Student loan debt in the U.S. was $1.3 trillion in 2017, yet many borrowers aren’t even aware of how much or to whom they owe money, according to Dough, a student startup focused on taking the mystery out of student loans.
Dough was founded by U-M graduate students Catalina Kaiyoorawongs and Yahya Bajwa after they received a University of Michigan DOW Sustainability Fellows grant, which supports student-led projects that that foster sustainability at the local, regional, national or global levels.
“Our goal is to see default decrease,” Kaiyoorawongs said. “Dough is a personalized and simplified educational platform that aims at reducing student loan default. It’s a web and mobile platform. We don’t want students to have to download anything, because it’s just another barrier.”
Dough will send enrolled students text messages with information, links to videos teaching them financial skills and sticky messages alerting them to new tutorials posted.
Creating a project about financial literacy had been Kaiyoorawongs’s goal from the start, and after finding out about another U-M competition, Innovation in Action, she asked members of her DOW team to join her in moving the project forward.
Dough won U-M’s Innovation in Action competition in the Education category in March, and will receive a $50,000 equity investment from Kyyba Innovations after winning the Detroit Fintech Challenge on April 7.
Loan default occurs when a former student fails to pay on a federal student loan. According to the U.S. Department of Education, the national default rate was 11.5 percent for students in fiscal year 2014, increasing from fiscal year 2013’s rate of 11.3 percent.
Bajwa and Kaiyoorawongs iterated through several ideas and participated in round table discussions with other students from Innovation in Action. They presented different solutions to and allowed peers to pick their favorite concept for Dough.
Initially, the team thought of creating a budgeting app, but IIA had them focus on the problem instead of the solution. What they found was that students lacked the ability understand how loan decisions would impact their future finances.
“We interviewed undergraduate seniors here and they didn’t even know what their loans were or who their lenders were,” Bajwa said. “Students are just relying on the brand of the University of Michigan to get a good job.”
Bajwa and Kaiyoorawongs noticed that many budgeting apps still drive consumption by offering consumers coupons or special deals. Instead of facilitating consumption, they hope to influence student saving habits and provide more financial information, specifically the maximum amount of debt that is safe to borrow.
“We don’t define financial literacy as a part of basic literacy that children need,” Kaiyooragwongs said. “They can count and read, but financial literacy isn’t considered what’s part of literacy. We need to redefine what literacy means.”
Bajwa and Kaiyoorawongs would like to continue working on their innovation post-graduation but are still looking for financial funding.
“I’d love to be able to get enough support so that I can viably transition after graduation into working on this,” Kaiyoorawongs said. “I’ve always seen myself as an entrepreneur, even when I was in the nonprofit space I was starting up initiatives. I naturally just like to engage. I think Dough fulfills my personal desires and personality.”
The team hopes Dough will be completely functioning within the next three years, with 40 to 50 universities using it as the front end of their financial aid system, Yahya said.
Bajwa and Kaiyoorawongs hope to make an impact not just at U-M, but at other local colleges as well, such as Washtenaw Community College, Wayne State University and more.
“Ultimately, we’d like to create an education platform that transforms the way students understand their financial well-being. They should be aware of their finances, and need to know this information to be empowered agents of their future. They can’t do it without financial literacy.”
