World’s first loyalty programme to lower student loans

The world’s first customer loyalty programme that lowers student loans was recently officially launched with Warehouse Stationery as its first major retail partner.

Named Feejoa, the programme will help the 730,000 New Zealanders, who owe a total of $14.8bn, to reduce student loan debt resulting from their years of study and training. 

Using crowdfunding, each Feejoa member and loan holder can reduce debt through their own loyalty to participating merchants and services, as well as by recruiting a network of benefactors happy to dedicate their own reward dollars to that person's student loan account.

Working alongside the IRD, retailers’ loyalty contributions are paid directly by Feejoa to a nominated student loan account monthly. The system has been tested since November 2014 with technology development being finalised in conjunction with merchant feedback. 

And in another innovation, scheme members won’t even need a loyalty card – they just register their usual eftpos, credit or debit card with Feejoa’s payment technology. All loyalty rewards are then automatically applied to the student loan holder.

Called Card Free Loyalty, this innovation brings more convenience and simplicity to Feejoa customers and has been made possible through electronic payments provider Paymark. 

Warehouse Stationery is now offering Feejoa members and their benefactors the opportunity to pay off their student loans through their 65 stores nationally. Other major national retailers are expected to join in coming months.

General Manager of Marketing at Warehouse Stationery, Cathy Atkins says this programme will hopefully go some way towards relieving the financial burden this debt can have on students and enable them to focus on furthering their careers after graduation. 

Phil O’Reilly, one of Feejoa’s creators and directors says Feejoa has turned loyalty into something useful to help solve one of the largest financial problems young people have in NZ. 

“Like all ideas whose time has come the Feejoa concept is fiendishly simple and addresses a screaming need to pay actual dollars off a student loan,” he says. “Graduates are deeply pragmatic when it comes to getting ahead in life and not easily seduced by a bunch of often superfluous stuff when there's bigger life issues hovering round – like their student debt.  

“For retailers, this realism means if they want their loyalty – show them the money,” he says.

Feejoa’s crowdfunding value comes from a student loan holder signing up and then recruiting friends and family to be benefactors to their PALs or People Alleviating Loans. That way a social network can be at work whittling away a loan.

Managing a Feejoa account happens online with the website providing some gamification by including a live dashboard showing how much has been paid off a student loan using Feejoa and by whom.

By using loyalty dollars to directly pay off loans, Feejoa allows more people in a network of benefactors to turbocharge payments off a student loan. The more times a member shops at a Feejoa merchant, the greater the payments.

“Normally people pay off their student loan with personal earnings. With Feejoa, payments are made using your own and other people’s loyalty dollars, meaning its money they wouldn’t have had otherwise,” Phil continues.

"Typically benefactors will be family and friends, but could even be businesses, who have a stake in that individual's future and want to help out – it’s a virtually cost free way for them to show some love and support.

“We expect it to be a game changer for students and graduates to make a financial impact on their student debt and give them a psychological boost at the same time,” says Phil.

Feejoa’s payment system also allows benefactors to spread their contributions among up to 10 recipients and loan holders can have as many benefactors in their ‘tribe’ and can even live offshore. This means they can be on their OE and reduce debt at the same time from their benefactors spending up back at home.

New Zealand born Feejoa is the creation of partners Phil O'Reilly, Hilary Lewis and Julius Fox who worked closely with the IRD to bring a robust and transparent protocol to handle reward contributions to individual loan accounts.