Student Lending that Keeps on Giving:
The First Pay-For-Success Student Loan
PYT connects families and banks to provide new solutions to financing education.
I am not an employee of BNY Mellon, or an immediate family member of a BNY Mellon employee
I am over 18 years of age
My organization is incorporated as a non-profit, for-profit, or hybrid organization, or I have a partner that is incorporated and could accept funds on my behalf
I have already piloted my initiative and have some initial evidence of impact
My organization is headquartered and creating impact in the United States
Where are you making a difference?
Washington, D.C. (20020)
Fort Pierce (34950)
Little Rock (72114)
New Orleans (70113)
Focus Areas (required)
Business & Social Enterprise
Children & Youth
Development & Prosperity
Human Rights & Equality
Project Stage: Select the description below that best applies to your approach.
Established (successfully passed early phases, have a plan for the future)
Website or social media URL(s) (optional)
1.Founding Story: Share a story about the "Aha!" moment that led the founder(s) to get started or the story of how you saw the potential for this to succeed.
Stacie decided that with the time she spent at HSBC and in specialty structured financing, she could innovate this antiquated space. With her discipline of serving in the US Army, and after numerous family members who experienced this problem, she decided to redirect her time and energy to help the community she is also a part of; since founding PYT, Stacie has decided she will not rest until graduation success and completion rates increase for underserved students.
The PYT team has successfully built a platform that is live and out of the idea stage. We validated the idea by engaging two bank-lender partners who also realized this is a larger problem that the financial institutions will help to solve.
2. The Problem: What problem are you helping to solve?
The problem is debt and no degree. The private student loan space is NOT currently structured to help the under-served community get access to capital. Very few financial institutions lend in the private student loan space due to the risk of the product type. This antiquated space has not seen real innovation for the greater community. For hard-working, high-quality, low-income students, all options have been exhausted.
3. Your Solution: How are you planning to solve this problem? Share your specific approach.
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. Over 5% of the 14% of the national default rate is due students with student loan debt and no degree.
The disruption and innovation in the traditional lending process begin with our KYS (Know Your Student) proprietary process, which allows PYT to provide a more transparent and socially responsible private student loan. The process 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 also have created a process that will securely capture the data while maintaining transparency to prove the student's ability to succeed in a professional environment and work with them to better negotiate their starting salary.
4. Example: Please walk us through a specific example of how your solution is working to solve the problem.
Our first student, Francina, was a low-income foster care student who was impacted by our services. Her situation ignited PYT's mission to include other students in need of education.
Our work specifically supports hard-working low-income students seeking to graduate from college. Encouraging, supporting and educating these students will improve the economic conditions for many of their households where additional education and support is needed. The pay-for-success program will step up and co-sign with high-quality low-income students.
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.
5a. Too many people in the U.S. have unmet needs for financial products and services. How is your work reaching a population(s) that is currently underserved? If it is not reaching an underserved population yet, how might it in the near future?
Our newest product the "Loanership", is a trademarked solution and credit building product for our low-income community. With our scoring model, we can recommend banks to use their grant money to lend to a student, and after 12 successful payments, grant the loan as a scholarship for the student. This program helps the student build credit or increase their traditional FICO score by 40 points.
5b. Please specify if the population you are reaching is underserved due to any of the following characteristics:
age - youth
6. Marketplace: Who else is addressing the same problem? How does the proposed project differ from these approaches?
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.
7. Impact: How has your project made a difference so far?
We have currently attracted over 6,400 students and families who request our services and fighting to reduce the national default rate of 14% down to 5%. Once the barriers of higher education funding have been removed, it has been proven that minority students will not only perform as well as other students, but even excel.
How PYT affects the low-income community:
1). Higher enrollment for higher education
2). Increased graduation rates for minorities
3). Financial inclusion for the underbanked by producing a credit score
4). Long-term debt burden lessened by crowdfunding and lower interest rates savings
5). Creation of consumer payback behavior and thus helping students to build a positive credit history.
