Average student debt post-law school graduation is well above $100K. Lending is highly fragmented and rates are not transparent for students. There are too many options and too few sources of reliable advice. Alone, students have no leverage to negotiate rates. But together, they can force lenders to compete for their debt and offer lower rates.
This means that for many people, private loans can be a better deal than higher-priced federal loans.
The Solution: Power in Numbers
The bigger the group, the lower the rates. Last year, the average loan of the over 700-member LeverEdge negotiating team was $60,000. Banks competed for the account; LeverEdge successfully negotiated a fixed rate of 5.2 percent with no origination fee (vs. the federal rate — up to 7.6 percent with a four percent plus origination fee). The result?
The average student saved over $8,000. The LeverEdge team helped students get loans totaling over $25M at low interest rates. Students saved more than $3.3M compared to federal options.
The AHA Moment
LeverEdge founders Nikhil Agarwal, HBS ’20 and Chris Abkarians, HBS ’20 faced $218,000 in student debt upon their acceptance to Harvard Business School. Frustrated by the high loan rates and lack of options, they created a Facebook group to see if other MBA students wanted to band together to negotiate for better loan rates. They created an amortization calculator in a Microsoft Excel spreadsheet so that students could compare federal and private loans.
Agarwal and Abkarians worked hard to get better deals for group members. “We both had full-time jobs,” says Agarwal, who was working as an engineer for Boeing. “But we made calls, walked into banks, interviewed lenders, and learned how to negotiate with confidence to get better deals for our members.”
“Students know so little about financing their education,” says Abkarians, a manager at Netflix, noting the irony that many of these students in business and law schools would end up making careers out of negotiating. “They accept whatever terms the banks offer. It’s their money and their future. It’s time students took back power and control over their financial futures.”At […]