Education as an Investment: Private Education Lending with Angela Galardi Ceresnie

One of the many beautiful aspects of the fintech industry is its ability to allow founders to leverage their own personal convictions alongside innovative financial vehicles.  In this respect, Angela Galardi Ceresnie typifies the courage demanded of the modern founder, placing herself front and center behind the fight for education accessibility.

Angela is the current CEO and former COO at Climb Credit.  As a firm specializing in education finance, Climb provides its clients with access to educational programs that increase their earning potential through proven, data-driven academic programming.  Unlike other private lenders, Climb works directly with its partner institutions to ensure students attain high returns on the academic programs they choose to attend.  By taking a deeply individualized and statistical approach, Climb is helping its graduates reach their financial goals and challenging the necessity of the traditional 4-year university approach.

Read on as I sit down with Angela and learn more about her journey into fintech and her passion for education...

DO: You come from a background in risk management and have a degree in engineering.  You’ve also been a successful founder before, most recently at Orchard Platform, which just sold to Kabbage. How have you translated your previous founding experience and engineering background into your work as the COO at Climb?

AC: My background in risk management at Citi and American Express flowed really well into my role at Orchard as a founder.  For those who haven’t heard of it, Orchard is essentially an analytical toolset offered to institutional investors that can be used to buy loans from marketplace lenders.  Given my background in risk, Orchard gave me the opportunity to develop a lot of the tools we used to run in our analyses.

As our company scaled, my role evolved from making the models to managing multiple teams within the organization.  As an executive, I discovered a passion for leveraging my analytical skills to manage our day-to-day operations.  Instead of focusing on our loan data and buying strategies, I began to focus on creating infrastructure that would best serve our organization as a whole.  I dealt with questions like how do we create better infrastructure for division building and strategic planning?  I looked at our marketing efforts from an analytical perspective, running return analyses on the avenues we were investing in.  I even began looking at our client relationships from an ROI perspective.  The framework I learned working in risk management applied well to larger business questions at Orchard.

With respect to engineering, my job at American Express came more so from a regional interest.  During my senior year, I decided that I really wanted to spend my time after undergrad in New York.  Unfortunately, most companies interviewing engineering students at the University of Michigan were located in Chicago.  American Express was one of the only firms interviewing that were based in New York.  When I got the job and had a chance to meet the team, I knew it was the place for me.

DO: How would you define Climb Credit’s mission, and how does it differ from other student loan providers like SoFi?

AC: The major difference between Climb and businesses in education finance is that we are the first point of sale education finance company.  We work directly with data given to us by the admissions teams at our partner schools to keep their costs down for high-impact programming, otherwise known as academic courses that lead directly to employment for their students.  Some examples of really successful programming we support include truck driving and computer coding.  Essentially, we are a financing option that aligns the interests of students, schools, and investors.

Our mission is to expand access to quality education through financing educational opportunities that our students otherwise would not have had.  Applying for a loan takes less than 5 minutes, and about 73% of the students that we finance report they wouldn’t have been able to attend their given program without a Climb loan.

To protect our students, we only partner with quality educators that offer programs with significant benefits.  We define that by calculating an ROI for every one of our partner programs using internal data from schools and external information we have access to.  We use the data to run cash flow analyses that compare a student who did the program versus the same student who didn’t.  If the ROI is positive, we know it’s a program that shares our mission.

Currently, we work with a wide variety of new for-profit institutions.  Many of the programs are focused on modern technology and innovation, things like coding bootcamps and financial accountability.  Our partner schools have become so effective that they’re now challenging non-profit schools to improve.  If a student can get an online Master’s in Education through American College of Education for $8,000, it will make them question if they really need to spend $30,000+ at the University of XYZ.

DO: One thing really unique about Climb Credit is that you believe education should be treated like an investment with a given return.  Can you explain more about how you define ROI as it pertains to educational outcomes?

AC: Of course!  Thanks to the data we receive from our schools, we’re able to accurately calculate the return that each student gets from their education.  To do so, we look at the amount of money the student was making before the program, the length of the program itself (during which time the students has no earnings), the graduation rate, the job placement rate, and the expected salary on the back end.  I think the best way to explain our calculation would be through a pretty common example from the truck driving sector.

Most people looking to become truck drivers have at least a high school degree, which statistically puts them at an income level of approximately $20,000 per year.  A truck driving program costs between $5,000-6,000 for a 6-week program and, upon graduation, an entry level driving job earns you $43,000 on the low end.  There’s currently a large shortage of truck drivers in the United States, and it is relatively easy to find a job in your first year with a certification.

Looking at this example alone, you can see that our student has made a ridiculous return.

DO: As a college graduate yourself, do you share any special connection to Climb’s educational mission?

