College is often viewed as the traditional path to gainful employment: graduate high school, attend college, get a degree, work in a field, and make money. It sounds simple enough.
However, reality often differs from expectations. Traditional colleges are arguably better known for leaving graduates with high debt and few job prospects according to the Department of Education.
How do you secure a high-paying job without taking on too much debt? One company, Climb Credit, is helping students bridge the gap between education and a successful career. Climb Credit partners with trade schools and programs to offer affordable financing and private student loans to students looking to enter career training programs.
I was lucky enough to run a Q&A with Climb Credit CEO Angela Ceresnie who offered valuable insight into higher education, career training programs, student debt, and more.
Read on to learn more about how Climb Credit circumvents the problems with higher education and offers a path to gainful employment.
In this Q&A:
- Working With Climb Credit as CEO
- How Climb Credit Helps Students Learn a Trade
- More on Full Stack Loans
- Higher Education and Student Loan Debt
- Looking Forward
Working With Climb Credit as CEO
Q: How did your prior experience with founding Orchard Platform and overseeing credit risk analytics prepare you to be Climb Credit’s COO and eventually CEO?
A: I view my entire career leading up to being the CEO of Climb as building blocks. Running and managing risk analytics at large banks helped to introduce me to credit markets and how lending works, while also learning about the fundamentals of managing people and building out scalable processes.
Orchard was an incredible experience of bringing a business to life. I gained an appreciation for the challenges of getting something off the ground and saw up close how the needs of a business changes as it grows in customers, revenue, employees, and investors. Climb has been a great experience of combining these two skills—credit products meets scaling company.
Q: What was the most exciting aspect of transitioning to Climb Credit as the COO and then CEO?
A: First and foremost, I’m excited by Climb’s mission and how we have expanded to address and tackle more complex issues, always with a focus on the needs of our students.
Secondly, I enjoy working with such an amazing team. Everyone at Climb is focused on our mission of expanding access to quality education, and that makes coming to work every day inspiring.
Finally, I’m motivated by the challenges of the CEO role and continuing to navigate those as we grow over time. From my time in the role, it is clear that it will continue to morph and change over time, which is exciting.
How Climb Credit Helps Students Learns a Trade
Q: Are you able to broadly elaborate on how Climb Credit evaluates the ROI of any given trade program and student? What are the most important factors?
A: Absolutely. When we evaluate programs, we try to assess whether the program is a positive financial investment for its students and whether or not the tuition cost is likely to be paid back to the student through a career and strong expected salary.
To determine this, we look at a number of factors including: job placement rate, typical job titles after graduation, the average salary of those job titles, and – of course – the amount of tuition paid to attend the program. Graduation rate is also an extremely important factor because the last thing we want is for a student to take a loan to earn a credential, and then ultimately not earn that credential—remaining in the same career and economic status, but now with additional debt.
The data we collect is reported directly from schools and graduates, then cross-validated with third party sources and our own proprietary data. The more we grow, the more data we’re collecting about the career and salary outcomes of our students.
Q: How does Climb Credit’s approach differ from traditional lending methods? How does this help both schools & students?
A: In addition to evaluating the return on investment of a program, we also require all of our school partners to invest in their students through a loan structure we call a “risk-share.”
Traditionally, when a student takes out a loan for school, the lender sends 100% of the tuition to the school as soon as the student starts class. We believe that this traditional structure incentivizes schools to get students into the classroom, but does not necessarily incentivize them to help students graduate, get jobs, and pay back their loans.
Through our risk-share structure, schools get a portion of the student’s tuition when they start class, and then earn the remainder of the tuition when a student graduates, gets a job, and pays back their loan. Our structure incentivizes schools to work to make their students successful in their careers.
Q: How critical is the cooperation between Climb Credit and partner schools in developing ROI calculations and program evaluations?
A: The cooperation between Climb and our schools is absolutely critical when we evaluate ROI. Since we use school-specific, program-level data we need schools to provide graduation rates, job placement rates, and student-level salary outcomes for us to determine ROI. The best schools are generally proud to share this data with us—and many times the results of the specific schools are better than the industry averages.
Q: Is there a particular education program or career field that is especially challenging to evaluate?
