A Big Payout on Student Loans? There’s an App for That

Mobile trivia app promises borrowers a chance to have debt paid. But game, which lets users pay for more chances at points and steers them to corporate partners, alarms some experts. Most users spend $4 a month, but company has imposed a limit of $2,500 a week.

August 27, 2018
 
Givling: Wipe out student debt by playing a game

Abra Belke has taken quite a few steps, some of them more unusual than others, to whittle down the six-figure loan debt she racked up between college and grad school.

A lawyer in Washington State, Belke worked two jobs for the first decade after she left law school and took on side hustles so that she could make more than the minimum payment on her loans.

Her knowledge of trivia led her to hit the game-show circuit to put a bigger dent in her loan debt, including Jeopardy! and Who Wants to be a Millionaire?

Those trivia skills, though, were what piqued her interest in another off-the-wall solution for student loan debt -- a mobile gaming app called Givling that promises winners a payout of up to $50,000 on their student loan debt.

Belke started playing the game in 2015 and says she checks into the game on her phone somewhere between 10 and 15 times a day. While she’s not yet close to a loan payoff, she says the game has helped her connect to a network of other student borrowers with similar experiences.

“It’s nice to see that you’re not in this all alone,” she said. “The thing about student debt is nobody talks about how much they have.”

Givling pitches itself as not just a chance to win debt relief but also a community of borrowers and supporters working together to crowdfund student debt forgiveness -- the tagline for the game is “a force for good.” The company says it just recently passed the $1 million mark for award winnings, of which about $700,000 went directly to student loans. Users have learned personal details about one another’s debt struggles and have even organized in-person meet-ups.

The game is also part of a growing ecosystem of brands looking to target the market of mid-20- to 30-something student loan borrowers. That segment of potential customers includes many people who are educated and have some disposable income but also feel under pressure to pay off their loans.

The TruTV game show Paid Off has borrowers compete at trivia for a payout on their student loans while calling on Congress to come up with better solutions for loan debt.

In Givling’s case, the borrowers are the consumers hoping for a big payout to reduce their student loan burden. The dedicated players see themselves as part of a community crowdfunding loan payoffs through in-game purchases. They're also a target audience for advertisers and partner companies looking to market their products. Some observers who study the financial aid system question whether the game -- in which borrowers can advance in the competition by spending time and money -- takes advantage of players desperate to pay off their debt.

The company’s founder and CEO, Lizbeth Pratt, became interested in student loans because of her own financial struggles. Pratt was forced to declare bankruptcy on a business venture early in her career before a successful stint as a stock trader. After retiring early, she wanted to do something positive in others’ lives and discovered that student loan borrowers could not declare bankruptcy as she did, said Seth Beard, the company’s chief marketing officer. Pratt created Givling to give those borrowers another chance to discharge their debt.

“There’s this big problem where students who have these big life moments and get over their heads,” Beard said. “Student loans are one of the only kinds of debt not able to be dismissed through bankruptcy.”

Givling now counts about 350,000 active users. That’s a far cry from other mobile games. But the company aims to hit a million users in the next six months, a number that it says would put it on pace to offer loan forgiveness to one winner each day.

The game works like this: users can, for free, play for cash prizes by answering questions in what’s known as the “orange queue.” They get two free rounds of questions each day -- topics range from film and geography to history and literature. Teams of three players win by answering more questions in a given time period. Winners -- the payout is usually around $6,000 -- can either pocket the cash or use it for points on the “green queue.”

Getting to the end of the green queue offers the game’s most serious reward, a chance for a payoff of student loans. But the competition is heavy and players make use of a number of options to accumulate points -- they can purchase additional turns to answer questions or invite friends to play the game, or they might watch an ad or answer a survey from a Givling corporate partner. Users across the board spend an average of just under 11 minutes per day on the app, according to the company.

While the maximum amount allowed has changed, users can currently make up to $2,500 in in-game purchases toward game points in a week, the company says. The typical user pays much less, though -- less than $4 each month -- and most have never paid to play.

Belke declined to say how much she had spent in total on the game, but for a few months toward the end of last year she spent the maximum amount each week to purchase more opportunities for points in the green queue, although she says she no longer has the cash to spend that much each week. She now sits at 16th place in the orange queue and 11th in the green queue.

Those cash purchases by players are one of three main sources of revenue for the company. It generates payments every time users sign up for an offer from a corporate partner (it counts among those refinancing company SoFi, LendKey, Lemonade Insurance, Champion Empowerment Institute, Spent App, Acorns, T-Mobile, Ibotta and others). It also earns money from third-party ads.

