SU Student Company Helps College Graduates Pay Off Student Debt

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UPDATE: September 29, 2020 at 12:48 p.m.

Financial Services for College Lending, a student-run start-up at Syracuse University, is working to help students better manage their student debt after graduation.

The FSCL, pronounced as “fiscal”, is still in its development stages. The company will allow students to repay their loans based on whether their income increases or decreases over time, said Sam Hollander, a junior at SU and the company’s founder and CEO.

“Our mission is to find a simple, affordable and flexible solution to funding higher education and alleviating the challenges of student debt,” Hollander said.

Hollander, who is studying finance and advertising, founded the company in his second year after learning that one of his family members still had significant student debt in his 50s. After spending weeks researching alternative methods to manage his own debt, he learned that there are few ways for students to pay off their debt outside of traditional loans.

These loans can be especially difficult to repay for students who have just graduated and are still looking for work or can only find entry-level jobs, Hollander said.

“Students are often handcuffed to their debt,” he said. “A lot of times we find that new grads are way over their heads and can’t necessarily pay off their loan.”

To help students manage their debt, FSCL plans to use income-sharing agreements through which clients can repay loans using a fixed percentage of their income over a certain period, Hollander said.

When a student is entering the workforce for the first time and may have a lower income, they will not have to pay as much. But as their income increases, they will make a higher payment, representing the same fixed percentage of their higher income, he said.

“The really nice thing about ISAs is that in the long run you pay less money,” said Jack Lyons, business development manager at FSCL. “It also gives you a sense of security more than you do with traditional student loan debt. There are people at SU who move to New York or other high cost of living areas which can be extremely stressful and they have to pay for it.

Student loan debt creates a significant financial burden for students and families.Shannon Kirkpatrick | Design editor

FSCL also offers customers flexibility once they sign their revenue-sharing agreement, said Lyons, a young marketing and advertising student.

If someone is struggling to make their monthly payments, they can choose to defer for 24 to 48 months so they have time to scrape together the money, he said. Conversely, if an individual’s income increases significantly, the company may prevent its payments from increasing beyond a certain point.

“If someone isn’t earning a living wage, they can defer their payments on the deal,” Hollander said. “Alternatively, if someone is doing extremely well, they can get upside protection where their payouts are capped at a fixed amount.”

When Hollander began his research to start the business, he realized that while some students were already using revenue-sharing agreements, they are generally only available to students in specific majors or at certain universities. Rather than imposing strict restrictions on customers, FSCL will serve any student, regardless of major, industry they work in or school they attended, Hollander said.

“Our goal is to bring this to a larger market and give anyone the ability to apply for at least a revenue-sharing deal,” he said.

FSCL started with SU’s Blackstone LaunchPad, an innovation hub that supports SU entrepreneurs.

Student debt has the potential to cause a financial crisis in the United States, said Linda Hartsock, executive director of the Blackstone LaunchPad and one of Hollander’s advisers. About 45 million Americans have student debt, totaling about $1.7 trillion.

That debt could prevent college graduates from making big purchases later, like buying a car or a house, Hartsock said.

“It’s a burden that students and their families shouldn’t have to face,” she said. “That means (this) generation will be out of college and (they) won’t be able to buy a house.”

Hartsock said FSCL’s revenue-sharing arrangements will also allow students to focus on what’s important to them, rather than worrying about paying off their loans.

Some loan companies that are supposed to help with student debt are transactional and focused only on how to make money, Hollander said. FSCL, however, will be relationship-based and focused on helping its client succeed, he said.

“I have the ability to bring a product and company to market that will transform the lives of students by reducing their financial stress,” Hollander said. “That’s really what motivates me the most.”

CLARIFICATION: In a previous version of this article, the payment process for the revenue sharing agreement was unclear. Students will make a higher payment as their income increases, not a higher percentage of the loan. Le Quotidien Orange regrets this error.