Leaders In Lending
How Climb Credit Is Creating The Finance Layer For Reskilling America
February 16, 2021
One news nugget you might have missed in 2020 was this milestone reached: Americans’ student loan balances had finally nosed past credit cards to become the second-largest chunk of household debt. Student borrowing has doubled in the last ten years, from $845 billion in 2010 to $1.7 trillion today, according to the Federal Reserve.
Is this a concern? Ask people in their 20s and 30s. Heck, ask people in their 40s. A 2019 Brandeis University study found that 51% of white student-loan holders and 74% of Black student borrowers still have debt 20 years after they started college. There are many solutions to the student debt burden, but one for sure is to expand access to college alternatives such as trade schools and skills certification programs. A six-month coding boot camp can make a real difference in someone’s income and eventually lead to a career.
For these programs, Climb Credit is angling to become the payments and lending partner of choice. In the latest episode of Zest AI’s Leaders In Lending series, we sat down with the CEO of Climb Credit Angela Ceresnie to talk about how the NYC company is bringing real payment alternatives to programs and students outside the debt-ridden and inflationary mainstream of higher education.
Climb has already stitched together a network of more than 250 training schools and certification programs where it serves as the financing partner who offers incoming students ways to pay that fit best for them: cash, loan, or installments.
Angela has spent her career in finance, first as an underwriting analyst at American Express and Citi. After the 2008 recession, she went into the fintech world, joining a startup called Orchard that aimed to create institutional investment products in marketplace lending as that sector was taking off in the early 2010s. She joined Climb in 2016 and became CEO in 2018.
An outcomes-based approach to student lending
Climb flips the trading student lending model on its head -- scrutinizing the schools as much as the borrowers to ensure the programs lead to good financial outcomes. It’s an innovative approach worth watching because it provides a real solution to the problem instead of making it worse.
“We turn schools away for all types of reasons,” says Ceresnie, some having to do with inferior outcomes or complaints. Climb wants students to be satisfied with the education they're paying for (shocking). Once Climb’s underwriters feel confident the outcomes are there, they analyze the stats to predict graduates' income coming out of that program. One of its core underwriting metrics is this “future debt to future income,” which captures larger, important factors such as affordability and earnings power.
Climb is always looking for new ways to improve its models, and one promising area is using machine learning to build models out of a bigger set of existing credit bureau data to approve more people safely while reducing disparate impact. But Ceresnie makes clear that any innovative underwriting techniques have to set a higher standard of fairness. "If machine learning is reducing access or increasing disparate impact, then it doesn't have a place I think with Climb, but as we think about introducing it, those would be the two levers that we would want to be pulling to be more innovative around our underwriting model."
Climb’s own results have been impressive: Graduation rates for its programs are over 90%, far higher than the typical 60% graduation rate for four-year colleges. Its partner programs’ job placement rates tend to be in the 70%-75% range. And of those people who get a job, more than 70% are earning more money than they were before. “We're always working to get those numbers to 100%, 100%, 100%,” says Ceresnie. “But I feel really proud of those numbers and the work that we've done, and every learner that we've supported through their educational process. I'm proud of them."