The average student graduates with $37,000 in debt. Kelly Peeler of NextGenVest has developed a text-based platform to educate Generation Z on the perils of student loans, before they become saddled by a crushing amount of debt.
SUE: (as music plays lightly in the background) You’re listening to Good on the Ground...
VARIOUS VOICES: ...Good on the Ground...
COLLEEN: ...You’re listening to Good on the Ground from The Story Exchange.
COLLEEN: I'm Colleen DeBaise.
SUE: And I'm Sue Williams.
COLLEEN: A lot of people are inspired to start a business because they have a deep passion for something.
SUE: Like cooking.
COLEEN: Or pets.
SUE: Or photography.
COLLEEN: Right. For this podcast we spoke to an entrepreneur right here in New York City.
KELLY: I'm Kelly Peeler. I'm the Founder and CEO of NextGenVest.com.
COLLEEN: ...who has a somewhat unique fascination with...hold on...
SUE: Financial disaster.
COLLEEN: When Kelly was a student at Harvard not that long ago, she helped create...
KELLY: Actually, the first undergraduate website for financial crises papers, which is a bit nerdy.
SUE: She could opine about the 2008 crash or...
COLLEEN: ...the Bank Panic of 1907 or...
KELLY: ...the past 300 years’ worth of previous financial crises, which I'm happy to talk more about.
SUE: And she really would be happy to.
COLLEEN: Now the thing that gives us pause is that Kelly thinks we are on a collision course with yet another disaster.
KELLY: I'm a huge believer that the next financial crisis is rooted in the student loan market.
SUE: Which is why she's created a company to stop that meltdown in its tracks.
COLLEEN: In this episode, we'll talk to Kelly about how she's using the power of business...
SUE: ...to educate Gen Z before they become saddled by a crushing amount of debt.
COLLEEN: Don't go away.
KELLY: The average student graduating from college in the U.S. currently owes $37,000, which is the price of a new car, or multiple cars; it's a down payment on a house.
COLLEEN: Kelly Peeler does not mince words when she talks about the student loan market.
KELLY: As an 18-year-old making the biggest financial decision of your life, without the information necessary, really seems pretty predatory.
COLLEEN: I think, Sue, I think most of our listeners can recall the Great Recession --
SUE: I certainly can.
COLLEEN: -- where there was a flood of irresponsible mortgage lending.
SUE: Mortgages were doled out...
COLLEEN: ...to subprime borrowers who struggled to pay them back.
KELLY: You would see families taking out loans and then be very surprised that their interest rates were going through the roof in their mortgages, because they actually hadn't understood the paperwork.
COLLEEN: Kelly sees a lot of similarities to what happened then, to what's happening now with student loans.
KELLY: One of the main problems that we see in this whole experience with students taking out loans to pay for college is around general transparency and consumer protection.
COLLEEN: So, let's take an average 18-year-old...
SUE: ...who might be the first in their family to go to college. They're...
KELLY: ...filling out seven different pieces of paperwork by themselves -- that might be the FAFSA, it might be college applications, it might be loan paperwork. And what happens is that they'll get into college and they'll get what's called a financial aid award letter.
COLLEEN: That's basically a breakdown of their scholarships.
KELLY: The loans that they were awarded, grants, and kind of like a summary of their bill, on an annual basis.
SUE: But the process isn't standardized across universities.
KELLY: So you could get into seven schools and you could get seven different financial aid award letters.
COLLEEN: Compounding the problem is that interest rates aren't really spelled out.
KELLY: So, I compare that to when you take out a credit card. You have papers and papers and papers of disclosures saying, "This is your liability. This is what the interest rates mean." There's none of that disclosure on financial aid award letters.
COLLEEN: As a result of that lack of transparency...
KELLY: Students are actually signing up for loans that they don’t understand. And the reason why is not because the student is stupid -- it’s actually because the letters are incredibly confusing and misleading and not standardized.
COLLEEN: So Kelly wants to help those young students.
