Online Bank Will “Crush” Student Loan Debt
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UPDATED: Apr 10, 2012
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A rising online bank claims it will crush student loan debt through its new reward program.
The online bank is called SmarterBank, which was created by the financial aid firm SimpleTuition.
SmarterBank is offering free checking accounts, free debit cards, ATM access at 40,000 locations, and online bill pay services. But the really interesting offer from the online bank is a program called SmarterBucks, which lets users accrue rewards through normal spending. The rewards can then be put towards existing student loan debt.
“Total student loan debt currently stands at $1 trillion and growing,” said Kevin Walker, co-founder and CEO of SimpleTuition, in a statement. “Add to that a poor job market and it paints a challenging picture for graduates and our society as a whole. We built Smarterbank as a revolutionary way for students and graduates to start chipping away at their student debt.”
Those enrolled in the SmarterBucks program will find themselves earning rewards dependent upon how much they spend. They will earn:
- 0.5 percent back for purchases up to $100
- 1 percent back for single purchases over $100
- 5 percent back for certain offers
Over the course of normal spending, wherein groceries, gas, and entertainment are purchased every week, students and graduates can start to see their SmartBucks accounts grow in size. That money can then be diverted to student loan payments.
Additionally, family and friends can also contribute to an individual’s SmarterBucks account.
The bank claims that paying a mere $10 extra a month on a 10-year, $8,500 student loan at 6.8 percent interest can save a borrower up to $1,500 in interest and cut the term down by 16 months.
If a borrower makes extra payments of $50 a month, they can reduce their term by 51 months, and save up to $5,000 in interest.
The SmarterBucks program allows borrowers who typically don’t have any extra money to put towards their student loan to earn extra money meant for exactly that.