Summer Raises $9M to Make Student Loan Assistance From Employers a Workplace Benefit

Summer Raises $9M to Make Student Loan Assistance From Employers a Workplace Benefit

Time Stamp: April 11, 2024 9:27 AM
Source Node: 2542231

The burden of student loans in the United States has reached a staggering $1.74 trillion, surpassing the total outstanding credit card debt. During the pandemic, 63% of full-time employees reported increased financial stress, highlighting the need for employers to prioritize financial well-being. In this competitive talent landscape, engaging and satisfying employees is not just good practice—it’s essential for attracting and retaining talent, especially among millennials and Gen Z. Summer is an end-to-end benefits platform for the workplace that allows employers to offer employees paths to save for their education, reduce existing loans, find forgiveness options, and lower monthly payments. The company takes advantage of recent legislative changes that now allow for matching contributions in retirement plans based on employee-qualified student loan payments, letting employees pay down their student loan balances without having to worry about saving for retirement.  Employers using Summer can implement this program seamlessly without additional administrative burdens.  The company currently works with over 800 employers and has seen an average of $40K per employee while reducing turnover.

AlleyWatch caught up with Summer CEO and Founder Will Sealy to learn more about the business, the company’s strategic plans, latest round of funding, and much, much more…

Who were your investors and how much did you raise?

$9M in Series A (extension), led by Rebalance Capital and SemperVirens, with participation from General Catalyst, QED, Flourish Ventures, Partnership Fund for NYC, Fenway Summer, and Gaingels.

Tell us about the product or service that Summer offers.

Built by borrowers, for borrowers, Summer partners with employers to deliver a tailored benefit that empowers employees to save for education, better manage their student loans, find forgiveness options, and lower monthly payments—simplifying student loans from start to finish.

As a Certified B Corporation, Summer has partnered with leading employers, financial institutions, unions and trade associations, and government leaders across the United States to generate over $1.6B in savings.

What inspired the start of Summer?

I served as one of the first student loan policy experts at the Consumer Financial Protection Bureau (CFPB), and saw that while the federal government has made many programs available to those who are both planning for college costs and carrying student debt, those options are not well known and are incredibly difficult to navigate. As a result, most people don’t end up applying for programs like Public Service Loan Forgiveness or Income-Driven Repayment, collectively leaving nearly $1 trillion on the table.

Summer was founded to address that complexity, and make it easier for people to understand their options, simplify their student loan debt, and save substantially on payments.  Since founding, we’ve expanded our platform considerably to enable employers to offer student loan optimization, student loan contributions and tuition reimbursement, and student loan retirement matching.

How is Summer different?

Summer is the only end-to-end student loan solution that saves employees an average of $40k and is proven to reduce turnover by 20%. By working with employers to address a major financial concern for employees, we’re helping them strengthen the employer-employee relationship and respond to the most pressing needs of the workforce.

What market does Summer target and how big is it?

Student loans are a pressing concern for employees at all companies, and at all income levels, and they have real impact on employees’ overall financial wellness. Even when student loan payments were paused, 38% of student loan debt holders reported they delayed saving for retirement due to the burden of that debt. Now, with payments resumed, nearly three-quarters of employees expect that payments will impact their ability to save for retirement. And these financial concerns impact employers: a recent study by the ADP Research Institute reports that about half of workers are in the process of leaving their workplace, and among workers with student loan debt, that number increases to nearly 60%. There’s also a misconception that student loan benefits are only relevant to recent graduates, but the reality is, 50% of the people we’re supporting are over the age of 42.

What’s your business model?

Summer works with employers (currently more than 800 employers including Fortune 500s, hospital systems, and state governments and municipalities) to help them take advantage of the many opportunities available to reduce the stress of college costs and student loan debt, charging a per employee, per month fee with prices tiered based on employer size.

How are you preparing for a potential economic slowdown?

In times of economic uncertainty or a slowdown, finding ways to reduce the stress of student loan debt becomes even more pressing, and even with the emphasis on student loan debt by the current Presidential administration, the rising cost of college tuition means that this will continue to be a top concern for decades. 

What was the funding process like? 

The process was straightforward for this raise –– we are grateful to have many phenomenal returning investors as well as some new ones in this round. We were also lucky to be able to take the opportunity to raise thanks to inbound interest, rather than soliciting investment proactively.

What are the biggest challenges that you faced while raising capital?

Summer has previously received investments from generalist investors like NextView and General Catalyst. These firms were critical to our success and growth in the early days of the company, however, as we continued to specialize in the employee benefits category, we recognized a need for more specialized investors. We are grateful to have come across Rebalance and SemperVirens which are laser-focused on the future of work thesis, which includes financial technology for workplace financial wellness, and their respective networks and expertise are truly top-notch.

What factors about your business led your investors to write the check?

Investors are excited about our newest customers and distribution partners, such as ADP with 1 million clients, the growth of the team (adding SoFi co-founder Dan Macklin as President last year and Don Weinstein the former CPO & CTO of ADP as a Senior Advisor), and the ways in which our platform has expanded to be able to address a range of tuition and student loan related challenges. Our investors are also privy to the ways in which HR leaders are quickly waking up to the importance of this category of benefits — leveraging them as high-ROI recruiting and retention tools — and see Summer as a leader in this space.

What are the milestones you plan to achieve in the next six months?

We’ll continue to expand our team, as well as our client base – we currently work with about 800 employers, including TechSmith, Mattress Firm, Fidelity, ADP, Credit Karma, and the American Diabetes Association, and plan to support many more by the end of the year.

What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?

Many startups are changing their pitch decks to reference AI to lure investors to their cause. We heard that one of our competitors that has struggled to raise did this to attract capital, and it actually backfired. Several investors told us they invested in us instead because our competitor could not credibly point to true AI tech beyond their pitch deck. Be careful not to end up with a similar fate!

Where do you see the company going now over the near term?

We’ll use this round of funding to grow our team and continue to develop our platform, which makes it possible to roll out these benefits to employees at a grand scale. There’s a lot of work to be done in bringing these benefits to HR leaders and the employees they serve, which is why we also announced our CHRO Advisory Board, made up of HR and technical leaders from ADP, TIAA, Mattel, DIRECTV, and Gilead. This Advisory Board will work hand-in-hand with the Summer team to help simplify what is ultimately a very complex set of policies and resulting benefits, and work alongside Summer to ensure we’re delivering best-in-class solutions to the HR leaders who need them.

What’s your favorite restaurant in the city?

I could eat the Lomo Saltado at Llama Inn in Williamsburg every day for the rest of my life. Of course, it’s not the healthiest, so I limit myself to 2-3 servings per year but it’s pure bliss every time.

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