The Cincinnati-based Fifth Third Bank has introduced the Fifth Third Momentum app that is meant to assist student loan borrowers in repaying their student loans, according to a press release issued on September 5th.
The Fifth Third Momentum app will make automated micropayments to a student debtor’s loan balance by syncing up a debit card with a student loan servicer account. Any bank customer with a Fifth Third debit card will be able to link their card to their student loan account.
There are over thirty different student loan servicers that are working with Fifth Third Bank to help consumers chip away at their student loan debt.
Student loan borrowers will have the option to either round up all debit card purchases to the next dollar or simply add one dollar to each purchase made with the card. With both options, the extra amount will go towards the student loan balance once a minimum of five dollars in round ups is collected. The payments will be made on a weekly basis.
For example, if a student loan borrower that is synced up with the Fifth Third Momentum app and using the round up option buys a sandwich for $10.35, then 65 cents will be put towards their student loan balance. If the same borrower opts for the dollar pay-down option, they will still pay $10.35 for the sandwich, but an additional $1 will go towards their student loan balance.
Greg Carmichael, the President and CEO of Fifth Third Bancorp, offered the following statement for the press release: “As a bank, we need to bring innovative solutions to the market, to lead the way in helping the next generation pay off their student loans faster. Fifth Third Momentum is a simple digital tool to help pay these debts faster.”
According to Fifth Third’s estimates, customers who use the Momentum app and round up $25 each month may be able to pay off a 20-year loan in 17 years, while also saving 8 percent by not having to pay interest for those extra years.
The Fifth Third Momentum app can also be used by parents or loved ones of student loan borrowers. Family members or close friends can link up their Fifth Third debit cards to the borrower’s student loan account and contribute rounded up payments.
As previously mentioned, the Momentum app works with more than 30 student loan servicers to help student debtors repay their loans. The student loan servicers are a mix of both private and public student loan companies. The Fifth Third Momentum app can be found in the app store of any Apple or Android smartphone, and a user simply has to enter in their student loan servicer. Fifth Third Bank currently does not offer their own private student loan product.
With so many young Americans drowning in student loan debt, this app is certainly a step in the right direction. According to LendEDU, there are over 44 million student loan borrowers in the U.S. that collectively owe over $1.41 trillion in student loan debt. The average student debtor holds $27,975 in student loan debt, while the average federal student loan default rate sits at 11.8 percent.
In recent times, more and more organizations are experimenting with different ways to help student loan borrowers repay their educational debt. For example, LendEDU reported that the Philadelphia-based software analytics firm MRP introduced a new employee benefit that will offer workers a monthly contribution towards their student loan debt. Last year, LendEDU announced that a new employee benefit was launched that will pay $2,400 per year to employees with student loan debt.
Author: Mike Brown
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