Paying for college can be a daunting task for anyone, but it's doubly difficult navigating those money issues when you're a young adult new to the country.
Wemimo Abbey faced that dilemma nine years ago when he arrived at the University of Minnesota Crookston from Nigeria. Like other students, he took out loans and struggled at first with the complexities of the American financial system.
Now an entrepreneur and business consultant, Abbey's hoping to ease that path for others using a modern phone app grounded in an ancient financing practice known as rotational savings, or Susu.
'Something I knew'
Susu refers to the rotational savings and credit associations found in Africa, the Caribbean, Asia and Latin America. Within the groups, people set a savings goal each month and contribute a standard amount to the pot.
Each person in the group takes turns cashing out the pot on a rotating basis. For instance, in a susu with 10 people who all agreed to contribute $100 a month, each person would be able to cash out $1,000 instantly when their spot in the schedule comes up.
Esusu takes that concept and digitizes it, connecting the group members' bank accounts and verification systems. Users pay a flat $10 month per pay in cycle for the service.
The shared savings and spending is a better way than other alternatives immigrants students and their families may face, said Abbey, who recalled his mother having to borrow money from high-cost payday lenders and pawnshops to pay for his first semester at Crookston.
Abbey, 26, graduated in 2013 from Crookston with a bachelor's in business management. He went on to graduate from an international nonprofit management program at New York University and has worked around the world as a business consultant.
But he never forgot his financial struggles while he was in college. When he recalled that his mother had used a rotational savings group when he was child to help pay for him to attend expensive schools in Lagos, Nigeria, Abbey saw a path to helping young adults. He teamed up with entrepreneur Samir Goel, 24, whose parents are immigrants from India, to create the Esusu app.
Launched in January, it has about 5,000 users now, including Wale Babalola, a Blaine business analyst who stumbled upon the app in his social media streams.
"I grew up in Nigeria, so rotational savings is something I was quite used to. It's something I knew," Babalola said. "When I moved over here, it was a different system. Everything is credit card and things like that."
Rotational savings is a "more efficient way for savings, plus you saving together with a bunch of people you know or family, community members," Babalola added. "It just makes it easier to save because you kind of police each other to help each other to improve their financial status."
Babalola said he's in an Esusu group with 10 people with a set contribution of $500 each a month. Each member takes turns collecting the $5,000. He said he plans to use his share for a trip to Africa for this father-in law's birthday, a trip that costs about $7,000 and would have taken him a while to save for.
"You know you save enough for what you really need and you are not paying extra for it. I think that's one of the main benefits of using this," he said.
It's that old world familiarity that has made immigrants Esusu's main demographic.
"We really want to build a product that serves that demographic because they are so overlooked in the kind of general financial services space, but also because we've got that this is the early adopters," Goel said, adding that money saved through the app has been used to pay off big-ticket items like cars, mortgage payments and student loans.
Bringing financial literacy to campus
Some 44.2 million Americans are currently holding about $1.48 trillion in student loan debt, according to the latest report from the Federal Reserve.
With those startling statistics, Abbey and Goel made it one of their goals to bring accessible financial literacy to a growing demographic that needs it: students. One of the popular group names within the Esusu app is "RIP Student Loans," typically a fund that groups specifically set up to pay down and off student loans.
"We realized very quickly that financial literacy and just the basic understanding, you know kind of how to manage personal finance was a big, big gap particularly for college students entering the workforce where critical mistakes would then impact the next two to 10, 20 years of their lives. And so then our company mission is to cultivate universal financial access," said Goel.
The Crookston campus is the first University of Minnesota school participating in the Esusu financial literacy project. The program is being offered to all students and will cover topics like personal finance, taxes and student loans.
"A lot of students depending upon the situation are not aware of even what kind of student loans they have, which ones are repayable, which ones are forgivable given upon their individual personal situation. So the first session is really again just kind of looking at a financial literacy framework with that," said University of Minnesota Crookston Chancellor Mary Holz-Clause.
"Financial literacy is an important issue," she added, "and it is connected to student success in some cases it's connected to issues that are quite significant."
Kevin Thompson, head of the business department at the University of Minnesota Crookston, wanted to make sure they have a positive impact on students in helping them to prepare for their financial futures.
"During college you get student loans but you don't usually pay on those loans until after college. So, what does that mean for you after you graduate while you're trying to also buy a car that you're thinking about housing and other expenses. And so it's about understanding, building that knowledge about financial literacy and how you are living that financial aspect of your life now and also in preparation for the future," Thompson said.
Abbey and Goel have also built an interactive financial literacy program and partnered last spring with New York University's Leadership Initiative. The financial literacy knowledge of students in the NYU program ran the gamut from basic to advanced, Goel said.
The pair say their work is about empowering people by providing greater access to financial literacy, regardless of whether anyone uses what they've built.
Said Abbey: "There's an African saying if you want to go fast go alone, or if you want to go far go together. What we know today is our futures are inextricably tied together and the concept of pulling capital together, pulling our resources to empower each other is not just something from today, it's something from centuries or centuries ago."