A: Typically fields with unclear career outcomes, or heavy reliance on cash tips, are the most difficult for us to evaluate—although we are able to do it in some cases. We are extremely cautious when we evaluate these types of programs and generally require additional supporting data, like student interviews or letters of recommendation from employers who hire heavily from the programs.
We also launched a data collection offering for schools in these types of fields, and are currently piloting the product. Through this initiative, we act as a third-party validator and gather job placement as well as salary data from past graduates of these programs. We can then use these results to inform our future partnerships.
Q: How do you envision Climb Credit’s program evaluation and ROI calculations evolving 10 years down the road?
A: We envision having a lot more custom and proprietary data in all of these career paths down the road. Each career path is completely different, and in 10 years we plan to have even more robust data on all of the education programs that train students directly into careers. We’ve built a strong data set of the results of coding bootcamps, heavy equipment programs, truck driving programs, and IT programs so far, and we aim to make all of our career path data just as expansive.
More on Full Stack Loans
Q: How do you balance the emphasis on viable ROI and the high approval rate approach of the Full Stack?
A: Our emphasis on ROI is part of what allows us to offer such high approval rates. We are able to offer loans to students with lower FICO scores because of the career and salary transformation we expect them to achieve through their program. The risk-sharing structure also allows us to offer higher approval rates, because the school is sharing in the risk alongside Climb.
Q: How does the average Full Stack loan debt balance compare to a typical graduate relying on federal and/or traditional private student loans?
A: One of the benefits of our ROI calculation is that many of the programs in our network have low tuition costs overall. The average program on our platform costs about $10,000 – much less than a traditional 4-year degree. We also aim to keep our monthly payments low, with reasonable interest rates and a focus on debt-to-income ratios. Because of those factors, our balances tend to be lower.
Q: How does typical Full Stack repayment performance compare to national performance data?
A: Of course, there will always be people who don’t pay back their loans, but our delinquency rates are in line with expectations. We attribute this to the fact that we’re looking at the school quality and underwriting based on that in addition to FICO score.
Higher Education and Student Loan Debt
Q: When you look at collective student loan debt today, what do you consider the leading cause or causes of the high student debt problem today?
A: The causes are complicated and systematic, but I believe it’s largely driven by overpriced education without a definitive focus on outcomes. Adding the federal loan system to that foundational problem compounds the issue since those loans cannot be discharged in the same way that private loans can.
Q: What do you think is the number one mistake that graduating high school students and current college students in pursuit of a degree/education are making today?
A: Ultimately, this is a societal higher education problem, and will require changes in primary and secondary education to ensure that we showcase and elevate the status of all of the higher education pathways in the same way that we do for 4-year universities.
Q: Would Climb Credit consider partnering with larger schools with diverse course offerings, such as a public university?
A: The short answer is yes. We’ll partner with any school that offers students the outcome of being placed in a career with strong earning potential. We already partner with a number of universities through their continuing education departments.
We review the return on investment of every program at the schools we partner with.
Q: How would the approach to evaluating education programs differ with large public universities?
A: I think that the evaluation would continue focusing on the program-level data for these schools. Some career paths are going to offer better outcomes than others, and students need to be able to go into their chosen major with their eyes wide open about what their options will be after graduation.
About Climb Credit
Climb Credit partners with trade schools and career training programs to provide affordable funding to students learning in-demand skills while also ensuring a positive return on investment. Climb Credit offers the Full Stack loan to students attending partner programs to learn necessary skills.
About Angela Ceresnie
Angela Galardi Ceresnie is the CEO of Climb Credit, an education finance company that evaluates the return on investment of education programs and helps consumers find, evaluate, and finance these programs to increase their earning potential. She joined Climb as the Chief Operating Officer in 2016 and quickly helped shape the operations, culture, and future of the Climb, earning her the role of CEO in 2018.
Prior to Climb, Angela co-founded and was COO/CFO of Orchard Platform—a provider of software and data products offered to institutional investors to purchase loans from marketplace lenders [acquired by Kabbage]. Before her time at Orchard, she spent 9 years running credit risk analytics teams at American Express and Citibank where she made billions of dollars’ worth of data-driven credit decisions.