Summer Co-Founder and CEO Will Sealy joins the Yahoo Finance Live panel to discuss the latest perspectives on tackling student debt.

Video transcript

– Let’s move on to the news we got today on student loans. President Biden’s chief of staff said today that the president is considering potentially canceling student loans. Let’s listen.

RON KLAIN: He asked his secretary of education, who has just been in office for a few weeks, once he took office, to have his department prepare a note on the legal authority of the president. And hopefully we’ll see that in the next few weeks. And then he will examine that legal authority. He will look at the policy issues on this and make a decision.

– We want to invite Will Sealy for a little more on this. He is co-founder and CEO of Summer. And it’s a platform here that lets you help students save money to pay off student loans. Well, first I want to ask you what we just heard from Ron Klain, that he said the president is looking for a way, looking at his legal authority, should I say, to write off the debt. student. What’s your reaction to this?

WILL BE SEALED: Yes, we just represent, for context, tens of thousands of borrowers who are actively trying to navigate a complicated repayment landscape. And these are people of all ages. The average age on our platform is between your late 30s and early 40s. So people spend decades looking at this problem. And so when the president says he’s navigating the student loan repayment process for the entire $ 1.6 trillion debt cohort of 45 million Americans, I think it reflects the complexities involved. and that he wants to do it right.

You have a lot of progressive groups lobbying the White House to take immediate action in the event of a massive cancellation. Obviously, there are a lot of people on the other end who say I have already paid off my student debt. What impact does this have on me? At the end of the day, we represent the borrowers and we want what’s best for them. And so we think some form of cancellation makes sense.

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– When I was looking at your profile, formerly at the Consumer Financial Protection Bureau, right?

WILL BE SEALED: It’s correct.

– So you’ve seen how some of these loans can benefit people who don’t quite understand what they’re getting into. I was very impressed with the average savings Summer has of $ 30,000 for people with a consumer loan. I call it indentured servitude. Can you tell us more about how you save people money?

WILL BE SEALED: Yes. Summer was therefore created by borrowers to help student borrowers across the country. I have student debt myself. Lots of people in the summer do it too. We are working with large organizations like the American Federation of Teachers, representing nearly two million teachers who during the pandemic, as you well know, were placed in very difficult positions trying to help their students get the education they deserve, while doing so during a life-threatening pandemic.

We just don’t believe student debt should be what drives them down, preventing them from being able to help the people in their community that they are looking to do. And so we step in and help the teachers, we help the doctors, nurses, anyone who is racking up student debt, get into affordable repayment programs. It’s federal, state, and other programs that exist to help people navigate, programs like income-based reimbursement. Unfortunately, these programs are very complicated.

And the reality is that even though the Biden administration cancels a lot of student debt, unfortunately in this country the debt doesn’t go away. And so, we exist to help create a system where borrowers can sign up for these programs that are complicated to do. A lot of people equate this with filing your income tax returns, but there has never been an accountant out there to help you in any form. We try to fill that void, give them a reliable source of information and the software to navigate these difficult and complicated application forms.

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– RT, I think you need to turn the sound back on.

– I believe that I am not dumb.

– Here.

– Weill, we’ve talked a lot about the administrative burden. And we talked about this issue of IDR and basically paperwork being such a challenge. But I’m curious to be able to tell us a bit about the partnerships you have forged with AFT and other organizations, how it works and how you created them.

WILL BE SEALED: Sure thing. For example, the American Federation of Teachers, which represents nearly two million teachers across the country, constantly tries to represent the best interests of teachers. And they provide a host of affiliate membership benefits. And so they introduce Summer to the teachers. We have similar partnerships with AFSCME, an organization that represents over one million public sector employees. And we’ve heard from these unions that their members are struggling to enroll in programs like income-based repayment, public service loan forgiveness.

And again, not too different from your taxes, they need extra support. Summer is therefore a platform. It’s a software-based system that these unions and our other partners – we work with dozens of employers, both for-profit and not-for-profit, offering summer to their employees as a mid-point benefit. of work. And this voluntary benefit allows people to participate in these programs and save quite a significant amount of money. As I believe was mentioned earlier, we are saving borrowers almost $ 30,000 on average by enrolling them in those loan assistance programs that they were otherwise unaware of or attempted to enroll in but. that were wrongly rejected.

– Will, just a follow-up question. So in the CARES Act and in the next stimulus package, there was a provision to basically help employers help their employees pay off student loan debt. Can you talk a bit about, have you started to integrate this into your platform? It seems to be a very interesting way to help borrowers.

WILL BE SEALED: Yeah, great question. So just recently, in December, Congress moved forward with a new provision that allows employers to contribute their employees’ student loans tax-free. So there is a tax benefit involved, not too different from a 401 (k) match for an employee. And so a lot of employers are now asking, how can we do our part to solve this problem? Obviously, this is a problem. We hear it every day. It’s all over the news. Student debt is a problem.

And it’s not just that student debt is too high. It is that it is very complicated to navigate in this problem. You have spouses and two people have student loan debt. And we were constantly where every spouse has student debt and student debt for their children. And so when you think about the complexity of different loans, private and federal, there are over a dozen different loan types, there are over a dozen different repayment plan types, the tracking is incredibly complicated. So I think more and more employers are realizing, what’s our part? What is our role to play?

So Summer is now partnering with dozens of employers. And we are working with them to figure out how much money to allocate to their employees’ student debt as another option so that we can reduce this debt burden that weighs on the backs of millions of Americans.

– Weill, very quickly, one last question. So what’s the worst-case scenario for October? What worries you so much about this deadline?

WILL BE SEALED: Yes, I think if people don’t know, millions of borrowers will go back to paying off their student loans in October. It is only in a few months. And the challenge is that borrowers are paying hundreds if not thousands of dollars a month on their student debt. So while we have seen the economy and its turmoil over the last few months, and really last year, the assumption that borrowers will be ready to magically pay off in October is, I think, wrong.

I personally worry about the number of millions of borrowers who risk defaulting on their loan and not paying off their student debt, which can cost thousands, if not tens of thousands, of dollars and ruin their ratings. credit along the way. . So we’re looking to partner with some very large organizations to make it known that borrowers need to start planning over the summer for this historic moment when loans will mature in October.

And one of the best ways to prepare is to sign up for an income-based repayment plan so that if they’re unemployed their loans can be as low as $ 0. Or if they are underemployed, their loans will be significantly less than what they would have paid under a standard repayment plan.

– Very good. Will Sealy, nice to see you, co-founder and CEO of Summer, and then, of course, Aarthi Swaminathan, always nice to have you on this.