Digit, the fintech that helps customers automatically add to savings, is turning its attention to student loan debt.
Its mobile app analyzes users' income and spending to determine how much money they can stock away without missing it. As of Thursday, Digit is applying that technology toward helping customers to make extra payments on their student loans. The firm says it's a growing problem that the app can help address.
“There are 40 million Americans with $1.5 trillion in student loan debt and a lot of them are financially insecure,” said Ethan Bloch, Digit's CEO. “Digit can now help customers sleep a little bit better at night knowing they're making extra progress against their debt load."
In 2017, 65% of college seniors graduated with student debt. Among those graduates, the average student debt amount is $28,650. The average U.S. household with student debt owes $47,671.
Digit’s customers can now save for a trip, make extra credit card payments and make extra student loan payments via the app, which charges users $5 a month.
It’s also an example of BBVA’s open banking platform in action. Digit was one of the first fintechs to use BBVA’s open banking platform and the relationship continues to deepen.
Several student lenders, including Navient, Gradient, Great Lakes, Nelnet, Fedloans and American Education Services, have agreed to accept the extra payments from Digit to pay off student loans.
Digit didn’t work with these lenders directly. Through Digit's partnership with BBVA USA, the bank makes the payments. The student loan servicers are on BBVA's list of billers that accept its electronic payments.
“This is part of a big banking integration with BBVA that we that started almost two years ago,” Bloch shared. “It enables us to not just make payments on student loans, but make payments on credit cards.”
So that customers are not surprised by money being suddenly siphoned out of their account by Digit, 80% of customers have their checking balance sent to them every morning by the fintech, so they're very aware of how much is in their account. And the amount Digit draws out of the accounts is usually less than $13, so it's unlikely to upset their budget needs.
Bloch described the student loan payoff tools as an extension of what his company has been doing all along.
“We started Digit with this belief that financial health should be effortless,” he said. “By now being able to support student loans, it's just a continued extension of that mission. And we're not going to stop.”
