College Savings for Millions of New Yorkers

Through November, like many of you, we were feeling wary about how the election will impact the communities we care about. Working poor families will be hit hard if the federal resources that help them make ends meet are weakened or destroyed.

The Burden of Student Loans

The Burden of Student Loans

The average 2016 college graduate has $37,172 in student loan debt.

A Fresh Look at Possible Solutions

Going back to school is always filled with anticipation, excitement AND stress. Now, more than ever, stressors about handling the costs of an education are on par with academic challenges. The average 2016 college graduate has $37,172 in student loan debt, creating a burden that lasts long past the college years and often sidetracks important life choices. Overall, student loan debt hit $1.26 trillion in the third quarter of 2016; more than double from 10 years ago.

With over 43 million Americans impacted by student loans, it is a chronic phenomenon which is fast becoming a crisis across all 50 states. The consumption of college debt not only envelopes students but their friends and relatives who co-signed the loans as well.

Print and broadcast media have spotlighted the problem and ways to initially avoid debt. Rightly so. For the majority of students, loans — at considerably large amounts — are an inevitable part of the college experience. However, there isn’t a significant amount of information available on what to do after the deep dive into debt, and more specifically, the identification of strategies to lessen the pay-back load once accrued. Based on The Financial Clinic’s financial coaching experience with 21% of customers burdened by an average of $27,776 in student loan debt, we have developed a few strategies to deal with just that. As a result, our customers have paid off a total of $392,000. It should be noted, however, that these strategies are not one-size-fits all but rather a look at a range of opportunities for ameliorating the student loan burden.

What are the different kinds of student loans?

Simply put, there are two kinds of loans: federal and private. Federal loans include Stafford (FFEL), Grad PLUS, Parent PLUS and Perkins Loans. The records of all existing federal loans are housed in the National Student Data System. They can be accessed by creating and logging in with a Federal Student ID.

It is also important to note that some federal loans are subsidized (the government pays the interest until repayment begins); others are not. Direct Subsidized Loans are available to undergraduate students with financial need, which is determined by taking the cost of attending a school minus one’s expected financial contribution. Perkins Loans are another type of need-based, subsidized loan, and these are available to graduate students as well as undergraduate students. Direct Unsubsidized Loans are available to both undergraduate and graduate students with no requirement to demonstrate financial need. Some agencies (like New Jersey Higher Education Student Assistance Authority or HESAA) present a misleading picture. Through various marketing tactics, such as a name that could easily be assumed to be associated with a government body, they lead students to believe they are offering federal loans, when in fact the loans HESSA offers are private loans. If you are considering taking out a student loan, a good rule of thumb to follow is this: If receiving the loan requires completing any paperwork outside of the FAFSA, forms on, or authorizations through your school, it is most likely a private loan. If you’ve already borrowed loans, and are not sure whether it is federal or private, the best way to find out is to simply call the lender and ask.

Private loans are borrowed directly from a financial institution, rather than a government agency. Interest and loan amounts are market rate and based on credit, not financial need. They are typically offered at less favorable terms than federal loans and usually cover the gap between federal loans and other forms of financial aid, and total education expenses. Anybody who meets the credit and income requirements put forth by the lender is eligible for a private student loan.

Strategies for Holders of Federal (only) Student Loans

First and foremost, one must never miss a payment or default on a loan. Doing so will reduce the repayment options available to the borrower, cost the borrower more in the long run, and negatively affect the borrower’s credit history. If the borrower is unable to make a payment, they must call their lender to make arrangements as soon as possible, because as soon as a payment is missed, the loan becomes delinquent. In the case of short-term relief, the borrower may qualify for a loan deferment or loan forbearance. Deferment is a period of time when the borrower is not required to make payments on the principal or interest of the loan, and no additional interest will accrue on any Direct Subsidized, Subsidized Stafford, or Perkins Loans. Deferments are available for a variety of circumstances and can last up to three years. Forbearance is similar to deferment but with some marked differences, the first of which being the payments may only be reduced, not completely suspended. Additionally, interest will continue to accrue on all subsidized and unsubsidized loans. The factor of whether or not interest will accrue or not generally makes deferment a better option for most borrowers if they qualify for it.

Income-Driven Repayment Plans

Apart from winning the lottery, there are several ways to repay federal student loan debt. By far, the most popular are income-driven repayment (IDR) plans. These plans are available to borrowers who may be delinquent but are not in default. There are a variety of IDR plans: Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE), Income-Based Repayment (IBR) and Income-Contingent Repayment (ICR). With IDR plans, monthly payments are capped, can start as low as $0/month, and may fluctuate based on a reasonable percentage of income and family size. Debt forgiveness may be available after just 10 years of full, on-time payment for borrowers in the public and nonprofit sectors. For other borrowers, the repayment period may extend to 25 years. Be sure to note, however, that extending one’s repayment plan beyond 10 years will lower monthly payments but drive up the amount of interest paid over the life of the loan. Anyone with an interest in pursuing “public service forgiveness” should enroll with an IDR plan to maximize the amount of student loan forgiven. (

Direct Consolidation Loan Program (DOE)

All borrowers with federal loans are eligible for consolidating these loans under the US Department of Education’s (DOE) Direct Consolidation Loan program. On the one hand, this can move borrowers with multiple student loans into a single, and more simple, payment plan; lower monthly payments by extending the life of the loan to 30 years; and set a fixed interest rate, determined by the weighted average of interest rates on all previous loans. This particular program also makes the borrower eligible for all federal repayment programs including the IDR plans above.