SUE: In 2014, she co-founded NextGenVest.
KELLY: So, NexGenVest is the money mentor for every student. You can think of us as the personal financial assistant for Gen Z. A student can text in to our service anytime, and get connected to what we call a Money Mentor, which is a trained college student who can help them with any kind of financial questions.
COLLEEN: We'll tell you more about how NextGenVest works...
SUE: ...and how it's helped tens of thousands of students...
COLLEEN: ...after the break.
SUE: The Story Exchange is a nonprofit media company dedicated to women who mean business. Check out our videos -- including a profile of the entrepreneur you're listening to -- at www.thestoryexchange.org.
COLLEEN: We've been sharing the story of Kelly Peeler, who has started NextGenVest to help prevent the next economic disaster.
SUE: Speaking of which...
SUE: Let's talk about how she got interested in this topic in the first place.
KELLY: I am completely obsessed with the history of financial crises.
COLLEEN: Yeah, it's not everybody cup of tea, as it were. (Laughter)
SUE: No, it's not. But Kelly loves history, and she loves economics -- so it sort of makes sense. And she started at Harvard just as a sequence of momentous events was unfolding.
KELLY: I was in college during the last financial crisis in 2008, which as you remember it was the biggest financial crisis in recent history.
COLLEEN: Here’s a clip from CBS.
SOT: It was a manic Monday in the financial markets. The Dow tumbled more than 500 points after two pillars of the street tumbled over the weekend. Lehman Brothers, a 158-year-old firm, filed for bankruptcy.
KELLY: I studied financial institutions and how they've been built, why they didn't work throughout history, how they led to different crises.
SUE: She honed in on one in particular...
KELLY: John Pierpont Morgan and the creation of J.P. Morgan.
SUE: ...which did survive the most recent financial crisis.
COLLEEN: After Kelly graduated in 2010...
SUE: ...she decided to go work for the bank she’d studied.
KELLY: I wanted to actually go live and work within a financial institution, to kind of give myself a more holistic understanding of how a bank actually worked.
SUE: She learned the nuts and bolts. But after a few years, she realized that J.P. Morgan -- or any bank -- couldn't really relate to Gen Z -- and they definitely weren't giving these young consumers the advice they desperately need.
KELLY: And that really shaped where NextGenVest has kind of come since then.
COLLEEN: Sue, let's pause here for a second to review generations.
SUE: Good idea.
COLLEEN: So you are a baby boomer, I believe.
SUE: I am, and there are a lot of us -- we like to exercise, stay engaged -- we're really redefining retirement.
COLLEEN: Though of course you’re far from being retired. I'm personally Gen X; we gave the world '80s music -- you're welcome -- now Kelly Peeler is Gen Y.
KELLY: I’m a Millennial. I grew up with a cellphone as a teenager.
COLLEEN: But the demographic her company is trying to reach is Gen Z. Those are the young people born after 1995.
KELLY: What I find really interesting and really exciting about Gen Z is that they're easily the most fickle consumer ever. They have zero brand loyalty. They have a totally different debt profile than even Millennials, they have a totally different attention span.
SUE: Gen Z isn't even on Facebook.
KELLY: They've grown up on Snapchat and messenger-based platforms, so that the way that they communicate is also totally different.
COLLEEN: Kelly and her co-founder, William Falcon, who is a software engineer, realized that they needed to create a phone-based platform to reach these young people.
SUE: Because Gen Z is never without their phones.
KELLY: The way the NexGenVest works is, we help Gen Z navigate their largest financial decisions, all over text message.
SUE: A person confused about the financial aid process can text one of NextGenVest's “Money Mentors,” or trained college students who’ve been through the process themselves.
SOT: A lot of them don’t understand the financial aid process.
-Have you been getting any student loan questions, like specifically in the past hour?
-Here’s all the students I’ve been texting.
-So you helped this student get financial aid?
-That’s great. Cool.
