Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Feb 1, 2013

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Get ready for a curveball in the student debt crisis.

Upstart, a new company founded by Dave Girouard, the former President of Google Enterprise, is ready to offer indebted students a chance to shuck off their burdensome debt.

However, they aren’t offering refinancing for college loans. Rather, Upstart is offering to give money to indebted students and grads in exchange for those recipients buckling down and pursuing their dreams.

The way Upstart works is by having “backers” pool their funds and give this money to an “upstart.” These “upstarts” are usually recent graduates that are saddled with student debt, yet have a vision in their minds. Some of these young minds wish to become entrepreneurs, while others seek to be artists, writers and innovators.

However, the massive student debt crisis counts these young minds as its victims. Shackled by debt payments, these young people have little time to focus on their dreams while they are so desperately clinging onto jobs in the corporate “rat race” to pay off their debt.

Upstart aims to shatter this blunting of entrepreneurial drive.

According to a post on Upstart’s blog, MBA students shy away from the entrepreneurial path and instead pursue the far safer road of climbing the corporate ladder. The post cites a 2009 study on income for entrepreneurs and found they earn roughly 50 percent more than employees stuck in corporate America. Eager to see a new wave of entrepreneurs change the world, Upstart aims to give young entrepreneurial minds a helping handful of cash that can get them started on their project of choice.

When “upstarts” receive funding from “backers” it is not in the form of a loan that must be repaid in monthly payments . Rather, the “upstart” gives the “backers” a small portion of their income for 10 years. This portion is capped at seven percent of their income.

According to a interview with David Templeton, Head of Media Relations for Upstart, most “upstarts” borrow $20,000 to $30,000, while paying 3 to 4 percent of their income to their backers.

Despite being a product of Silicon Valley’s brightest minds, Upstart isn’t solely for the nation’s elite that graduate from Ivy League schools.

“We have quite a diverse group of upstarts, even at this early stage. Upstart is open to grads (or soon-to-be grads) from any school in the US, provided they have residence in a state where we operate,” said founder Dave Girouard in an interview with

Upstart understands that not all initial business ventures prove successful, despite the potential mentoring from “backers.”

 “When you earn little or nothing, you pay nothing, which we believe is a primary benefit of Upstart. For any year that a funded upstart’s total income is less than $30,000 there is no payment required. But 10 year payment term will be extended by one additional year, up to a maximum of 15 years. In any case, the upstart never pays more than the agreed-upon share of income earned,” said Girouard.

Girouard continued to explain that Upstart would work with an “upstart” to bring their account current but in the event that isn’t possible it would convert payment obligations into a loan with a fixed rate and term.

In the event that an “upstart” wishes to pay off their backers, he or she would have to repay five times the amount that they received. Once an upstart has paid back this amount, minus previous repayments, their obligation will be completed.

While Upstart thus far only has several dozen “upstarts,” it remains to be seen just how eager many young grads will see their college loans paid off through this new form of business funding.