Student Loanership

We are committed to finding innovative solutions in the higher education space to fill funding gaps that financial burden contributes to the student drop-out problem.  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 person’s 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 positively impact the American economy by funding more American graduates and lowering the default ratio. 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.

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 that 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 enable 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. We are building "LOANERSHIP " a financial model which is a credit-building scholarship tool in which a student agrees to pay a percentage of their future income for a set period of time in exchange for funding their education. This model can help align the interests of students and lenders, as the lender only earns a return if the student is successful. Currently, most student loans are underwritten based on credit scores and income. However, this can exclude many students who don't have a credit history or come from low-income backgrounds. Alternative criteria, such as academic achievement or potential future earnings, could be used to expand access to student loans. Many borrowers especially people of color struggle with high interest rates on their student loans. Offering refinancing options, either through the government or private lenders, could help borrowers reduce their monthly payments and overall debt burden. Offering more flexible repayment options, such as income-driven repayment plans or deferment options, could help borrowers avoid default and manage their debt more effectively.Providing more comprehensive financial education to students could help them make more informed decisions about their loans and manage their debt more effectively.

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 the 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 to 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 many students all over the U.S. are struggling to stay in school let alone 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 loans 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.

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

2O000+

The private student loan space is not currently structured to help the underserved, under-banked community get access to capital and students are feeling strapped 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 solution is not just unique but also impactful which further aligns with Solve's vision of "Solution to worlds problem".  

Our flagship product, Loanership, has been granted a licensed trademark by the USPTO, recognizing its uniqueness in the financial services market. As the first company to offer this type of service, we differentiate ourselves by creating a credit-builder scholarship. Our platform stands out from others by combining crowdfunded dollars with alternative data to assist underserved communities.
The private student loan market is not accessible to everyone, particularly women and people of color who may lack collateral, credit, or a co-signer. Our competitors often overlook the segments of the market that we serve due to the high-risk nature of lending and low paid-back percentage. This creates an additional obstacle for minority students who require financial aid to continue their education. PYT provides an alternative to students who are ineligible for traditional funding or have exhausted their options.
At PYT, we prioritize the needs of students and have interns who can attest to our commitment to serving them. Our company revolves around students, and our internship program reflects that belief. We aim to create a model that is designed by students for students. Please visit https://www.gopyt.com/fubu to see a list of our current and former interns.

Our strategic objective is to foster innovation and prioritize community reinvestment in the higher education finance sector. We plan to achieve this by becoming a CDFI (Community Development Fund) and partnering with at least one bank to fund our PYT product using the PYT scoring model. Furthermore, we aim to expand our partnership with our current lending partner to provide loan forgiveness.
After conducting a one-year pilot program with a bank partner and originating over $5 million in loan/scholarship products, we intend to begin a strategic nationwide rollout. Initially, we will expand north and south of the east coast region, growing our fund from $5 million to $25 million, $50 million, and eventually $100 million, with the goal of serving over 300,000 families across the country. When the timing is right and we have proven our success, we plan to engage with Department of Education officials to gain further support for our innovation.
We have a grassroots plan in place to engage with financial aid officers and administrators to raise awareness of our product and support innovative debt reduction programs for students from low to middle-income areas. To directly target financial aid offices, we use online digital ad marketing. We also have a comprehensive list of over 10,000 contacts, including schools and banks, to help us implement our digital marketing strategy.

1. Pilot Program Success: One way to measure progress is to evaluate the success of the pilot program with the bank partner. This could include tracking the number of loan/scholarship products originating, the repayment rates, and the impact on the borrowers' credit scores.

2. Fund Growth: Another way to measure progress is to track the growth of the fund from $5 million to $25 million, $50 million, and $100 million, as well as the number of families served as the fund grows.

3. Nationwide Rollout: The success of the nationwide rollout can also be tracked by evaluating the number of families served and the repayment rates. It would be important to track whether the product is making a significant impact in the communities it serves.

4. Government Support: Progress towards gaining government support can be measured by tracking the number of meetings or engagements with Department of Education officials and the level of support received from them.

5. Grassroots Outreach: The impact of grassroots outreach can be measured by tracking the number of financial aid officers and administrators who are aware of the product and the number of schools and banks that are engaged in the digital marketing strategy. This can help to evaluate the effectiveness of the outreach efforts in raising awareness about the product and its benefits.

The private student loan market is not designed to assist the underprivileged and underbanked communities in obtaining funding, resulting in students being burdened by student loan debt. Federal policies and decision-making directly impact college tuition costs, and the current government financial aid is insufficient to cover higher education expenses, leaving a funding gap that private student loans fill. However, the private student loan market typically excludes clients with a credit score of 700 and below.

PYT offers a unique predictive lending process that combines crowdfunding and alternative social and predictive data with traditional lending processes to identify the best students and mitigate loan risks. The company's next objective is to become a certified CDFI (community development fund) to serve this emerging underserved market and address a significant problem. Once certified, PYT aims to innovate and find solutions to student loan debt. The company's certification and scoring process set it apart from competitors.

Furthermore, PYT provides a workforce development tool that empowers students to showcase the essential professional traits necessary to market and negotiate their first starting salary after graduation. This unique feature distinguishes PYT as the only financial solution that supports students in this way.

The Loanership™ is designed to transform the negative experience of unpaid tuition fees into a positive one by offering economic incentives to students who complete their studies and secure employment. Initially, the Loanership is a loan, but eligible students can apply for a grant or scholarship that can be used to pay off the PYT loan by fulfilling their degree requirements and other predetermined goals related to academic progress and future employment.
We think that this financial product and structure will disrupt the higher education finance market. By forming private-public partnerships, we can mobilize capital that will prompt positive consumer behavior for those seeking education in underserved communities. We collaborate with pro-bono consulting firms to develop pay-for-success initiatives and cultivate a community of social finance groups who believe in this problem and solution. This combination of factors enables us to close the funding gap and ease the debt burden for families who need additional financing to pursue higher education.
The Department of Education and the Department of Labor are ideal government partners. By investing in this product and financial vehicle through program-related investments and bank Community Reinvestment Act dollars, they can provide indirect support.

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 hyper-ledger 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 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 a light on “credit invisible” students by providing transparency and applying value to students with unknown credit risks. Also, we partner with mentoring organizations for customer acquisition and referral of applicants. Additional funding to invest in cyber security is a key priority of PYT to ensure the security of our customers.

PYT strongly believes in Diversity, Equity, and Inclusion as it is a female-founded, minority, LGBT+ organization led by a service-connected disabled US Army Veteran. Our team represents a diverse community with over 90% of our organization being diverse and consisting of individuals from different socio-economic backgrounds. Although we are a startup, every team member has over 20 years of banking experience. Our products are not designed to serve any particular community of color exclusively, but rather through our years of experience in the industry, we have found that minorities frequently meet the requirements and face the issues that we are trying to address. Our company is built upon minorities and our products serve the needs of those minorities.

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 ensure 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 provide 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 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 venture capital. The benefit of this certification is to be eligible for the CRA pool of capital

PYT Funds has built a crowdfunding platform to help fund our services or provide 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 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 venture capital. The benefit of this certification is to be eligible for the CRA pool of capita

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 that is certified by the federal government.

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