- Pillar, a company that is helping solve the student loan problem, announced it has raised $5.5 million in seed funding
- This round of funding was led by Kleiner Perkins with participation from Rainfall Ventures, Great Oaks VC, Financial Venture Studio, Kairos, Red Dog Capital, and Day One Ventures.
- Individual investors Adam Nash, Noah Weiss, Zach Weinberg,Misha Esipov, Patrick Kavanagh, and Nadia Asoyan also participated
Pillar is a company that helps people manage, pay off, and save money on their student loans. And early users of the service have already linked $50 million worth of student loans into the platform for automating and managing the loan repayment process. And Britta Mulderrig, the head of growth and marketing at Pillar, announced that the company has $5.5 million in seed funding led by Kleiner Perkins.
Rainfall Ventures, Great Oaks VC, Financial Venture Studio, Kairos, Red Dog Capital, and Day One Ventures participated in this round. And individual investors include Adam Nash (the former CEO of Wealthfront and Acorns board member), Noah Weiss (former SVP of Product at Foursquare), Flatiron Health co-founders Zach Weinberg and Nat Turner, Misha Esipov (CEO and co-founder of Nova Credit), Patrick Kavanagh (head of growth at Robinhood), and Nadia Asoyan (head of finance and strategy at Robinhood) also joined.
Student loan debt is considered the second largest type of consumer debt with 45 million borrowers in the US owing more than $1.5 trillion. And 7 out of 10 students take out loans for paying for college and the average person graduates school with $30,000 in debt and it takes an average of 20 years to pay it off. And it takes more than 30 years on average for people with $60,000 in debt to pay it off. Nearly 20% of borrowers owe more than $100,000 after graduation.
And student loans also have a negative impact on the economy and harms wealth creation opportunities in America. About 83% of people ages 22 to 35 with student debt blame their loans as the reason why they have not bought a house yet. And women — who own two-thirds of all student loan debt — are disproportionately impacted due to the gender pay gap. Since women borrow more and earn less, it results in two extra years for paying off their loans.
How does Pillar work? The platform aggregates all of a borrower’s student loans into one place. Then it analyzes their loans, income, and spending for determining the fastest way to pay down their debt. From there, Pillar automates the payment and management process — which makes it easy for people to take action and pay off debt faster.
“Last year my wife graduated from law school with over $300k of student loans. I was at Stanford Business School, where I planned to take on another $250,000 of debt. We spent weeks researching how we were going to pay our loans back, but struggled to find a way that was right for our unique financial situation and goals,” said Pillar co-founder and CEO Michael Bloch. “I experienced the same problem that millions of other borrowers face each day. I saw how the student loan debt crisis is one of the biggest challenges facing our country, so I dropped out of Stanford to help solve it.”
Essentially, it solves the pain points inherent to managing student loans, thus creating a positive impact on borrowers and helping them get out of debt faster. And the average borrower on Pillar will save $6,200 and four years on repayment.
“Managing student loans has become one of the biggest challenges for many Americans today, impeding their financial well-being,” added Kleiner Perkins investor Monica Desai. “Startups have revolutionized many aspects of personal finance. We believe Pillar is well poised to tackle this mounting crisis and make it radically easier for graduates to manage and get ahead of their student loans.”
One of the biggest issues for borrowers is that student loan lenders are financially incentivized to keep people in debt longer. Pillar is not a student loan provider or refinancer so it does not make money from charging interest on student loans. And it takes just two minutes to sign up with Pillar. Plus it is completely free to download and use. Later this year, Pillar is going to introduce premium features that people can access.
“According to my student loan providers, I will be paying off my loans until I am 40 — yikes. I’m excited about Pillar because it tells me how much money I save by paying a few extra dollars towards my loans every month, which lender apps don’t do and are hard to use. With Pillar, I can see all my loans in one place and can finally see how much money that extra $5 saves me!” exclaimed BNY Mellon project manager Jordan Trejo.
With Pillar, people can make in-app payments and they are regularly updated on new ways to save money so that they can pay off their loans more effectively. And Pillar shows people how much money they will save over time if they make specified payments now or in the near term and whether they can afford to increase or decrease their payments.
“There is no simple way to figure out if you’re on track with making your student loan payments, I’m always wondering if I’m doing the right thing and making the right payments. Pillar’s app makes it easy to know if you are on the right track and making progress,” explained filmmaker Nora Unkel.
Pillar was founded last year by Bloch and CTO Gilad Kahala. Kahala was previously a senior data engineer at Spring Inc., a senior software engineer at Fiverr, and a software engineer for ForNova, IBM, and Zoran. And prior to launching Pillar, Bloch was a manager at DoorDash, the head of growth at Camio.
“I’ve been looking for a way to easily see and repay my student loans all in one place,” explained Ashwin Aravind — who is a law school graduate and management consultant with more than $200,000 in debt. “It’s exciting to see Pillar come along because that’s exactly what it does. I can use it without getting confused or feeling like I’m being kept in debt longer so someone else can make money off of me.”
You can download and sign up for Pillar in two minutes via iOS or via Android, which will add users quickly to a growing waitlist. Early access to Pillar is based on a first-come, first served basis.
