Photo credit: Melissa Key/Charlotte Business Journal
David Helene is Co-Founder and CEO of Edquity, a technology-powered platform that streamlines emergency funds disbursement to college students in need. The startup recently announced the completion of a $2.4 million seed round backed by several funds and foundations including Michelson 20MM.
This interview has been edited and condensed for clarity and length.
Let’s begin by sharing how you got involved in the postsecondary education space.
I started my career in the financial services industry where I was focused on lobbying on behalf of large financial institutions. And I found myself not terribly enamored with the macro impact I was having. I wanted to work on financial empowerment, particularly for communities that have been historically disenfranchised by financial services.
While there I noticed that the student market had a lot of similarities to the pre-crash housing market. So in 2014, I started a non-profit, UniFi Scholars, with a few friends where we provided financial literacy education to low-income high school students around the intervention point of planning for college. The next year I met (Edquity’s Chief Strategy Officer) Dr. Sara Goldrick-Rab, who at the time was running the Hope Lab in Wisconsin. She helped us understand that the issues students face financially are actually structural in nature. They’re not due necessarily to poor financial planning, but rather to students not having the resources they need to be successful in the first place.
We dug into Sara’s work and started to understand the scale and scope of food and housing insecurity students face across the country. And we learned that many students start college facing a 30% financial shortfall because of the discrepancy between the estimated cost of attendance, expected family contribution as calculated by the federal government, and the actual cost as experienced by students.
How did Dr. Goldrick-Rab’s insights inform Edquity’s operational model?
With Edquity, we flipped our framework from providing financial counseling to streamlining access to emergency support in a timely manner for the millions of students who face a crisis. We’re a tech-enabled, anti-poverty company addressing students’ basic needs. And if it’s emergency cash grants that students require, then we help them get access to those funds quickly.
How have emergency aid programs grown on college campuses?
Every year, about 3 million students drop out due to a time-sensitive financial challenge of less than $500. Given the decades-long divestment from higher education at the state level, institutions rely heavily on tuition revenue in order to remain financially sustainable. With this in mind, colleges and universities are starting to acknowledge that micro investments in student retention, like emergency aid programs, are existential to their bottom line.
We’re heartened to see that 50% of colleges now have an emergency aid program. We’re excited that growth in these programs has increased eightfold since 2016, but we know that many of these programs are plagued by a lot of inefficiencies, including how programs evaluate if students are “worthy of funds.”
In particular, a lot of these programs require students to “perform poverty,” an assessment not of empirical need but rather on how students present themselves. We want to minimize the trauma and the transaction cost that students face when interacting with these programs, while maximizing outcomes in the process. Beyond increasing efficiencies with these programs, we also help students find the help they need as it pertains to food, housing, transportation, childcare, goods and services, legal assistance, and job assistance to create a holistic framework of financial support.
What does need look like on college campuses?
Many in the political arena believe that college students look like the students who control the media narrative, typically those attending traditional four-year institutions with a strong brand name. In reality, about 75% of students attend a two-year college or a four-year public institution. The majority of students who go to college do not look or have the experiences of those students who are perpetuating the media narratives about college today.
About 87% of students live off-campus. They’re fending for themselves as true adults. Many students are living the lives of those in the workforce because a.) most of them are actually in the workforce and b.) they’re meeting the same real-life responsibilities that the rest of us meet while adding college to their list as well.
If you look at the demographic shifts, the fastest growing populations in higher ed are students of color, particularly Latinx and African-American students. So we have to redesign and re-engineer higher education to make sure it is ready for the students coming through the door if institutions want to remain financially sustainable in the long term.
At Edquity, your flagship offering comes in the form of an app. Can you describe it and tell us how it helps students?
There are three pillars of support that our technology offers. First, we worked with Sara to design the first evidence-based and research-informed emergency aid application. We are able to algorithmically determine whether or not it is appropriate to distribute an emergency grant with an eye toward addressing the most need while improving student retention. This allows us to give students an answer in less than 24 hours and deliver cash assistance within 48 hours.
