Pay Your Tution Funds Inc

We are committed to finding innovative solutions to fill funding gaps in the higher education space. We are proposing to scale the PYT flagship product the “Loanership” which provides innovation in the scholarship industry by its innate ability to be a credit building scholarship. We combine alternative data and social vouching to evaluate a persons’ credibility. We will look at transcripts and social activities to assess students' potential. In short, our solution positively helps students succeed and increases their chances of earning a degree. Our solution can indirectly impact the American economy by funding more American graduates and lowering the student loan default rate. Lowering the default percentage will ultimately recover costs to the American taxpayer. Our innovative financing approach creates a new path to fund new skills and re-skill our working economy.

Many students all over the United States are struggling to pay the tuition and graduate on time due to financial constraints. According to the National Student Clearinghouse Research Center in 2019, less than 60 percent of students who started at a four-year school completed their degree within six years. PYT targets students who are already admitted into college that have typically exhausted all of their federal financial aid and are in need of one more boost to graduate. For decades now college students have coped with the rising cost of tuition by borrowing which is now the primary way many young people pay for college. What we have seen and what this means is this shift places an unequal burden on communities of color that have historically been denied access to fair and equitable credit. At all schools, almost 40 percent of black borrowers drop out, compared to 29 percent of whites, the main reason is students of color do not have enough access to credit to complete the degrees they started.

The Loanership™ is a hybrid between a loan and a scholarship that is formatted in a way to build credit simultaneously. It decreases the number of loans which the students are responsible for paying and helps students build their credit early on their college life cycle. Our process uses crowdfunded money and a reinforced machine learning algorithm to develop a financial scoring mechanism (PYT Score) tailored for students in underserved communities. This gives them the ability to get the last bit of funding needed to ultimately graduate. The PYT Score uses alternative data models which enables students without credit history or access to a qualified cosigner the ability to secure additional funding for their school. The Loanership™ process also includes a distributed shared ledger to ensure that representatives from underserved communities are able to track and verify that their community needs are being met.

Our primary target market is low-income to mid-income undergraduate college students who are more than halfway through their degrees but have exhausted all other sources of funding options to pay for their college education. Low-income students frequently take out large loans at the beginning of their higher education career to pay for their college education. However, with a lower likelihood of having a credit score or cosigner, these students are more likely to then exhaust these loan options that they need in order to complete their degrees. Juniors and Seniors from low-income families find themselves in huge amounts of debt, yet still unable finish the rest of their degrees. Currently, of the 36 million Americans with some college but no degree, roughly half are people of color (18 million people). African American and Hispanic populations make up more than a third of this statistic. We are estimating a target size of six million students per year.

We are providing the financing structure that will allow workers in the United States to improve or acquire new skills from universities, community colleges, and alternative educations, for example, boot camp. They can go to more technical schools and we will provide the financing structure to help people go back to school to re-skill and re-try. Our solution is well-aligned with the challenge of the competition because we feel the financing structure to provide opportunities for all Americans to get access to education to be re-trained and re-skilled.

We have three full-time employees and five interns that work part-time with us throughout the years. For special projects, we have three subject matter experts as needed. 

PYT defines Diversity, Equity, and Inclusion at its root as we are a service connected disable US Army Veteran, female-founded, minority, and LGBT+ organizations. We are proud to say that over 90% of our organization represents a diverse community and our team is built up from different socio-economic backgrounds. Despite being a startup, each person on our team has over 20 years of banking experience. Our products do not exclusively serve and target any particular community of color. Though through years of experience in the industry, we found that minorities frequently meet the requirements and face the issue that we are trying to solve. Not only is the company built upon minorities, but our products also serve minorities in need.

1. We have a licensed trademark for the Loanership. The USPTO which is the United States Patent and Trademark Office has recognized our flagship product is unique to the financial services market. We are the first company that serves this type of service. Therefore, the creation of a credit-builder scholarship is what makes us different.

2. Our platform is unique and different because we have created a solution that combines crowdfunded dollars with alternative data to serve overlooked communities.

3. The private student loan market is far from adequately democratized and acts as a barrier for women and people of color who often lack collateral, sufficient credit, or a qualified co-signer. The segments of the market that we serve typically are not seen as valuable to our competitors because of high risk lending and have a low paid-back percentage. This problem is an additional hurdle to minority students who need to find ways to fill their tuition gaps or be kicked out of the college each semester. We offer an alternative for those students who either never qualified for funding or have exhausted traditional student loan options.

4. At PYT, we listen to the voice of students. Here is a link to all of our past and current interns https://www.gopyt.com/fubu. The company is built to serve students and our internship numbers show that. PYT believes students are always the heart of the company. Our model is built by students for students.

