Co-founded in 2019 by Tomas Campos and Tushar Vaish, Spinwheel is an American startup company that developed a student loan debt management software to help people manage their loans and expedite paying them off. The business has the mission of making debt easier to manage through its application programming interfaces (APIs) that embed loan management tools into apps people use.
Campos stated to Crunchbase News that the company was founded after his sister was denied student debt forgiveness and was forced to take her entire savings to pay down her debt.
According to the startup, student loan debt is the number one financial concern of millennials. Additionally, the company claims 50% of American households have student debt. Americans reportedly owed more than $1.7 trillion in debt in quarter three of 2020 compared to $845 billion owed in quarter three of 2010 — a 102% increase in the last decade.
The business announced it raised $11 million in its first round of financing led by QED Investors. Core Innovation Capital, Fika Ventures, and Firebolt Ventures also participated in this round.
Arjan Shutte, founder and managing partner of Core Innovation Capital, said in a statement, “Financial services are complicated, and Tomas and Tushar have an extraordinary motive for getting up in the morning. We were moved by what we felt was an authentic story and reason to chip away at student debt.”
With the new capital, the startup company plans to scale its product roadmap and double its team. In addition, the business will explore other categories such as auto, credit card, and mortgage in the next 12 months.
Spinwheel Business Competitors
Spinwheel is one of many new startup companies that are looking to help Americans alleviate their current or potential student debt. Startup Savant reported that Backer, an education savings business that allows families to save money for their children’s future education, raised $8.4 million in April.
Other fintech companies like SoFi, Goodly, and FutureFuel.io have worked to make an impact on the student debt crisis. Goodly offers student loan repayment as an employee benefit. FutureFuel.io provides financial institutions and employers with digital tools to aid in eliminating student debt.
Student Debt Crisis
The student debt crisis in the United States (US) is in the trillions of dollars. This crisis affects approximately 44.7 million Americans who carry student debt. Furthermore, prior to the COVID-19 pandemic, roughly 11% of student loans were 90 days or more delinquent or in default. Loan delinquency refers to the period of time before a default occurs after borrowers fail to make loan payments.
In March 2020, former President Trump passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) as part of a COVID-19 relief measure. After the subsequent passing of the law, student loan payments were suspended and continue to be to date. Default collections have also halted, and 0% interest is being charged on student loans. Student loan forbearance is in effect until September 2021.
About the Author
McKenzie Carpenter is a graduate of Central Michigan University with a B.A.A. in Integrative Public Relations and French. McKenzie has previously worked for small businesses and nonprofit organizations.