginalized and low-income communities for whom not making a payment can have catastrophic consequences. “People end up missing payments, going into delinquency and defaulting on their loans,” says Cooper. “If you don’t make that payment on time, you could get kicked out of your house.”
The first question they set out to answer: Why are so many people defaulting on their loans in the first place? They found that the lender experience is often difficult for people, which results in unpaid loans and mounting fees. “Interacting with your lenders is a horrible experience,” says Nadim Homsany, EarnUp’s co-founder. “The system is often unnecessarily confusing, making it very hard for people to make payments.”
In a world where our lives are largely automated at the touch of a screen, Cooper and Homsany were determined to figure out a way to help consumers like their parents better pay off debt. In 2014 they launched EarnUp with the goal of simplifying loan payments. The platform they created allows for an individual to manage all their loans in a single place and syncs their payments directly with their income schedule, so they don’t have to worry about budgeting to make their monthly payment.
Say, for example, you are in your 40s and just bought your first house. On top of a mortgage, you have student loans from college, auto loans and credit card debt. Keeping track of each of those loans and making sure they’re paid on time can be a logistical nightmare. “We want to provide a single place where consumers can manage all of their loans, to empower them to get out of debt,” Homsany says. “Instead of trying to budget for six different loan payments at the same time, you are now managing all your loans together on your mobile device and automatically syncing those payments to your income.”
Had a platform like EarnUp been available to Cooper’s parents, for example, it would have prevented them from getting into deeper debt in their retirement years. “If you gave my parents access to EarnUp in their 30s or 40s, they could have had the tools to take control of their loans,” says Cooper. Additionally, EarnUp is constantly looking for small opportunities to accelerate people’s loan payments and get them out of debt faster. Setting an extra $10 a week toward loans, says Cooper, can help pay a loan off two to five years faster. 94% of users choose to increase their monthly payments, which can help save around $20,000 in interest over the life of a single loan.
When they launched the business in 2014, users paid around $8 a month for access — but today, the company has partnerships with several groups across the country, from servicers to credit counseling agencies, that offer the EarnUp service for free to their members. “The solution to our problem is helping people be educated about the loans they have and how to pay them off faster,” says Homsany. “We really believe technology should take the actions for the consumer that benefit the consumer the most.”
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