In February, the Federal Reserve announced that the total student loan debt in America had reached $1.6 trillion. Just over a month later, the COVID-19 pandemic took full hold over the country. Cities were shut down and an almost instantaneous economic crash set off a chain reaction of layoffs that have continued to today, leaving millions unemployed and unable to chip away at their loans. The federal government quickly put a loan freeze into place (which was recently extended through January), but without freezes on rent, car payments, medical bills, credit card debt and more, American households were still spread thin.
Online lending and banking startups have slid in to fill that void. Companies like SoFi ($PRIVATE:SOFI) and Better.com ($PRIVATE:BETTER) have found success as millions turn to them to make ends meet during the pandemic. 2020 has been good to them — Sofi acquired payment software company Galileo for $1.2 billion in April, Better.com secured a $200 million Series D and both companies are currently looking to go public in 2021.
SoFi's average weekly page views per million users are up 29% since the beginning of the year, peaking at a 66% increase in July. Lending Club, another popular online lending service, saw its page views jump to a 42% increase as of November 23, the week of thanksgiving.
Lending Club is keeping pace in terms of user metrics, but the two younger startups are growing at a much faster rate. Job listings for Better.com sit at 124, a 36% increase from January. SoFi is hiring even more aggressively; with 205 job listings, the company has increased its open positions by 53%. Meanwhile, Lending Club never fully recovered from the decrease in job listings that plagued many companies in the first half of the year.
That increase in listings is echoed by both companies' LinkedIn headcount. SoFi has only added about 80 new employees so far this year despite having more open positions than the competition. Better.com, on the other hand, has grown at an incredible rate. Approximately 3,103 new employees have joined Better.com's workforce, growing the company from 867 employees to nearly 4,000 as the company has likely hired to keep up with increased demand.
When the first COVID vaccines were announced, stocks in companies like Zoom and Peloton dipped dramatically, signaling uncertainty as to whether or not companies that soared during stay-at-home and work-from-home conditions would remain as dominant during the pandemic. It's unclear if lending companies will be subject to the same foreshadowed decline; Lending Club, which is traded on the New York Stock Exchange, saw its lowest stock price ever this year, but has steadily climbed back up over the last month to about 75% of its January value.
The pace of recovery for employment is unlikely to line up with the current federal freeze on student loan payments, and if the freeze is not extended by the incoming Biden administration — which has signaled interest in forgiving some amount of student loan debt — then more users will likely flock to Better.com, SoFi and Lending Club's refinancing services. Even once a new administration takes office or vaccines begin to be administered, it will take a long time before things "return to normal," and many will still be left jobless and spread thin as the economy crawls to recovery. As long as the pandemic persists, lending startups will have a captive audience.
About the Data:
Thinknum tracks companies using the information they post online, jobs, social and web traffic, product sales, and app ratings, and creates data sets that measure factors like hiring, revenue, and foot traffic. Data sets may not be fully comprehensive (they only account for what is available on the web), but they can be used to gauge performance factors like staffing and sales.