Boston-headquartered startup career school Startup Institute has a new partnership with San Francisco-based micro-lender Earnest to help potential students afford the costs of the program that has become one way in to the often dizzying world of tech startups.
Earnest, which first opened in Boston due to its high concentration of college students, offers small loans (between $1,000 to $20,000) for low interest rates. The company aims to help recent graduates and young professionals afford the early stages of new careers or during job changes, and uses different metrics than traditional lenders when deciding if a borrower qualifies for a loan. Earnest claims to be the first merit-based loan service (although it has competitors in the space, including Upstart, another company offering non-traditional loan services). Earnest relies on an applicant’s education, employment history, and overall financial picture as qualifications for its loans.
The new loan product will be offered to Startup Institute students, who are often folks wanting to break into the startup world as a mid-career change or are looking for alternatives to graduate school. The loans are available to students who will be participating in the Boston and New York City programs. Applications for the Fall 2014 classes are being accepted now: New York until July 14, Boston until July 21.
The terms of the loan are typically at either 12 or 24 months; a one-year loan has a 5.5 percent interest rate, while a two-year loan has a 6.5 percent rate.
At first, when it was known as Boston Startup School, the program was free, with the tuition subsidized by partnerships and companies who hired program graduates. Later, Startup Institute shifted to a charged tuition model for individuals that was then often (partially or sometimes fully) covered by companies that hired them out of the program. Currently, it costs $4,750 to attend the 8-week Boston Startup Institute and $5,250 for the New York City program. The Startup Institute’s website says that partner companies often offer $1,250 in tuition reimbursement “as an incentive to join their team after graduation.”
Louis Beryl, chief executive and co-founder of Earnest, said that he looks at Startup Institute as a next generation educational institution and added that, “someone who is going to Startup Institute is really making an investment in their future.”
“It was clear that these guys were incredibly mission-aligned with what we are trying to do with our students,” said Startup Institute’s chief executive and co-founder Aaron O’Hearn. “There was no one out there that had the same product as Earnest, so we know this was going to be a huge win for the students.”
“For us, its all about helping people further their lives,” O’Hearn said, “Earnest does that financially, and we do that through our programs.”