Once paralyzed by student loans, this entrepreneur is helping others manage their debt

With diplomas from prestigious universities in hand, Bobby Matson and his wife Nicolle were flying high after graduation.

But within a few years, they watched the life plans they’d sketched out slowly fade as they became paralyzed by the $200,000 debt they racked up to get through college.

Despite finding well-paid jobs in Los Angeles, they were forced to scrimp each month to meet their hefty student loan and credit card repayments.

“We didn’t really think we could afford a home or have kids, because we just didn’t know what that would mean financially for us,” says Matson, who studied business at the University of Michigan, while Nicolle majored in fine arts and multimedia design at Northeastern University in Boston.

The Matsons found themselves in good company. Despite the Biden administration’s moves to forgive a slice of the outstanding $1.7 trillion federal student debt, 43 million Americans now owe an average of $38,000 on their loans. This includes many people over 60 who took on loans to help their kids through college. The crisis also threatens to deepen racial inequality as Black students on average incur more debt than white students.

“It’s an issue for basically any American,” Matson says. “It affects almost every generation.”

Determined to make their repayments more palatable, Matson started using the skills he had honed as a software engineer to codify the complex federal student loan rules and see how the couple could switch to more affordable plans that are tied to income and come with federal interest subsidies.

As he heard from more friends with debt concerns — particularly medical doctors grappling with loans of up to $600,000 — he saw an opportunity to build a business to help others like him.

“When you’ve got thousands of dollars a month going to student debt and private debt, it’s easy to put your head in the sand, but you have to make hard choices as a consumer,” says Matson, who is now 36.

In 2017, he launched Payitoff, a white-label solution that provides banks and fintechs, including Earnest, LendKey and U.S. Bank, with the technology to help people manage student loans and other debt.

Built on online banking technology, Payitoff can be embedded into fintech and banking platforms to provide clients with a 360-degree picture of their financial profile. It works by asking them to enter their phone number and to link their federal and private student loans to the app, along with any other debt, through open banking, which allows consumers to securely share their financial data with third parties.

Payitoff’s tech can then analyze their financial position and their eligibility for various plans. Most users can save about $300 a month by moving to a new federal student loan plan, Matson explains.

And the benefits can be life-changing. Reducing monthly debt repayments can improve credit scores and give people a better chance of getting mortgages to buy homes or loans to launch businesses.

“Our special sauce is pre-simulating all these scenarios and personalizing it to the consumer and what they need,” he says.

Since its launch, Payitoff has grown to a 20-strong team helping thousands reshape their debt. In June, the company joined Mastercard’s Start Path Open Banking and Embedded Finance startup engagement program, designed to support and collaborate with fintechs to democratize financial services while keeping consumers in control of their data.

Given that just a small percentage of tech startups survive their first few years, Matson advises fellow entrepreneurs to quickly determine whether their concepts can drive revenue, as well as stay flexible enough to adapt to inevitable challenges.

For instance, when federal student loan payments were paused during the pandemic, Matson managed to flip the crisis into an opportunity by providing his customers with extra guidance to manage the situation.

“It did slow down the commercial operation in the short term, but then we knew the long-term opportunity was huge, because the reality is the debt management issue wasn’t going away,” he says.

Meanwhile, the Matsons have navigated the student loan system well enough to realize their own dreams of putting down roots.

“We saved thousands of dollars a year. And now we have two kids in the house we own,” Matson says. “We’re the walking testimony of how all this tech works.”