To help more students receive a higher education, Chicago startup A.M. Money is making it easier for students from low and middle-income backgrounds to get approved for loans that help pay for college.
The company, founded in 2017 by Daniel Rogers and Jeffrey Wright, provides loans for both undergraduate and graduate students, and uses unconventional factors to decide whether students qualify for a loan.
Unlike other lenders, A.M. Money doesn’t require student borrowers to have good or substantial credit, nor does it require them to have cosigners. Instead, A.M. Money gives students loans based on how long they’ve been pursuing a college education, what classes they take and the grades they get in those courses.
“This is a way to understand not where a person is coming from but ultimately, where they’re going,” Rogers said.
The loans are facilitated through Wisconsin-based Bank of Lake Mills, and like other lending businesses, A.M. Money generates revenue through loan interest. A.M. Money wouldn’t disclose exactly how much funding it has raised, but Rogers confirmed it is north of $1 million. The company’s backers include Lightbank, Octavia Impact, Michael Alter of the Alter Group, former McDonald’s CEO Don and his wife Liz Thompson, Tim Knowles from the Academy Group and Shayne Evans.
A.M. Money, which has eight full-time employees, provides income-based repayment options based on what college students attend and the kind of job they take after graduating. More lucrative career paths may have shorter repayment options, while those in traditionally less lucrative careers may receive more time to repay a loan.
“The last thing that we want to do is cause a person to go into default,” Rogers said.
Student loan debt is at an all-time high with more than 45 million borrowers owing a total of $1.5 trillion. Borrowers in the class of 2018, on average, owe $29,200, according to the Institute for College Access and Success.
“This problem is a pretty big problem,” Rogers said. “The funding for higher education from the federal government and the state is not keeping pace with the cost of going to college.
“I started [A.M. Money] because of the challenges I had paying for college,” Rogers continued.
Raised in the Windy City, Rogers attended Chicago Public Schools growing up. But as his senior year of high school approached, he began looking for alternative routes post-graduation.
“Like a lot of people, I couldn’t afford to go to college out of high school,” Rogers said.
Instead of going to college right away, Rogers enlisted in the U.S. military two weeks after graduating high school and was deployed to Iraq. While serving, Rogers said he took some college courses abroad, and was able to finish his first two years of college.
"I started [A.M. Money] because of the challenges I had paying for college."
“I would read a textbook, go out on a mission, come back, write a paper, go back out and then take a test,” Rogers said.
Once he left the military after nearly five-years of service, Rogers enrolled at American University in Washington, D.C., to finish his bachelor’s degree. But soon after enrolling, he encountered financial challenges again.
“I was told that unless I could come up with $16,000, I’d have to drop out of college,” Rogers recalled.
Rogers’ grandmother ended up co-signing a loan for him, which allowed Rogers to finish his degree. A few years later, he earned an MBA from the University of Chicago, which was financed through the college’s full-tuition David W. Fox Fellowship that's reserved for veterans.
Before launching A.M. Money, Rogers held roles at the Chicago Public Education Fund, Uber and Moneythink.
Now, A.M. Money is giving loans to students around the U.S. but most of its clients are in Chicago. Students granted A.M. Money loans have attended local institutions, such as DePaul, Northwestern and UChicago.
Last year during its pilot launch, A.M. Money processed $10 million in loan applications, Rogers said. And last quarter, the company received 500 loan applications.
