Jun 22, 2016 11:15 AM EDT
Boston-Based Bank Capitalizes Nearly $1.4T On Student Loan Tab To Attract Millennials
Boston's Radius Bank, a one-branch lender having an accumulated $655 million deposits, announced Tuesday that it took partnership with Gradifi, a student debt-repayment platform well-known for its involvement with employers, to relaunch the nation's only debit card devoted to paying down account holders' student loan debts.
Radius and Gradifi plunge on debt reduction instead of the usual deduction on rewards points or undersized reimbursements to entice young Americans as a move to capitalize on the nation's nearly $1.4 trillion student loan, Bloomberg reported. Both banks are gambling for Americans in their twenties and thirties will prefer paying down their debt over acquiring more of it or mounting their consumption.
Most employers want to draw and keep employees and, alas, one of the superlative ways to do that at the moment is by offering student loan assistance benefits. Small enterprises and businesses can use Gradifi to invest money toward the student loan of their employees.
Twenty companies have registered to Gradifi and another 80 are scheduled to commit on the program during the Q4 of 2017. In January, PricewaterhouseCoopers signed on to Gradifi. Almost $150 million in student loans are listed on the Gradifi platform, Tech Crunch reported.
Gradifi's partnership with the Boston-based Radius Bank will allow MasterCard Debit Card holders to earn 1 percent cash back for student loans. It may not sound big but if someone spends $2,500 monthly on their debit card, they will incur $25 a month allotted to their student loan debt, Tech Crunch added. During the timeline of the 120-month student loan, users will be able to earn $3,000 to be paid forward their student loan debt. Gradifi is completely backed by prominent investors and has an outlook for a cash-flow positive through the end of next year. The company signed a partnership deal with MasterCard for 1.1 percent cash back and takes advantage on the difference between the 1 percent offered to pay fixed cost and operational expenses.
In preparation of the Radius and Gradifi partnership, the team made an expansion from three to 30 employees over the last year.
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