INDIANAPOLIS (WISH) — Student loan debt in the United States is close to reaching $1.5 trillion. If you’re one of the 44 million borrowers, maybe paying off your loan is a resolution you have for 2018.
Daybreak’s Nina Criscuolo tried out an iPhone app that claims to save people thousands of dollars in interest and years of payments. It’s called ChangEd and it uses your spare change from routine purchases to pay down student loans.
The app just launched in 2017, after Apple’s App Store featured the company in its “New apps we love” section.
It was created by Dan Stelmach and Nick Sky, two brothers in Chicago who partnered with developer Mike Land.
The app tracks each purchase through the bank accounts you link to it, rounding it up to the next dollar and transferring the money automatically for you. So, if you spend $2.95 on an iced tea, five-cents go to your ChangEd account. When the balance reaches $100, which is when the little squirrel on the app fills all the way up, the cash is sent to your student loan company by ChangEd.
The founders, who have a background in business, not app development, said they knew they were onto something big when they came up with the idea.
“We were very confident that we were building something that a lot of people need. We set up changed to be effortless to use and it runs in the background, so you can continue to live your life. Because you’re not going to stop spending, paying bills, and things like that, but if you sign up for ChangEd you can at least take care of your student loan debt without having to worry about it as much,” Sky said.
According to the Federal Reserve, the average college graduate from 2016 left school with more than $37,000 in debt. That can come with about $30,000 in interest over the life of a 25-year repayment plan. Using ChangEd, the company says a borrower who pays $50 extra each month could save up to $10,000 in interest and five years of payments.
WISH-TV’S Criscuolo downloaded the app at the beginning of November. It took about seven weeks for her to reach $100 in round-ups. The extra payment to her student loan shorted its life by 13.54 days, according to the app, which tracks the money and time saved for users.
The app is free in the apple iTunes store. ChangEd is compatible with most banks. You can also link credit cards to the app. The company does charge users a $1 monthly fee.
Sky said an expansion is in the works that would allow friends and family to have their spare change applied to paying down the loans of others.