We provide direct development services by engaging with the client from the beginning application stage to the ending servicing stage. Our goal is to spend the technical funds by building the remaining infrastructure on our nodes with hyperledger fabric. This will ensure accuracy, efficiency, effectiveness, checks and balance of data management, top security, and transparency to the stakeholders. This technology will provide a more secure platform that also allows transparency. We are currently investigating incorporating a proof of authority consensus mechanism on our Loanership™ process.

We work high-touch with the student and the family to ensure all transparency and proper needs are identified.  We developed a neural network based scoring model (PYT Score) which predicts fraud and default rate that will allow us to work with the students to assess the level of employability/credibility of our students at the time of the application, to the technology to monitor their progress.  The PYT Score uses academic, career and social data to shine the light on  “credit invisible” students by providing transparency and applying a value to students with unknown credit risk. Also, we partner with mentoring organizations for customer acquisition and referral of the applicants. Additional funding to invest in cyber security is a key priority of PYT to ensure the security of our customers. 

Our solution utilizes AI and Blockchain, which are the two most talked-about tech trends of the past two years by a wide margin. There is a good reason why these technologies have received so much attention. AI is a centralizing technology that incentivizes the consolidation of data and computing power. AI promises to automate many tasks and is often better at modeling complex situations than humans. Blockchain, on the other hand, offers greater data security and privacy while also reducing the overhead and centralized power of major institutions. Blockchain ledgers decentralized control of data and computing resources while still making the data and resources available to the overall network. In the FinTech industry, these technology advances are becoming standard so we aim to stay current with technology if not innovating or leading FinTech technology.

The private student loan space is not currently structured to help the underserved, under-banked community get access to capital. Students are under pressured by the weight of student loan debt as reform in federal policies and decision-making have a direct impact on college tuition. Current federal government financial aid is not enough to cover higher education costs, which creates a funding gap that the private student loan market fills. The private student loan market does not service clients with a 700 credit score and below.

PYT is the only platform that pulls together the following predictive lending process: We combine crowdfunding as a customer acquisition tool and loan risk mitigator to source the best students with alternative social and predictive data combined with the traditional lending process. Our next milestone is to become a certified CDFI (community development fund) to truly serve this emerging underserved market and to create a disruption to a big problem. There are numerous ways we can innovate to find solutions to student loan debt once we are a community development fund. The combination of the certification and our scoring process is the clear differentiator to competitors.

Lastly, we are the only financial solution that uplifts the student with a workforce development tool that helps the students to highlight the key professional traits needed to market and negotiate their first starting salary after graduation.

Our strategic goal helps the higher education finance sector with innovation and focus in community reinvesting.  Strategically we need to become a CDFI (Community Development Fund) and engage with at least one bank partner to fund our PYT product using the PYT scoring model in the decision process. We also would like to expand our partnership with our current lending partner to provide loan forgiveness.

Once we complete a one year timeline pilot with a bank partner and originate over $5 mil in the loan/scholarship product space then we will begin a strategic state by state nationwide rollout.  We will begin to expand north & south of the east coast of the region.  We will grow from a  $5 million fund to $25mil, $50mil, and $100mil fund. Our goal is to serve over 300,000 families nationwide. As a strategic plan when timing is right and traction is further proven, our goal is to engage with government personnel at the Department of Education to gain more support for our innovation.

We have a grassroot plan that allows us to engage with financial aid officers and administrators to bring further awareness of the product and support to innovate debt reduction programs for the students of low to middle-income areas. We use online digital ad marketing to directly target financial aid offices. Additionally, we have a fully developed list of contacts to implement our digital marketing strategy. Our contact list consists of over 6,000 contacts which includes both schools and banks.

The barriers that currently exist that would keep us from hitting our target goals are important but do not limit our ability to create a successful business model. If we can not secure the collateral to execute our product, there will be a high need for financial support of low cost and no cost capital to execute this product. 

Lack of financial support is the biggest barrier. The second largest barrier is our technology infrastructure and the ability to scale and grow to keep up with the need. We have to successfully use the technical award to further build the technology platform to increase security and transparency.  The technical award will allow further business development to build strong bank partner relationships and to expand the banking CRA network. This product and structure will ultimately change how we pay for higher education. 

The third largest barrier is overcoming the challenge of Fintech Startups working with large financial institutions. Regulatory constraints are a big factor that prohibits large financial firms from being innovative and working with fintech startups.  There is a fear of the government rules and fines that would be a high risk for larger firms to pilot, test, and partner with fintech start-ups. We aim to work with the government and financial firms at the same time to establish a working relationship over the next 5 years.

