Meritize, Which Provides Merit-Based Education Loans, Raises $13.2 in Series A
By Henry Kronk
October 07, 2018
Securing funding for further education can be exceptionally difficult for learners with poor credit. What loans are available will typically carry a high interest rate. That marks a catch-22 for individuals hoping to advance their socioeconomic status with further education. The company Meritize thinks it has a solution. Based on factors like work history and military service, they offer loans for professional programs on a partial merit basis. On Wednesday, the company closed a Series A funding round to the tune of $13.2 million to help advance their work.
In addition to providing loans, the company operates the Skillsbuilding platform, which acts as a hub for students, educators and employers to connect, grow enrollment, and discover new talent.
Meritize loans require partnership and risk-sharing between individuals and educators and/or employers. All parties will have skin in the game. If a learner decides to leave the program or job financed by Meritize, they will be fully responsible for repaying the loan.
Meritize Looks Beyond Your FICO Score
Loan packages, furthermore, don’t look like what you’d see with the average shark. Variable and fixed interests rates currently range from 5.13% APR to 17.93% APR.
The company launched in January of 2017, quickly picking up seed funding of $6.8 million from a round led by Colchis Capital, who were joined by Chicago Ventures, Cube Financial Holdings, and others. Those same investors have signed on for the Series A and have been joined by Socratic Ventures, ZZ Ventures, ECMC Group, PC Squared, Meritize management, and others.
2018 has been good to the company so far. Institution partners accepting Meritize loans have increased 400% and cumulative growth in originations has been 250% between Q1 and Q3 of this year.
Funding will be used primarily for scaling up as interest gains steam. They will also continue to develop their platform, talent acquisition, and career services.
“We’re very pleased with the response from investors who share our commitment to expand funding for students across the credit spectrum and help employers close their skills gap,” said Meritize CEO Chris Keaveney in a statement. “It allows us to continue our mission to bring together smart students and quality skills-based training with a direct path to employment, and as a result, contribute to a healthy economy by building a more vibrant skilled workforce.”
A Low, but Promising Profile
The company has not received a good deal of scrutiny or spent much time in the public eye. Notable institutional partnerships have included Woz U, which has received its own healthy dose of scrutiny this week. That partnership should not necessarily reflect on Meritize as a company.
On Facebook, the lender has all of 2 ratings—one highly positive and one highly negative.
“Meritize states they take your academics into consideration,” writes Jeffrey Monterrosa. “Lies!! They solely base it off your credit. Don’t let them fool you into another inquiry against your credit. I applied with a cosigner making well over 150 k together and still got denied. Shame on you Meritize! Your [sic] not here to help students. You’re here for PROFIT!”
The company responded courteously: “Thank you for bringing your concerns to our attention and we’re so sorry things didn’t work out for you with a Meritize loan. It’s true that we include information from a person’s academic transcript in their credit evaluation – beyond just considering the FICO score. Including academic history can only help and cannot count against someone applying.”
The world of professional programs often moves faster than the U.S. Department of Education, and learners can’t use a federal loan to pay for every program. These unrecognized programs, however, may also be unknown to regulators, and the (often for-profit) professional training sector doesn’t have a spotless record by any means. Still, increasing access to education is usually good news.
Featured Image: Simon Abrams, Unsplash.
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