AG: Absolutely.  I grew up in Ann Arbor, Michigan, in a family of educators.  My father was actually the principal of my high school, and my brother currently works in the education sector.  Having my father as the principal was painful at times, but it also made me aware of the benefits a good education would bring me throughout my life.  I was not allowed to miss a day of school, even for vacations.  It was instilled within me that education was going to be a very important part of my life

After high school, I attended the University of Michigan close to home.  Regardless, I always questioned that my life experience was the only path.  I always agreed with my family that an education was crucial, but I disagreed with the one-size-fits-all approach of attending a traditional 4-year research university.

I look at my own life as the perfect example.  Starting my first company Orchard was an incredible learning experience.  That was my MBA, and it taught me skills and lessons in much the same way a business degree might.

At Climb, I want to make sure the paths that are less obvious are still made available to people.  Someone’s credit and financial history should not inhibit them from being able to get the education they need to succeed.

DO: You’ve raised a significant series A in 2017.  How have you deployed that capital to date, and can you speak to some of the positive growth signals you’ve seen so far?

AG: We finished our series A last year totaling $6 million.  Our main investment right now is in our people.  We have a decently sized engineering team, and technology continues to be a huge competitive advantage for us.  Like I mentioned before, Climb is deeply integrated with the admissions processes at our partner schools.  This makes it much easier for students to find us directly and get a loan for their desired program.

The other place where we’ve deployed a lot of capital is on the sales and revenue side.  We’ve spent energy shoring up our marketing team to be able to effectively talk to the market.  Our sales and partner success teams play a critical role in bringing in new schools and managing our relationships.  It is crucial that they present Climb in the most effective way possible to schools so that we bring in institutions that share our mission of serving students.

Our growth has been huge.  We brought in 18 schools in our first couple months and have continued to invest in new types of programs.  We’re currently growing originations by 60-70% YOY, which I feel is  the perfect sweet spot for us.  It allows us to toe the line between high growth and measured risk.

DO: What does your customer acquisition model currently look like?

AG: Great question.  One of the special things about Climb is that our cost of acquisition is very low.  We interface directly with schools and bring them on as partners once they prove the effectiveness of their programs.  Then, the schools themselves are responsible for bringing the students to us.  We teach the admissions teams how loans at Climb work and show them how to explain our mission to their prospective students, but the growth that we see is not linear.

Additionally, we will occasionally run vertical campaigns that are industry-specific.  For example, if we work with a school offering an amazing welding program, we might run a welding campaign to try to identify interested parties in specific geographies.  In general, this is something that we test into since it’s pretty targeted.  Of course, we also have initiatives that re-target people who visit our website and show them ads on Facebook.  We focus on re-targeting, not just targeting.

DO: Loans from the federal government currently constitute around 90% ($95-100 billion) of all education loans, as compared to around 8-10% ($7-9 billion) by private lenders.  This is largely due to the rampant accessibility of federal loans that are carelessly funded and defaulted on with tax dollars.  How does Climb Credit compete with such a large institution that isn’t even playing with its own money?

AG: Title IV regulations are the main reason why Climb loans are an attractive alternative to federal funding.  Schools that fall under Title IV have to jump through a lot of administrative hurdles.  A lot of the regulations make sense, including the need to accredited.  Others are a lot more bureaucratic.  They end up costing a lot of money and complicating the process for universities and students.

With for-profit institutions, there is also a 90/10 rule that prevents them from receiving more than 90% of their revenues from the Department of Education Title IV federal student aid.  If for-profit schools decide to keep their tuition low, students can tend to over-borrow in amounts higher than the cost of their education.  The school then needs to figure out how to maintain their 90/10 ratio without curbing student borrowing.

At Climb, we’re able to offer a similar product to the one that students get from federal government.  We offer a financing option that every student can qualify for while also helping schools keep their costs low.

DO: If you could model yourself after one founder or leader in the fintech industry, who would it be?

AC: When I look around the fintech industry, I’ve noticed that a lot of the women are in operational roles.  Something I’ve really come to admire is when a leader or founder is able to take strong position on an idea or belief and put themselves front and center behind it.  Sallie Krawcheck is great example.  As the CEO and co-founder of Ellevest, she truly stands behind her company and believes in its mission.

In Closing:

Founding a private lending firm is a lofty goal, especially considering the overwhelming protective benefits provided to competitors that include the federal government.  Despite such challenges, Angela and her team at Climb have managed to create a business that successfully balances their own financial health alongside their ongoing goal to provide students with access to educational programming.  It is truly amazing to see the life-changing returns that students have managed to attain through programs funded by Climb, and we here at SIC look forward to seeing the continued positive impact of their lending.

Thank you to Angela and the Climb team for taking the time to speak with us at Simple Innovative Change!