There are plenty of apps that can calculate college loan debt, but a new one from Wharton’s Stevens Center for Innovation in Finance is different right down to its digital DNA. It’s X-factor is this: the app is built by high school students, for high school students.
After working with Wharton students, School faculty, staff, and professional partners for more than a year, about 35 juniors and seniors who are interns at the Center developed an app that helps college-bound kids — just like them — figure out the real costs of higher education. From researching the inputs to writing code to designing the interface for the free app, it is the Center’s teenage students who put in the work, and the app is slated to launch in early 2024.
As the project unfolded, students saw growth
“I thought it would be a summer internship with a project, but then I realized this is big. We’re making a difference,” says Nancy Li, W’27. Li’s relationship with Wharton and the Center began back in high school when she was still enrolled in Philadelphia’s Central High and interned on the Center’s Research Team. Now, Li is a first-year student at Wharton. “Our goal is to make an app that shows students how college loans can affect them years into the future. The biggest thing I learned is that you’re never too young to make impact,” Li adds.
The app helps users gauge the net benefit of student loans by simulating their journeys toward their goals through the risks that await them. Users see the financial realities of their goals – tuition, rent, income, etc. – as well as the financial impacts of real-world risks such as not finishing the degree or not getting the high-paying job they want. They also see how the federal government softens the blow of these risks through its repayment programs. The simulations build in the probabilities of the risks based on data gathered from previous borrowers. By incorporating all this real-world experience, the simulations show both the risk and reward of a loan, allowing users to make the borrowing decisions that suit them best.
“You’re able to look at different colleges that you are interested in, look up the costs, and different plans to pay off loans. It’s really a tool to help students learn about the financial aspects of college,” says Robert King, who is seventeen-years-old and a junior at Vaux Big Picture High School in Philadelphia. King is a member of the project’s coding team at the Center.
Emily Lu, WG’24, who is a Wharton MBA candidate and one of the app’s project manager, shares King’s sentiments and added that the ultimate goal of the Center’s app is to help young people improve their long-term financial security. It takes 20 years for the average borrower to repay college loans, and many find themselves still saddled with debt while trying to buy their first home or pay for daycare for their children.“When you tell a student their loan is $100,000, what does that mean to a high-schooler? What does that mean for the house they want to buy or the car they want to have?” says Lu. “The app is giving them that tool and presenting options, and I think being nonjudgmental in those options is really important. Maybe they don’t go to their dream college because of the cost.”
A dream two years in the making
The idea for the app came from Wharton’s Ronald O. Perelman Professor of Finance, David Musto, who is also the Director for the Stevens Center. He wanted to create a project that would resonate with the community beyond Penn and engage high school students at the Center, and the app seemed like the perfect fit.
“There are a lot of nice aspects in that the students get to see it through, from inception to product market fit. They get to see the whole business of entrepreneurship,” reflects Musto. “And they make sure we are looking at it from their perspective, so it keeps us constantly learning from them as they build their skills.”
Musto also said the app is different from so many others because it doesn’t just calculate loan debt, but also calculates risk. The app provides a “multiverse approach,” with seemingly endless choices for users to imagine all the financial paths their lives could take after graduation. As of this writing’s publication, student loan debt stands at $1.6 trillion and accounts for the second-largest category of debt in the U.S. behind mortgages. That’s why it’s so important for young people to understand the financial impact of borrowing, whether five years or 30 years down the road.
“If everything went according to plan, nobody would talk about student loans. But there are all these risks, and that’s where the difficulty comes in,” Musto says. “Bad things could happen, but good things could happen. Interest rates could go up, or they could go down. Your income could go up, or it could go down.”
This sentiment is one shared by Wharton’s Senior Associate Director, Gillian Bazelon. “The work the students have done is really something to celebrate. We have already had great response from students and guidance counselors. This is an app for high school students, made by high school students,” says Bazelon, who worked closely with Musto to recruit the Center’s team of interns. The interns receive compensation for their work via funding distributed by the Philadelphia Youth Network. a fund supported by the federal-level WorkReady program. In addition to these monetary payments and gaining real-world experience, the interns are genuinely passionate about their work with the Center and on the app.
“The students are extremely committed, and that’s a big deal because there is so much attrition in these kinds of programs,” Bazelon says. “I think that commitment speaks to the strength of what they are learning here with us…I am blown away by these students, by their commitment, their consistency, and their energy. The level of work that we are doing is high, and they have met the challenge of it.”
As launch date approaches, and the interns consider life beyond high school, both the Stevens Center and Wharton look forward to watching their bright futures unfold.
– Angie Basiouny
*Editor’s note: this Wharton Story is adapted from an article originally published by the Stevens Center.
Posted: September 26, 2023