KELLY: We see thousands of students who come to us with questions over text message. The conversation always goes something like this, which is, “Hey, I just got into this college, and I'm so excited. I got $19,000 to go to College A.” And they'll text a picture of their financial aid award letter, and our technology will read it and will actually be able to say, “Wait a second, no, you weren't awarded $19,000. You actually owe $19,000.”
COLLEEN: Behind the scenes, NextGenVest's software combines tools and analytics to predict where this conversation is going and to automate elements of it.
SUE: That allows each Money Mentor -- the company has about 200 of them, real-life humans -- to advise hundreds of students at once, 24/7.
SOT: Here this one’s saying, “Thanks, you’re awesome.” Yeah, so, we’re helping them accommodate with their schedules.
-Awesome, that’s great.
COLLEEN: We found the tech element of this a bit confusing.
SUE: Here's some of my conversation with Kelly.
KELLY SOT: We actually use really sophisticated machine learning and technology to be able to “supercharge” our human conversations with students.
SUE SOT: So, a kid is going to want to know about this federal loan, and the minute they say the word "federal loan," the answer kind of somehow is brought up?
KELLY SOT: So, if you've heard of the word "bot" before, which is a robot that's kind of using really basic ways of serving up messages to people. What we're actually doing is kind of a -- you can think of that as a combination of AI and that bot world, with a human on top of it.
COLLEEN: Well, that clears it up.
SUE: (Laughter) Yes. Well, the gist is that it's very techy, but it looks like ordinary text messaging.
COLLEEN: This is why it's geared toward Gen Z and not us.
SUE: Exactly. This all seems very natural and normal for kids going to college now.
COLLEEN: And NextGenVest is indeed helping them navigate the college financing process.
SUE: Kelly says her company has helped more than 50,000 students receive some $40 million in aid -- often, just by coaching them on the paperwork.
KELLY: Students leave $2.7 billion of free federal aid unclaimed every year because they do not fill out the right forms. So we help students in high school fill out those right forms. And that can help them reduce their overall student loan amount because that’s money that they wouldn’t have to pay back.
COLLEEN: So you might wonder how Kelly plans to make money with her company.
KELLY: The advice that we give to students is free. What we really aim to do is to democratize transparent decision-making for students who otherwise would be the most vulnerable to making the biggest financial mistakes of their lives.
SUE: What she's trying to do is build trust with this next generation of consumers...
COLLEEN: ...one text message at a time.
KELLY: So a lot of people who work within financial institutions do kind of brush off, “Oh, teens are just taking a million selfies of themselves, and looking at memes all day.” I look at that and say, “This is a shifting of how communication is happening.”
COLLEEN: By building this relationship with Gen Z...
KELLY: We do see ourselves growing with our user base as they experience more financial decisions.
COLLEEN: Kelly hopes to be able to recommend financial products to them.
SUE: So one day when Gen Z wants to open a bank account...
COLLEEN: ...or apply for a credit card...
SUE: ...or a mortgage...
KELLY: We really want to be the trusted advisor to be able to help them navigate any future decision, so that it's not painful, they don't procrastinate it, and they actually make smart decisions with all the information available.
COLLEEN: If she’s successful, Kelly hopes to prevent a student loan crisis.
SUE: And like the famous financier John Pierpont Morgan who she once studied...
KELLY: We’re really thinking about what does it look like to build the next 100-year-old brand for the next financial institution.
COLLEEN: We thank Kelly for sharing her story with us.
SUE: You've been listening to "Good on the Ground" from The Story Exchange. Join us next time to hear more stories about innovative and inspirational women doing the things you’d never dream of. Or...maybe you would.
COLLEEN: If you liked this podcast, please share on social media or post a review on iTunes. It helps other people find the show. And visit our website at TheStoryExchange.org, where you’ll find news, videos and tips for women entrepreneurs. Sound editing provided by Nusha Balyan. Interview recorded by Kevin Cloutier. Executive producers are Sue Williams and Victoria Wang.
Posted: July 24, 2018