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Interesting facts app promises student loan repayment, but higher education experts question benefits for borrowers

By on March 11, 2021 0

Abra Belke took quite a few steps, some of them more remarkable than others, to ease the six-figure loan debt she contracted between college and high school.

Belke, a Washington state attorney, worked two jobs for the first decade after graduating from law school and took a side job to pay off more than the minimum payable on her loans.

Her knowledge of trivia led her to enter the game show market to increase her credit debt, including Danger! and Who Wants To Be A Millionaire?

However, these skills sparked her interest in another out-of-the-box solution to her student loan debt – a mobile gaming app called Givling, which promises winners to pay back up to $ 50,000 in student loan debt.

Belke started playing the game in 2015 and says she checks the game on her phone 10 to 15 times a day. While she isn’t close to paying off her loan yet, she says the game has helped her connect to a network of other student borrowers with similar experiences.

“It’s nice to see you’re not all alone in this,” she said. “The problem with student debt is that no one talks about how much they have.”

Givling is not only a debt relief opportunity but also a community of borrowers and supporters working together to cancel student debts through crowdfunding – the motto of the game is “strength for good”. The company says it recently surpassed $ 1 million in winnings, of which approximately $ 700,000 went directly into student loans. Users got to know their personal information on fighting debt and even arranged face-to-face meetings.

The game is also part of a growing ecosystem of brands looking to target the market for borrowers between the ages of 20 and 30. There are many people in this segment of potential customers who are educated and have some disposable income, but at the same time feel pressured to pay off their loans.

TruTV game show It paid off has borrowers compete on the trivia of student loan disbursement, urging Congress to develop better loan debt solutions.

In the case of Givling, the borrowers are consumers who are counting on a large payout that will reduce their student loan burden. Dedicated players see themselves as part of their social loan repayments through in-game purchases. They are also a target group for advertisers and partner companies wishing to sell their products. Some observers who study the financial aid system wonder if the game – where borrowers can advance in competition by spending time and money – exploits players who are desperate to pay off their debt.

The founder and CEO of the company, Lizbeth Pratt, became interested in student loans because of her own financial difficulties. Pratt was forced to file for business venture bankruptcy early in her career before successfully embarking on a career as a stock market investor. After retiring early, she wanted to do something positive in the lives of others and found that student loan borrowers could not go bankrupt like she did, said Seth Beard, the company’s marketing director. Pratt created Givling to give these borrowers another chance to pay off their debt.

“There is such a big problem when students who are going through these important moments in life and cannot cope with their head,” Beard said. “Student loans are the only type of debt that cannot be written off through bankruptcy.”

Givling currently has approximately 350,000 active users. This is far from other mobile games. But the company aims to reach one million users in the next six months, a number it believes would accelerate offering loan forgiveness to one winner each day.

The game works like this: users can play for free cash prizes by answering questions in the so-called “orange queue”. Each day, they receive two free rounds of questions – from film and geography to history and literature. Teams of three players win by answering more questions during the period. Winners – the payout is typically around $ 6,000 – can either win the cash or use it for Green Queue Points.

Reaching the end of the green line is the most serious reward in the game – a chance to pay off your student loans. But the competition is tough, and players benefit from multiple options for collecting points – they can purchase extra turns to answer questions or invite friends to play, or watch an ad or complete a survey from Givling’s corporate partner. According to the company, all users spend on average almost 11 minutes a day on the application.

While the maximum amount allowed has changed, users can now earn up to $ 2,500 in in-game purchases in exchange for in-game points in a week, the company says. However, the typical user pays much less – less than $ 4 a month – and most never paid for the game.

Belke declined to say how much she spent on the game in total, but for a few months late last year she spent the maximum amount every week to buy more opportunities for points in the green queue, although she says there is no money left to spend that much every week. He is currently ranked 16th in the Orange Line and 11th place in the Green Line.

These cash purchases by players are one of the three main sources of revenue for the company. Generates payments each time users sign up for an offer from a corporate partner (this includes refinancing companies SoFi, LendKey, Lemonade Insurance, Champion Empowerment Institute, Spent App, Acorns, T-Mobile, Ibotta and others). It also makes money from advertising from other companies.

“We strive to work with companies that provide value to our users, are trustworthy and passionate about helping eliminate student loan debt,” Beard said.