The second piece of our offering is like Yelp but for social services and emergency resources in the community. We identify all the off-campus and on-campus resources available to students such that they have a one-stop digital shop where they can find the emergency support they need.
And finally, we do want to try to support students in improving financial behavior and decision-making. We don’t believe you can budget your way out of poverty, but where possible we do want to support financial organization, and thus we provide a cash management tool for on-going budgeting.
Our technology is not intended to displace or serve as a proxy for human touchpoints in emergency programs. Our goal is to scale a culture of caring. We try to take a poverty-informed approach to student success and make sure that can be done at the scale at which higher education is operating.
Would you say your approach differentiates your offering from others?
I would. In addition to being a first-of-its-kind solution, I believe the culture that informs what we do is a major differentiator. The way we’re approaching problems is focused on major macro and societal issues where our goal is to address the symptoms of poverty. The only things that can eradicate the structures and underlying causes of poverty are sustainable and radical policy changes.
The challenge is that policy changes are slow-moving. So we are thrilled to work with a partner like Michelson 20MM because you all are on the frontlines of advocating for the policy changes we are trying to see.
Where has the app been adopted and what are your biggest successes?
Our largest partner is Dallas Community College District. It’s a district of seven colleges with 90,000 credit-bearing students and about 150,000 students receiving education in some form. We rolled the technology out three days after the largest tornado-based disaster in the history of Texas.
We received 100 applications in just the first hour of going live, and we were heartened that the technology performed exactly as it was supposed to and was able to meet the demand we received. Since October 24, we’ve issued about $100,000 in emergency assistance to students, nearly 30% of whom have suffered as a result of the tornado.
Walk us through the demographics of the college students using Edquity.
The demographics of students we’ve served: 34% are homeless, nearly 1 in 2 is a student-parent, 30% has a child under 5, and about 15% are likely to be DACA eligible. So we’re serving the students demonstrating the most need and doing so in a way that we believe will give them a strong chance of staying enrolled in school.
The broader demographics of the students who apply closely mirrors Sara’s research. 53% are dealing with some sort of food challenge, 75% indicated a housing issue, 21% of applicants indicated a degree of homelessness, and about 30% are student-parents.
How many students does the $100,000 in delivered aid represent?
So we’ve supported about 250 students thus far where the average award is close to $500. The volume is larger than we anticipated for a pilot program given the natural disaster, and yet everything is performing up to expectations.
Are there expansion plans on the horizon with the app? New partnerships with educational institutions or districts?
In the next few weeks, we’re launching our partnership with United Way of King County and they serve a number of colleges in the Seattle area. We’re also moving into California; Compton College appears to be next on the horizon which we’re very excited about. We’re growing our footprint in Nevada, and we have deals in the pipeline, some potentially as large as 17 schools.
Tell us about the growth of Edquity in general.
On January 1, 2019, we had five employees; today we have 12. The one that comes with the most cachet is of course Sara. We really want to hold our feet to the fire with regard to student outcomes and that means working with the leading researcher in the space. Our goal is to add to our team and bring on and support as many as 40 colleges in 2020. And it looks like we’re on track so we’re excited about where we are and where we’re going.
Anything else you’d like to add about Edquity.
The challenges we face in higher education, unfortunately, are a microcosm of broader structural issues. Issues like homelessness and food insecurity are not endemic to college students but are just exacerbated among them. While Edquity delivers value and is a tremendous solution for supporting students and institutions, you cannot use the private sector as a unilateral way to fix broader societal problems. We can be a great partner and work with NGOs and government, but we shouldn’t believe a for-profit company will eradicate poverty.
We want to use our platform to advocate for legislation like California AB 943 (Community colleges: Student Equity and Achievement Program funds). We are happy to see candidates running for president who are putting forward very progressive higher education policies like debt forgiveness, expanding the national lunch program, and free college. Those are the radical changes we like to see and I believe we all have a part to play in it, namely, by participating in the election process.