In the year since its launch, Tuition.io, the company billing itself as the Mint.com for managing student loans, has grown to manage over $1 billion in loans. The company, which provides a monitoring and management service for student loan payments, has just picked up an investment from Raj Date, the former second-in-command at the U.S. Consumer Financial Protection Agency, through Fenway Summer, the advisory and investment firm he helped found.
Tuition.io’s origins prove the adage that necessity is indeed the mother of invention, since the company began when chief executive and company founder Brendon McQueen confronted his own $120,000 in student loans split between 12 different lenders.
McQueen’s story is not unique among the roughly 37 million people in the U.S. who have outstanding student loan debt. Those loan obligations total over $1 trillion and are a huge drain on the finances of debtors, especially given the high interest rate of most government-backed loans.
The majority of federally backed student debt is at an interest rate higher than 6 percent, with more than three-fourths being at an interest rate above 4 percent, according to a February 2013 report from the Center for American Progress. These rates are double or triple the 2 percent rate of government debt, and that disparity has resulted in additional costs for young borrowers who are least able to repay the loans. Indeed, default is a huge problem for government lenders.
Given the demand, it’s no wonder that Tuition.io’s growth has been scorching. When it raised its $1 million seed round in February 2012, the company had just surpassed the $250 million mark in aggregate user debt under management.