Richard King Mellon Foundation Invests $2 Million in Innovative Venture to Enable Promising Low-income Students to Attend the Best Colleges and Universities They Can
December 17, 2020
PITTSBURGH (December 17, 2020) - The Richard King Mellon Foundation has made a $2 million investment in an online lending platform to help high-achieving students from low income families to go to the very best schools they can - the schools with the greatest opportunity for positive, life-changing outcomes.
The investment in San Francisco-based Sixup blends the Foundation’s longstanding support of higher education with its strategic focus on powering economic mobility for low-income members of the Southwestern Pennsylvania community.
Sixup provides responsible, affordable loans to students with a minimum high school GPA of 3.0 or better who have been admitted to, or are attending, quality, four-year non-profit colleges and universities - but who, even after institutional and governmental financial aid, still face prohibitive financial gaps between $5,000 and $15,000 per year on average. Too often, there is nowhere for such students to turn, because conventional lenders regard them to be too risky without a co-signer or strong FICO score.
Founded in 2015, Sixup first launched its online lending program in Texas for exactly those students and has since expanded to 21 states. While still early in its gestation, the company has started generating early promising evidence that its model works, but must continue to scale and season its portfolio into less financial stress, better academics and ultimately higher graduation, job-placement and wealth-creation rates. But, much like the students it serves, Sixup has been unable to obtain all the funding it needs to expand its business to areas such as Pennsylvania, to grow new partnerships with colleges and to continue originating loans.
Enter the Richard King Mellon Foundation.
“For the past year and a half, the Foundation has been developing an economic mobility strategy to help low-income members of our community to break through the barriers of poverty and inequality to achieve their dreams,” said Sam Reiman, Director of the Richard King Mellon Foundation. “Low-income students deserve the same opportunity to go to the nation’s very best schools - schools that, the data shows, are most likely to generate positive, life-changing outcomes. Sixup’s mission aligns square with our economic-mobility goals, and we believe their business model is proving to be viable, sustainable and scalable - both for students and for Sixup. We are proud to join our peers at other leading national foundations, The Rockefeller Foundation and the John D. And Catherine T. MacArthur Foundation, to make this investment, and in so doing, to expand access to higher education in Southwestern Pennsylvania.”
The Richard King Mellon Foundation investment will be targeted to expand Sixup’s lending nationally as well as in Southwestern Pennsylvania - enabling low-income students in Southwestern Pennsylvania to go to their dream colleges across the country, and also to enable promising students from other regions to attend Southwestern Pennsylvania schools.
Reiman said the Sixup investment “is a logical extension of our historic work with Pittsburgh Promise, to make higher education more accessible to kids in Pittsburgh, as well as our efforts to help make the PA529 college-savings program universal for every Pennsylvania child, through the Keystone Scholars initiative.” The Richard King Mellon Foundation awarded $250,000 to the Keystone Scholars program in 2018, for a pilot in Westmoreland County.
"The investment from the Richard King Mellon Foundation empowers Sixup to continue our critical work of transforming transactional student loans into investments in underbanked, high-performing students and their outcomes as well as proving out our proprietary data science and credit model at scale,“ said Sunwoo Hwang, Founder and CEO of Sixup. “We are thrilled to have another bold investor join our strategic blend of commercial, venture and impact investors like Goldman Sachs, Learn Capital and W.K. Kellogg Foundation who believe in the vital role for-profit, mission-focused companies play to actualize systemic change and upward mobility for the next generation of innovators, leaders and change-makers.”
As early investors in Sixup through its Zero Gap Fund, The Rockefeller Foundation saw the need to bridge the financial gap that prevents low-income students from attending four-year colleges. Launched in partnership with the John D. and Catherine T. MacArthur Foundation and its flagship Catalytic Capital Consortium (C3), the Zero Gap Fund is a vehicle designed to utilize philanthropic funding to channel private investment toward addressing the world’s most pressing challenges.
“Without sufficient funding, pathways to the best colleges and to the economic opportunities that flow from a college degree remain out of reach,” said Mike Muldoon, Managing Director of Innovative Finance at The Rockefeller Foundation. “The Zero Gap Fund and its partners are excited about The Richard King Mellon Foundation’s investment in Sixup as the additional funding will help demonstrate and scale Sixup’s innovative credit model and in turn, address a defining challenge for many of America’s young people through financial innovation and impact-driven investment.”
Philanthropic investments in for-profit businesses such as Sixup are called Program-Related Investments, or PRIs. The Richard King Mellon Foundation has been a local leader in using PRIs to advance its mission. Through PRIs, the Foundation provides capital to for-profit initiatives that have the potential to bring significant public benefit, but that require financing beyond traditional capital markets. The Foundation’s primary goal in making such investments is to achieve a positive social difference.
Reiman will serve on the Sixup board of directors in conjunction with the Foundation’s investment.
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Founded in 1947, the Richard King Mellon Foundation is the largest foundation in southwestern Pennsylvania. The Foundation’s 2019 endowment was $2.7 billion and its Trustees in 2019 awarded 172 grants totaling $129 million, focused on the Foundation’s strategic priorities: economic development, education, environmental conservation and human services.
Sixup is a for-profit, public benefit technology company reinventing student loans for high achieving, low-income students in pursuit of higher education pathways into jobs, wealth creation and social equity. Founded in 2015, Sixup is a licensed consumer lender and certified Community Development Financial Institution (CDFI) in over 20 states with investors that span family offices, foundations, banks, venture capital firms and impact investors.