Reinvigorating Workforce Development and Access to Education

PYT's hybrid approach to traditional financing connects low-income families with banks to provide new solutions to financing education. 

The private student loan space is NOT currently structured to help the under-served, under-banked community get access to capital and students are feeling strapped by the weight of student loan debt as reform in federal policies and decision-making have a direct impact on college tuition such as the HBCU Capital Financing Program that could possibly be axed from the government spending bill. Undergraduate students are faced with funding gaps that prevent them from being able to start, stay in, and complete their degree. This financial hurdle accounts for 50% of the reason low-income students do not complete the degree.

Stagnant resources cause families to turn to the private sector. The private student loan market factors in assets, income, and traditional credit and this causes the non-traditional student to not qualify. This private sector is trying to find innovative ways, but these innovative products do not fully understand the community, creating a cohort of students with debt and no degree. Due to a lack of products to support these families, they go unserved. 

One out of five low-income students complete their higher education degree while the other four are faced with financial hurdles as the cost of higher education increases every year. It is typical for these students who come from communities whose household income is below the median to be denied multiple times. For hard-working, high-quality, low-income students, all options have been exhausted at this point.

PYT’s overall vision is to build a financial inclusion product that will help close the income gaps of these students by leveraging a pay-for-success loan structure that will build the professional and traditional credit profile of the student. The more students who have access to our pay-for-success program, we project the national default rate of 14% in student loans to decrease. 

Additionally, the development of a financial education program to promote healthy financial relationships will ensure payments are timely. This will help build traditional credit and break down the myth that these subgroups will not repay a loan. 

We are developing a high-tech platform that will allow us to create HR employer-based assessments to assess the level of employ-ability of the student at the time of the initial application to monitor progress. Through our partnerships with financial literacy and mentoring organizations, we have learned how to meet the offline needs of the student.

We have currently attracted over 6,400 students and families who request our services. Once the barriers of higher education funding has been removed, it has been proven that minority students will not only perform as well as other students, but even excel. The Bill and Melinda Gates Foundation proves the lack of access to higher education for minorities does not only affect the individual, but the country as a whole.

PYT is the only platform that pulls together the following predictive lending process: We combine crowdfunding as a customer acquisition tool and loan risk mitigator to source the best students with alternative social and predictive data combined with the traditional lending process. Our next milestone is to be the first certified CDFI (community development fund) to truly serve this emerging underserved market and to create a disruption to a big problem. There are numerous ways we can innovate to find solutions to student loan debt once we are a community fund. 

The disruption and innovation in the traditional lending process begins with our KYS (Know Your Student) proprietary process that captures over 10,000 data points from students who give us access to their personal data through our platform. This allows us to know more about the student than any traditional FICO-based lender.

We securely capture data to prove the student's ability to succeed in a professional environment and work with them to better negotiate the starting salary. Without disclosing too much proprietary information, we have identified employment seeking personality data to match with the alternative low-income community data to drive results. 

We plan to execute the concept and have a functional model in the market in three months. The whole project will be executed on Amazon Web Services. The first month of the project life cycle will be utilized in collecting data for training and testing our model, and building a data pipeline. 

We are planning to lend directly from our community development fund (CDFI) to continue innovating ways to lend, grant and refinance options for this market. We would like to note that in our financial model, the high growth and 10x return is projected to be deployed by 2019.

Our goal is to reach 100,000 new loans or "Loanerships" by 2023. PYT estimates facilitating over 340,000 loans over the next seven years, resulting in: 

1). Increased enrollment 
2). Increased graduation rates for minorities 
3). Financial inclusion for the underbanked 
4). Long-term debt burden lessened by crowdfunding and lower interest rates savings 
5). Creation of consumer payback behavior 
6.) Development of salary gap negotiation skills with their first employer.

Ultimately, it is our goal to decrease the national student loan default rate of 14% down to 9% by being a solution to the problem of debt and no degree. 

PYT has a unique viral marketing approach, predicated on low customer acquisition costs that produces high volume from our organic partner relationships to pull customers from: 

1). PYT’s viral crowdfunding database and social network marketing platform. 
2). Partner lender turn-down databases. 
3). Preferred community organizations with qualified high-performing students.

We also use social media to connect with the millions of students around the country and also use face-to-face networking to obtain an individual profile of each student. Through crowdfunding viral marketing, one student can potentially attract three additional students to sign-up and use PYT’s platform. 

PYT’s traction is growing steadily. We have grown our user database to over 6,400 users. This is a combination of supporters, donors, students, and families. Our innovation has been recognized in prestigious online journals such as Forbes, The Washington Business Journal, and DC Inno. More recently, we have been recognized by the U.S. Department of Education for innovative service.

Approximately 12 million students seek private student loans annually, creating a $120 billion market to fill the funding gap. About 300,000 juniors and seniors in college nationwide are suffering from a lack of access to funding to complete their degree.

Our trademark "Loanership" product allows us to drill down our algorithm and collect data from riskier students. Our goal is to reach 100,000 new "Loanerships" by 2023. The more students who have access to our pay-for-success program, we project the national default rate of 14% in student loans to decrease. 

Stacie Whisonant's (CEO) tenacity for building a strong, diverse team, has always been a strategic and organic decision. Together for at least 2-5 years, we have at least 15 years of corporate and technical experience combined. More specifically, our team collectively has experience in banking and consumer lending, specialty structured finance, and sales with strong technical experience ranging from artificial intelligence with data-driven expertise. Currently, there are five students working full-time on our mission with skills ranging from data analysis, digital marketing, software engineering to business development. The students have been intrinsic to the quality and integrity of our product.

PYT Funds has a for-profit business model that delivers high profits, positive social impact, and allows for multiple revenue streams. We have two lending partners (Sallie Mae and GS2, the top two student loan providers) in which we source high-quality borrowers who are filtered and recommend for approval with the PYT process. 

PYT is seeking to potentially become a direct lender to create two more additional revenue streams:
1). Platform service fee of $250.00 to the families
2). Marginal spread of 2% to 3% as a fund of funds for other student loan lenders looking to serve this mission 

We believe support from Solve will help with the following milestones:

1). Building the key personnel roles needed to build a fund. 
2). Building and bringing our lending in-house to reduce overhead costs.
3). Establish and maintain relationships with CRA officers and the foundation executive directors.
4). Securing a small debt facility to originate loans to help apply for the CDFI certification.
5). Global adaptation of our model.
6). Exploring the blockchain industry to create a cutting-edge student loan platform.

Key risks and obstacles include the following: 

1). Laws around lending that will have a direct impact or change for student-loans and scholarships. 
2). Alternative data is banned as a form of assessing borrower.
3). Data breaches (such as Equifax) in regards to data security.
4). Lack of financial support.
5). Changes in regulation due to GDPR (General Data Protection Regulation) that may directly affect how the United States implements data protection policies.