PYT continues to be resilient. Out of the numerous student loans start-up companies that we have competed with in the past few years, very few are still operating. One way that we overcome these barriers is that we keep mission at heart and know why we do the work that we do. As a startup, our biggest barrier is the funding. Our solution is to conduct calls with investors every week as well as we work to expand our network and build resources. Currently, our investors are allies and advocate with us. As for our resiliency, we have great team members, great interns, and high expertise technical talents. We believe teamwork makes a dream work. Specifically, in Washington DC, we have access to a lot of technical talents and direct access to advocate to the federal government. There are not many opportunities for them to utilize their expertise in the government sector or pursue passion projects. Government employees volunteer to work at companies like PYT. Our most recent challenge is COVID-19 which made a majority of schools decide to close and go online this Fall. The pandemic caused college enrollment to decrease. We are creating more innovative products that serve long-term and short-term alternate types of school that are not traditional four-year colleges, such as 6-months to two-year technical and trade schools. Students will find other ways to get new skills by attending boot camps or looking for alternative learning environments which won’t cost them a huge amount of money.

PYT would like to collect, analyze, utilize more social and academic data to qualify more students for financial products. PYT understands how to use alternative data, and we believe in using data to “profile for good”. We need to continue to lobby government to allow more regulatory exceptions for the data to test this proof of concept. Understanding the frequency of how a student spends is important to understand the students' financial literacy levels. For example, procrastination is a key credit risk indicator. PYT would like to learn how students respond to key activities, for example, waiting until senior year in college to declare a major is a form of procrastination. We want to have a chance to deeply understand our customers, we call this process KYS, Know Your Student. Our goal is to build a proprietary algorithm based on social data to create solutions to drive the finance sector.

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Our team is well-positioned to deliver this solution because we have team players who have expertise in educational advising and technology. Our team leader is Richard Adams, whose previous experience includes managing operations for a Fortune 500 Company and forging relationships with diverse stakeholders. Richard spent 5 years in the Commercial Real Estate services industry learning and cultivating knowledge on REIT investments, capitalization rates, and helping the start-up LoopNet to complete an IPO. As a Co-founder of PYT Funds, Richard partnered with long term friend and mentor Stacie Whisonant to innovate the finance industry and offer a solution to the country’s overbearing student loans and debt crisis. Stacie Whisonant spent 13 years in the financial services industry, utilizing her SEC license to manage mortgages, structured settlements, and annuities for the world’s largest international banking and financial services organization - HSBC. We have Wardell Samotshozo, a Methodical CTO with 4+ years of experience in the fintech industry who worked at financial services agencies such as Freddie Mac. He also has 8 years of experience strategizing and implementing low-cost and fault tolerant solutions at agencies. He is a strong team player to help PYT build and improve technology infrastructure. 

Pay Your Tuition has a joined force with the banking experience experts and the tech talents to deliver an innovative financing model. We believe our team is well-positioned to deliver this solution because we have relevant skills and have a strong passion in our primary mission: reduce the burden of student loan debt.

1. Ascent Loan Cosigned: Cosigned loan to help students get the additional money they need.

2. Ascent Independent Loan No Cosigner: Get the additional money without Cosigner needed.

3. Ascent Scholarship: 1,000 Ascent Scholarship Sweepstakes and no essay requirement. Students can apply every 3 months. 

4. Deserve Credit Card: Card program which is tailored specifically for college students: there’s no annual fee, and students can get one even if they don’t yet have a credit history.

5. Sallie Mae: Traditional student loan, which typically requires a co-signer. 

6. Lendvious Consumer Loan: Tool to help students quickly find pre-qualified student loan offers.

7. FundingU: Provides loans of up to $10,000 per year for students without the need for a cosigner (no past due balances).

8. Mpower: Helps international students studying in the U.S. 

9. Stilt: Provides loans for immigrants and the underserved F-1, OPT, H-1B, H-4, O-1, L-1, TN, J-1, DACA, and Non-U.S. citizens.

10. Prodigy Finance: Can get students a loan and fund their future education with the international graduate student loans in business, law, engineering and public policy (Top world class universities only (FYI).

Our goal is to create a pay for success structure where government and philanthropic groups are able to engage. The Loanership™ takes the negative experience of an outstanding tuition bill and turns into a positive experience with economic incentives for students to complete their studies and obtain employment.  Loanership rewards students for taking positive steps toward degree completion and future employment. The Loanership begins as a loan, but students can become eligible to apply for a grant or scholarship that can be applied to the PYT Loan by completing their degree and other specified goals tied to academic progress and future employment. 

We believe that this product and financial structure will truly disrupt the education finance bubble. With private-public partnerships, we can deploy capital that will change and create positive consumer behavior to those seeking education in the underserved communities. Pro-bono consultant firms partner with us to craft pay for success programs and to build a community of social finance groups that believe in this problem and solution. This perfect storm creates ways to close the funding gaps and debt load for families that need additional financing to achieve a higher education.

The ideal government partners are the Department of Education and the Department of Labor.  Program-related investments and bank Community Reinvestment Act dollars deployed into this product and financial vehicle allow indirect support.