"We look to partner with companies that provide value to our users, are trustworthy and are passionate about helping eliminate student loan debt," Beard said.

That model has allowed Givling to grow from revenue of $97 in July 2017 to $6,742 each day a year later. And it just reached its 21st loan payout.

One of those went to Amanda Limoges, who discovered the app through a Facebook post from a friend about nine months ago. Although she did not hold any student loan debt herself, Limoges’s husband, Glen, owed $86,000 in student debt between federal and private loans after completing an undergraduate degree in 2012.

When Givling changed its rules after being warned it didn’t comply with state gambling laws, the changes removed elements of chance and made the game skills based.

Limoges said she decided then to try to commit herself to winning the loan payout. She spent more time on the app in the two months before her win than in the previous seven combined, she said, eventually earning the top prize earlier this year. With the $50,000 payout, she was able to pay off the remainder of her husband’s loans as well as his brother’s.

“It took 15 years off the life of our loans and I believe about nine months off of his little brother’s debt,” she said.

Scholars See Pitfalls

Although the game has made a huge difference to a handful of borrowers like Limoges’s husband, some researchers who study higher ed take a skeptical view of the app as a solution for borrowers seeking student loan relief.

“I worry about it being addictive, just as gambling is addictive. I really worry about that,” said Lindsay Page, an assistant professor in the school of education at the University of Pittsburgh.

Robert Kelchen, an assistant professor of higher education at Seton Hall University, said the game is a reflection of how many companies find the abundance of young adults in student debt a promising opportunity to cultivate new customers. Employers, too, meanwhile, are offering student loan payouts in place of traditional benefits to attract new hires.

“They’re going after young college graduates with jobs, and that’s a pretty lucrative demographic in the long term to go after,” he said.

Companies expect those borrowers to have money in the future, even if they don’t have it now, Kelchen said. And although options like income-driven repayment are available to borrowers with federal student loan debt, many are still looking for creative ways to pay down their loans faster.

“People don’t like having debt hanging over their heads,” Kelchen said. “If there’s a lottery to take care of it, they may very well take it.”

The financial situation of those borrowers, while it shapes marketing choices today, is also an outcome of policy decisions made years ago. Nick Hillman, an associate professor in the school of education at the University of Wisconsin Madison, said the game is a product of failed education policies. The appeal of the game should force people to think about the kinds of outcomes the U.S. higher ed financing system creates, Hillman said.

“This is a consequence of having a college system that was financed by credit. We have this new market now that was only created because of the way we’ve designed our education funding,” he said. “It sounds like it could work to exploit students in so many ways.”

He said he was wary of what happens to users’ data and how third-party companies might use it to target marketing to borrowers.

“The fundamental question to know is how that data is being used,” he said.

At the very least, Hillman said an app targeting student borrowers should provide users with information on options for their loans that don’t involve private companies or advertising partners.

“An ethical company would also give students more information on how they manage their loans,” he said. “If not, these companies are doing no good, just exploiting people’s data.”

Beard said one of Givling's partner companies, Champion Empowerment Institute, does offer complimentary mentoring on student loan repayment options through Facebook Live events and other venues. Champion Empowerment also offers subscription services for borrowers at $10 a month.

Limoges, though, said she never felt taken advantage of by the game.

“No, I never felt like we were being used because of our misfortune. I didn’t have to do anything silly that everyone could see to get his loans paid, although obviously many people are in a position they will take any possible opportunity to escape that debt.”

And she said the app has helped her form many real-world friendships with other players through their shared interest in student debt.

Beard said the criticisms of the company are a response to its new approach. And he said users have the choice whether or not to spend money on the game or take advantage of partner offers but still earn prizes through Givling’s orange queue.

“When you’re an innovator and you’re disrupting something and accomplishing what’s never been done before, you’re going to have those critics,” he said. “We’ve just stayed focused on our mission.”

The ultimate goal in that mission is to pay off multiple student loans a day through the app. Givling describes that goal in terms of social justice.

“They give these student loans to people who are 18 years old. There’s no credit check. They just sign on the dotted line,” Beard said. “They don’t always realize what they’re getting themselves into.”

Belke said her only concern about the game is that so few people are putting money in right now. The long-term health of the game depends on activating more players, she said, but only a fraction are playing and contributing toward loan payoffs.

"That needs to go up for us to reach our goals," she said. "Would having more free resources help? Maybe. But if we can build a model where sponsors, ads, and crowdfunding are helping change a lot of lives, it feels more like shared labor than exploitation."

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