Gradifi is billing itself as a revolutionary way for people to reduce and hopefully eliminate student loan debt. Given that the combined student loan debt of people in the US is around $1.2 trillion, that sounds great, but so far, it leaves a lot to be desired. Here’s what’s currently known about the program to give you an idea of what to expect when it officially launches on 1 October.
Gradifi is basically serving as a replacement for the now defunct SmarterBucks program. In fact, from the looks of the latter’s site, Gradifi bought out SmarterBucks in 2015. That’s what makes Gradifi such a disappointment; in many ways, it doesn’t even have old, proven workable features. Starting with similarities, both allow you to select a student loan provider and use accumulated rewards to pay down that debt. To that end, both partnered with Radius Bank, a small Boston-based institution, to provide a rewards debit card. Before you get your hopes up, know that it only gives 1% in rewards, you must select credit when using it to earn rewards, and those rewards are only usable towards paying your student loans (with a very minor exception discussed below). Considering the plethora of 2% credit cards that give you rewards usable on anything, it seems like you’re better off skipping this.
That’s where the similarities pretty much end. The differences make it pretty apparent that Gradifi is inferior to its predecessor SmarterBucks. Whereas SmarterBucks at least had multiple ways of earning rewards such as taking surveys, shopping through an online portal (serviced by Shopping Fling), and even being gifted rewards by friends or family members, Gradifi lacks all of these features. The only positive difference I could find is that Gradifi offers employers the ability to provide a Student Loan Paydown benefit to employees. However, according to Wikipedia (this is an informal blog, and I’m okay with using Wikipedia), only 3% of employers offer some kind of employer student loan contribution program. Obviously Gradifi wants that to expand, but we’re probably some time away from seeing that grow to an appreciable number. As an aside, these kinds of employer student loan contribution programs are taxed as income, making this feature even less appealing.
Finally, a difference many people may not pick up on is what happens when you don’t pick a student loan provider. It actually turns out that SmarterBucks has a specific provision allowing you to cash out your rewards if you haven’t chosen a payee for 12 months, something I consider a fairly reasonable amount of time. On the other hand, Gradifi has a similar yet substantially worse provision saying that you can only get your rewards after 30 months, a full five years. Given the history of SmarterBucks, I’m not even sure Gradifi will still be in business five years from now. This makes it a wholly unpredictable option that I don’t advise people to rely upon.
As previously stated, Gradifi hasn’t officially launched yet, but if you had a Radius Bank checking account linked to a SmarterBucks account, you should have received an email outlining how to register for a Gradifi account early. If you want to register now, here is a stripped down link.
In all honesty, there’s probably still some use for Gradifi. If you happen to have an employer that offers a student loan payment program and isn’t willing to just give you that extra money as part of your paycheck, then it could be useful. Or maybe you know someone (I hope that any readers of this blog aren’t that someone) that refuses to use a credit card, always paying for things with a debit card. This could definitely be a useful program as it at least allows a person to earn some useful rewards.
All in all, however, I find this to be an extremely disappointing turn for this program, and I really hope that Gradifi is able to make it more appealing for customers.