The Company has a for-profit business model that delivers a high tech solution and provides a positive social impact return. Multiple revenues streams are projected through: (i) traditional fees charged to student loan borrowers; (ii) fees charged to lenders for PYT thin file loan “rehabbing”; and (iii) annuity revenue from the sale of securitized, private student loan portfolios funded by PYT, and sourced and qualified via PYT’s platform. Purduent financial management will insure that we manage burn rate and loss with revenue growth. 

Sustained donations: PYT Funds has built a crowdfunding platform to help fund our services or provides support to our students by:

• Utilizing PYT’s crowdfunding platform as a tool to increase deposits, derisk our student loan products and build a loss reserve fund. 

• Grants will provide low to no cost capital so that we can redeploy grant capital to our target markets and grow our portfolio and keep it solvent.

• Venture Capital which will be used to expand our technology and obtain the certification as a CDFI (Community Development Financial) giving us great access to Community Reinvestment Act (CRA) funds from larger financial institutions. CRA dollars can be dispersed in a form of a loan, a grant or a venture capital. The benefit of this certification is to be eligible for the CRA pool of capital.

We have successfully raised grants, venture capitals, personal investment, and philanthropic donations. We have partnership and financial support from FIS (Fidelity National Information) which is the largest fintech company. FIS facilitates the movement of roughly $9 trillion through the processing of approximately 75 billion transactions in service to more than 20,000 clients around the globe. FIS’s support helps to validate our model and we are proud to be partnered with a letter of intent. We have raised money from social impact funds such as the Points of Light Foundation, an international nonprofit dedicated to engaging more people and resources in solving serious social problems through voluntary service, founded by former President George H.W. Bush. An endorsement of support from POLF yields additional support and validates our mission to support people. The Points of Light Foundation invested in our company and we were able to provide them with a return on their investment. We also have a host of angel investors and additional social investors who personally invest their money because their values align with PYT. 

Lastly, we have a small partnership with GS2 (a consumer finance company focused on student lending). This partnership allows us to receive a monetary payout based upon funded loans and the approval of loan applications. We have expanded our partnership with GS2 by providing collection services on the default loans. This helps us to strengthen our model and we project a break-even in 2021 to cover the monthly expenses we currently burn.

PYT is currently raising at least $500,000 to use a portion of the funds for operational costs and to continue to build the technology infrastructure. Raising funds for our venture will strengthen our Balance Sheet. A stronger Balance Sheet will provide a stronger financial position for our current CDFI (Community Development Fund) application that we have pending. Our application is not contingent upon successfully raising $500,000, but helps us to strengthen the application. The Balance Sheet also proves that PYT has enough capital to pay expenses to stay in the lending business. We can leverage some of the funding to get additional credit to potentially originate loans directly ourselves. Our long term goal is to become a financial institution which is certified by the federal government.

We want to make college affordable for all students who request it.  Obtaining the knowledge and learning the skills needed will help students to secure jobs and create a healthy economic lifestyle. The work that PYT is doing not only makes a social impact but also has venture capital opportunities. In order to make real social impact, PYT needs patient capital that will buy time to do the social impact work. Our products can make an impact on the U.S. economy both directly by helping students and indirectly ensuring students success by increasing graduation grade. Since Covid-19, it is forecasted that going to a 4-year university will decrease. Our education financial product will create a way to finance the future. This includes re-training and re-skilling American workforce, and PYT is a way to pay for the future and education is the key to the future. PYT’s financial products support their family goals and reimages the future workforce.

PYT is seeking help monitoring the performance of the fund. PYT is working to close additional partnerships with organizations in above industry to further capitalize the fund. Additionally, as the loan portfolio grows larger, PYT will seek help forming a connection with an investment bank to securitize the loans.    

We are seeking more opportunities to network with venture capitalists, schools, financial institutions, family offices, and technology companies. Therefore, in addition to the monetary award, the additional connections to the MIT sponsors would be helpful. We are seeking to connect with following companies for the following reasons. 

PYT would like to partner with IBM which is the leader of the blockchain. From a technology perspective, working with IBM will refine and polish our technology stack. The IBM connection can help to run a more refined platform using IBM Watson. 

We would like to work closer with more universities. We are requesting to connect with the MIT Financial Aid office to discuss how to help the school increase graduation and retention rate. We regconize that MIT has a strong retention and graduation rate.

MFS (Morgridge Family Foundation) is one key organization that we would like to connect and partner with. Family offices like MFS usually have donor advised funds, so we would like to start getting a warm introduction to more family offices. Philanthropic organizations value our Loanership product because the Loanership is the first ever credit building scholarship. This allows donor dollars to have greater impact. Also, donor-advised funds can be directed to the PYT company or PYT Foundation. Last but not least, PYT would like to partner with the Gary Community Investment Fund to raise additional venture capital, which is one of our priorities for 2021.