6.) Development of salary gap negotiation skills with their first employer to help close the national wealth gap.
8a. Spread Strategies: Moving forward, what are the main strategies for scaling your impact?
These are the main strategies to scale our impact:
1). Building the key personnel roles needed to build a fund. The goal is to become a fund of funds for higher education.
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). Global adaptation of our model.
5). Addition of blockchain technology to our platform.
6). Lend directly from our community development fund (CDFI) to continue innovating ways to lend, grant and refinance options.
8b. If applicable, which of the following scaling strategies have you launched?
Franchising, Licensing, Accreditation
Large Scale Partnerships
Industry Standards (labels, certification, awards, etc.)
9. Financial Sustainability Plan: What is this solution’s plan to ensure financial sustainability?
In 2018, we are projected to add two additional revenue streams. These streams are a reasonable platform service fee of $250.00 to the families and a marginal spread of 2% to 3% as a fund of funds for other student loan lenders looking to serve this mission. PYT will originate and underwrite its own portfolio of private student loans to further validate the efficacy of our proprietary scoring model.
10. Team: What is the current composition of your team (types of roles, qualifications, full-time vs. part-time, board members, etc.), and how do you plan to evolve the team’s composition as the project grows?
Our team is as unique as the diverse client-base that we serve. Our deep understanding and personal experiences have sculpted how we pursue diversity, equity and inclusion for our low-income community. As a female, US disabled Veteran, minority-led company, we have publicly declared to always serve the student first. Together for at least 5 years, our team has experience in banking and consumer lending, specialty structured finance, and sales with technical experience in artificial intelligence.
Help Us Support Diversity! Part 1 - Which of the following categories do you identify with? (optional)
Black or African American (for example: African American, Jamaican, Haitian, Nigerian, Ethiopian, Somalian, etc)
Help Us Support Diversity! Part 2 - Do you identify as part of any of the following underrepresented communities? (optional)
Communities of color
How did you hear about this challenge?
Recommended by others
Word of mouth
PYT Funds, Inc. (Pay Your Tuition)
Program Design Clarity
Here’s an example of a real student: Francina, considered an independent student due to her foster care background and no credit, has a remaining $10K balance due by December 15th to complete the fall semester and re-enroll for the upcoming spring semester. PYT’s proprietary online platform and offline one-on-one sessions allowed Francina to fill the funding gap for college expenses, and raise cash collateral to secure a private student loan.
Approach to financial wellbeing: does your project focus on creating financial wellbeing through innovating on any of the following?
education / literacy
If you marked "Other" in the question above, please specify:
Workforce development: negotiating a first employer starting salary after college.
Innovation type: Please select which of the following types of innovation best characterize your work
Institutional innovation (Creation or changes in organizational structures, the setting up of new types of financial intermediaries, or to changes in the legal and supervisory framework)
Partnerships in detail: tell us about your partnerships that enhance your approach.
Our lender partners value our development and have signed partnerships to drive alternative information to assess high-quality low- and middle-income students. These include out current partnerships with GS2 and Sallie Mae. GS2 provides a wide array of financial services including loan acquisition, market advisory services, and asset management. Sallie Mae is a publicly traded CDFI that purchases student loans from lenders and provides financing to state institutions.
If you won the Unlocking ₵hange Challenge, how would you invest the prize money of $50,000?
With the assistance of additional financing, we will be able to build the personnel and technology to maintain the integrity of the product and allow our business development to bring awareness of this resource to the hard-to-reach communities. This will raise awareness of debt and no degree.
Awards & Recognitions: What awards or recognitions has the project received?
Accolades and recognition include: U.S. Department of Education's MLK Jr.'s Drum Major Innovative Service Award; 2016 chosen fellow of the prestigious Halcyon Incubator program in D.C.; graduate of the Lighthouse Labs accelerator program; selection for the Innovate Finance 2017 Women in Fintech Powerlist; and grand prize recipient of the StartRight! Women’s Business Plan Competition.