Lifting the burden of student debt

By Caroline Beaulieu

There are more than 40 million Americans with student debt – that’s roughly one in eight people. Together they owe nearly $1.3 trillion in student debt. But the student debt “crisis” is not about numbers; it’s about people. These people are the beating heart of Fidelity and the raison d’être for Fidelity Labs. Student debt affects the livelihoods and opportunities of Fidelity employees and customers. Student debt forces borrowers to make tough financial choices: save for retirement or pay down student debt, buy a home or pay down student debt, get married or pay down student debt. Those decisions don’t just affect their futures; they affect Fidelity’s.

So instead of walking away, we dug in. We took time to understand what the problem really was. Why is there so much debt? Why are people struggling to repay their loans? Who are the players? What resources do borrowers have available? This discovery process put a face to a problem—many faces, in fact. Our assumptions about the who and why were challenged and changed. Where once there was a generic problem, there were now real people with real concerns about their futures.

Gaps between loans, options

After synthesizing the incredible amount of information and data we’d gathered, obvious patterns emerged. It became clear that the problem didn’t begin and end with debt, but the debt was the most urgent problem. Consistently our research was highlighting a lack of knowledge and understanding about how student debt works, what options are available to borrowers, and how the particulars of individual loans can and should affect decision-making. It was clear that we needed to build something that helped users bridge the information gaps between their loans and their options.

The advantage Labs has over traditional startups when building a new product is resources, though not just financial resources. The diversity of talent under one roof (even if that’s a virtual roof) makes it possible to spin up multifunctional teams quickly. We needed development, product design and strategy, as well as legal and mathematical expertise to build out the complicated calculators necessary to handle the algorithms. All of those things had to come together seamlessly so that the user experience was simple, despite the insanely complicated math happening behind the scenes.

In less than six months, we’d built, tested, and released the beta of our Student Debt Tool. Fortunately perfection was not the goal, because it was far from perfect. But learning was. And only by building it and getting it out “in the wild” could we test it with real people—and find out if it was working. If we were going to fail, we wanted to know as quickly as possible.

Making a difference

So far, we haven’t failed. In the six months since our beta launch, we’ve moved into pilot with a number of partners. These pilots provide our team with the feedback necessary to iterate on the product and develop new insights. We’re also part of the White House Debt Challenge – joining a diverse community of organizations helping borrowers manage student debt.

We haven’t solved the student debt crisis, but in less than a year, we’ve made a difference. Our experiments have shown the company that student debt is a problem worth focusing on, a problem that Fidelity can solve. At the end of the day, that’s what Fidelity Labs does. We push the organization to see new opportunities in unexpected places.