Finding Your Path to Success: Tips from Tess Michaels, Founder and CEO of Stride Funding
We had the opportunity to interview Tess Michaels, Founder and CEO of Stride Funding. Michaels lets us on some keys for managing finances and opportunities for women in STEM and entrepreneurship. Moreover, she informs us of the value of financial literacy, the available options for managing our finances with today’s technology, and Stride Funding’s role in helping students pay for college in a flexible and affordable way.
1. You serve as the Founder and Chief Executive Officer for Stride Funding. For those unfamiliar with your company, can you tell us a little more about it?
Stride Funding is a mission-driven education funding company that offers a more flexible, affordable way to pay for graduate school via Income Share Agreements (ISAs). With an ISA, students agree to pay a share of their future income instead of fixed payments and penal interest.
Stride is a student-centric company that not only offers funding but also career support resources and a community of like-minded professionals. Stride ISAs serve as a smart supplement to student loans.
2. How did you get your start in Finance? What was your educational and training experience that ultimately led you to becoming a CEO?
I began my career in finance to strengthen my technical skills, think strategically about businesses, and learn from some of the brightest finance minds.
I attended UPenn for undergrad and pursued a dual-degree in business and biology - I’ve always had a penchant for STEM. I majored in impact investing and graduated with the Dean’s Award for Innovation. Learning such diverse subjects prepared me to wear multiple hats as a CEO - juggling decisions on strategy, finance, hiring, partnerships, marketing, sales, and company culture.
3. Stride Funding is an ISA. Can you explain what is an ISA and how is it different from a traditional student loan?
An Income Share Agreement (ISA) is a more flexible, affordable alternative to traditional loans.
Key Stride ISA benefits include:
- Downside protection - students owe $0 during any periods where they earn less than $40k - unlike traditional loans that penalize students with additional interest, we support them during the difficult times in their life.
- Career resources (i.e., helpful content / guides, recruiters, resume services, mentorship) to help students hit their stride!
- Flexible payments based on earnings - ensure students never pay more than they can afford (+ easy budgeting!)
- Shorter duration (5 yrs vs 10+) - students should not be burdened with loan payments well into their adult lives when they're trying to start a family, etc.
4. What is financial literacy and why is it so important?
Financial literacy is so critical because this essential knowledge changes attitudes and behaviors. I want to help people use the knowledge we provide them to make better financial decisions for themselves but also for their families. One of my favorite thought leaders in this space is John Hope Bryant who talks about how financial illiteracy leads to devastating ripple effects throughout our society, especially on women.
As a company, we are fully committed to providing free tools, information, and resources, including on-campus presentations, to ensure that students learn the basic money management and budgeting skills that will position them for long-term financial success. Unfortunately, too many Americans are spending more than they make, not saving for emergencies, and utilizing high-cost borrowing mechanisms like pay-day loans. I want Stride Funding to help prepare young people for the periodic economic dislocations so they can make smart decisions when the going is good, and weather the storm when the economy turns south.
Studies have shown that students who borrow more are more likely to underestimate their total repayments over time, so financial literacy is key to developing realistic estimates of future liabilities and financial health.
5. In your opinion, what is the best financial management skill someone should have?
This might sound like an oversimplification but the most important financial management skill is the easy to explain--don’t spend more than you make! Individuals don’t have the financial strength of the national economy behind them, so consistently spending more than you make inevitably results in maxed out credit cards, higher monthly bills than one can afford, missed payments, lower credit score, and the vicious spiral that too often leads to foreclosures and bankruptcy.
The key financial skill every American needs is the ability to differentiate between needs and wants coupled with the willpower to make the smart financial choices now to improve their financial strength later. The specific financial skills include the ability to use a spreadsheet to estimate interest payments, and understand the basics of the time value of money. These skills are important to manage student loans, auto loans, mortgages, insurance policies and taxes.
6. As you know, March is Women’s History Month. In your opinion, why is it important to set aside time to honor and celebrate women?
It’s a time to reflect and appreciate how far we’ve come and the women who made big leaps (e.g., Harriet Tubman, Ruth Bader Ginsburg, Angela Merkel), as well as the everyday women who make the world go round.
7. Is there a particular woman in history that you resonate with the most, or that had a big impact on your career? Who is/was that person? And what were the lessons you gleaned?
Many of my closest mentors are inspiring, strong women who champion change. Deborah Quazzo sits on the board of Stride Funding, and is an inspiring leader and a pioneering investor in the EdTech space. She’s built a career in male-dominated realms such as investment banking and venture capital - she outperformed her peers and came out stronger!
Also, on a personal note, both my grandmother and mother are physicians who have dedicated their lives to helping others. They’ve always put others first and shown me leadership comes from caring about your people and leading by example. They instilled in me the passion to support those serving in the healthcare space.
8. Do you think women have broken the proverbial glass ceiling in the corporate world, or do you think there is still more progress to be made? And why?
We have definitely chipped at the glass ceiling, standing on each others’ shoulders and seeking support and sponsorship from successful women and peers.
There’s still much progress to be made - we see this across STEM and entrepreneurship. We have to remove implicit biases and take a proactive approach in ensuring we increase the top of the funnel across industries to ensure more diversity and inclusion.
Diverse backgrounds lead to diverse ideas, which yield good results for businesses and generate social good.
9. In your own words, how do you think college prepares young women for either a traditional career, or entrepreneurial endeavors?
College offers an environment to be bold and take risks with a soft landing. Embrace entrepreneurship opportunities early in life. There are genuinely very few environments where you can pursue your passion, learn as many skills, build relationships, and grow as much as during college. It’s exhilarating to interact with like-minded team members and investors – and to create something new from scratch.
10. As you reflect on your own journey, is there advice you would give to your younger self? Big lessons you’ve learned that you could help her with?
Always seek opportunities with sharp learning curves - push yourself and embrace challenges. You have a higher risk tolerance than you realize, pursue the big ideas you’re passionate about, early. Surround yourself with strong mentors and don’t wait for opportunity to come knocking, go out and seek it!
11. When do you think is a good time to start educating students about personal finance?
As early as possible in Middle School. We actually have team members who volunteer with organizations like Junior Achievement to help teach money management skills to elementary school students! If you think about it, that makes sense because most of those students will earn an allowance or get money from family members for birthdays or holidays, so it’s important that we teach them the importance of saving and even more advanced concepts like compound interest. Too often we talk to college students who aren’t aware of simple ways they could stay afloat when their income streams are strained.
12. Are there any financial habits you practice like saving or sticking to a budget?
I always remind people of the saying, “There’s an app for that!” There are so many ways that young people can stay on top of their finances simply by pulling out their phone. I monitor my bank account, my credit cards, and even my monthly budget and credit score right on my phone. Almost every financial institution provides an app with great tools to help you keep tabs on how much you’re spending and what you’re spending your money on. Knowing is not always doing; but timely recommendations and reminders would make us act in our own best interest.
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