This model allowed Givling to increase revenues from $ 97 in July 2017 to $ 6,742 each day a year later. I just reached my 21st loan payment.

One of them went to Amanda Limoges, who discovered the app through a Facebook post from a friend about nine months ago. Although she had no student loan debt herself, Limoges’ husband Glen, after graduating from his undergraduate degree in 2012, owed $ 86,000 in student debt between federal and private loans.

When Givling changed his rules after being warned that he was not following the state’s gambling laws, these changes removed elements of chance and grounded game skills.

Limoges said she then decided to try to get involved in paying off the loan. She spent more time on the application in the two months leading up to winning than the previous seven combined, she said, eventually winning the top prize earlier this year. With a payment of $ 50,000, she was able to pay off the remainder of her husband’s loan, as well as his brother’s.

“It took 15 years for our loans to live, and I think about 9 months of his younger brother’s debt,” she said.

Scientists see the pitfalls

While the game made a huge difference for a handful of borrowers such as Limoges’ husband, some college researchers are skeptical about the app as a solution for borrowers seeking student loan relief.

“I’m worried that it is addictive, just like gambling is. I’m really worried about it, ”said Lindsay Page, assistant professor at the University of Pittsburgh School of Education.

Robert Kelchen, an assistant professor at Seton Hall University, said the game reflected how many companies believe the abundance of young adults in college debt is a promising opportunity to attract new clients. Meanwhile, employers also offer student loan payments instead of traditional benefits to attract new employees.

“They are looking for jobs after young college graduates, and in the long run this is quite a lucrative demographic situation,” he said.

Companies expect borrowers to have money in the future, even if they don’t have money now, Kelchen said. And while borrowers who have federal student loan debt have access to options such as income-based repayment, many are still looking for creative ways to pay off their loans faster.

“People don’t like having debts hanging over their heads,” says Kelchen. “If there’s a lottery to do it, they can take it.”

The financial situation of these borrowers, while shaping marketing choices today, is also the result of political decisions made years ago. Nick Hillman, associate professor at the University of Wisconsin Madison School of Education, said the game was the result of a failed education policy. The attractiveness of the game should make people think about the types of outcomes that the US’s higher tier financing system produces, Hillman said.

“This is a consequence of having a study system that was financed by a loan. We now have this new market that was only created because of the way we designed our funds for education, ”he said. “It looks like abusing students in many ways could work.”

He said he was concerned about what was happening to user data and how third parties might use it to target borrowers’ marketing.

“The first thing to know is how this data is used,” he said.

At the very least, Hillman said an app targeting student borrowers should provide users with information about their loan options, which does not include private companies or advertising partners.

“The ethical company could also give students more information about how they manage their loans,” he said. “If not, these companies aren’t doing anything, they’re just using people’s data.”

Beard said one of Givling’s partner companies, Champion Empowerment Institute, offers free advice on student loan repayment options through live events on Facebook and elsewhere. Champion Empowerment also offers subscription services to borrowers at $ 10 per month.

Limoges said, however, that she never felt used by the game.

“No, I never felt that we were taken advantage of because of our misfortune. I didn’t have to do anything stupid that anyone could see to pay off my loans, although of course many people are able to use every possible opportunity to get away from this debt.

She said the app has helped her make lots of real friendships with other players through a shared interest in student debt.

Beard said the company’s criticism was in response to its new approach. That said, users have the choice of spending money on the game or taking advantage of partner offers, but can still earn rewards on the Orange Givling.

“When you are an innovator and change something and achieve something that has never been done before, you will have these critics,” he said. “We just focused on our mission.”

The ultimate goal of this mission is to pay off multiple student loans per day via the app. Givling describes this goal in terms of social justice.

“They give these student loans to people who are 18 years old. There is no credit check. They just sign on the dotted line, Beard said. “They don’t always realize what they’re getting into.”

Belke said her only concern about the game is that so few people are investing right now. She said the long-term health of the game depends on activating more players, but only a fraction of the game and contributes to the loan repayment.

“This has to increase in order for us to reach our goals,” she said. “Would having more free resources help? Maybe. But if we can build a model where sponsors, advertising and crowdfunding help change the lives of many people, it’s more like working together than exploiting. “