On the other hand, if the borrower stretches the life of the loan to 30 years, they may end up paying out more loan installments and greater interest over the long term. One may also lose borrower benefits (e.g., discounted interest rates and discharge or forgiveness accommodations) from an existing relationship. Furthermore, if a borrower is interested in consolidation as a way to get loans out of default, it’s important to note that consolidation does not remove negative remarks or accounts of old loans from one’s credit report.

Loan Rehabilitation

Although defaulting on a federal student loan is by and far something a borrower wants to stay clear of for many reasons (e.g., it does significant harm to a credit score), there are a couple of options for addressing the issue if it occurs, besides the rare case that the borrower is able to repay the full amount outstanding. The most popular choice is to go through a loan rehabilitation program. The program enables the borrower to bring a loan current by making affordable payments over a specified period of time. This is a one shot deal. A borrower cannot rehabilitate a federal student loan more than once. Private loans cannot be rehabilitated.

Loan rehabilitation is for borrowers who need a more flexible, short-term monthly payment schedule and don’t have an immediate need for a “cleaner” credit report. The borrower must make 9 “reasonable and affordable” voluntary payments within 10 months. These payments can be as low as $5/month. As such, borrowers may find more flexibility in this option than with consolidation. The borrower will also become eligible for additional federal student aid after the 6th payment. Loans are not fully out of default, however, until after the 9th payment is made. At this point, all negative information regarding the loans is removed from the borrower’s credit report. In addition to an improvement in credit, after a loan is rehabilitated the borrower is now eligible for all federal repayment options, including the aforementioned income-driven repayment plans.

Additional Options for Federal and Private Loans

Along with the strategies mentioned above for federal student loans, both federal and private student loan borrowers may also refinance or consolidate loans through financial institutions or other lenders. Along with banks, many private companies have recently started refinancing federal and private student loans. However, a federal student loan borrower must be thoughtful about the advantages and disadvantages of doing so. By moving out of the federal loan system, these borrowers should be aware they will lose certain benefits like public service loan forgiveness and, most likely, will not have as many options to reduce payments in case of loss of income. With regards to income, and credit as well, a borrower must be in relatively good standing. Additionally, some lenders require that borrowers have already completed their degree.

For people who are contemplating this path and qualify accordingly, they can save themselves a significant amount of money by reducing existing interest rates. The bottom line is that going private with refinancing or loan consolidation can make good sense for borrowers with an anticipated secure income for the expected duration of student loan repayment and who are not interested in public service loan forgiveness.

Borrower Beware

In addition to legitimate companies offering refinancing of student loans, there are also many companies (such as Student Loan Assistance Center or Student Debt Relief) marketing “consolidation” services which do nothing more than enroll borrowers into an income-driven repayment plan — and charge the borrowers hundreds of dollars to do so. They advertise the best possible outcome ($0/monthly payments and debt forgiveness after 10 years) as though they are available to every borrower and are programs separate from what is already offered by the Department of Education. However, the reality is the most people will not qualify for $0/month payments or Public Service Loan Forgiveness. Borrowers should never pay to enroll in any type of repayment program and should know that if something sounds too good to be true, it is.

Some Final Thoughts

There are many different options for paying off student loan debt or moving a loan out of default. In evaluating these options, the borrower must keep in mind the following factors.

  • Are the loans private or federal?
  • What is the current status of loans: current, delinquent, or defaulted?
  • What is the borrower’s current income and do they anticipate changes to income or career?

The US Department of Education’s “student loan repayment calculator” is also quite helpful in determining the best course to take.

Finally, it is important to remember that is the goal of ALL lenders to be paid back. Most will work out options to help the borrower get back on track.

Why Being a Financial Expert Isn’t Enough

Brittany Curtis
Manager of Capacity Building

Being an expert in the field of finance, although crucial, is not enough to be an effective financial coach.

Financial coaching is a unique and complex endeavor. Today, financial coaches typically differ from financial educators and workshop facilitators because coaches cannot simply present financial security information to their customers and hope they take action. A workshop session on predatory lending and a summary handout isn’t enough in the eyes of a financial coach. Coaches don’t lecture on financial content, prescribe certain steps to take, or suggest “one size fits all” approaches.

So what is a financial coach for? What do they do?

Financial coaches support a one-on-one customer-led process that identifies the goals, motivations, and action plans that best keep a customer on track for building their financial security. It’s not just about someone giving you information and marching orders — it’s about developing your own skills and abilities to translate financial knowledge into improved everyday financial behaviors for meaningful and long-lasting change.

Coaches rely on their “soft skills” to make these lasting changes with customers possible. Soft skills include a wide array of interpersonal strategies that one may employ while interacting with other people, such as empathy, a positive attitude, and communication skills. Our coaches at The Financial Clinic embody the following coaching approaches and soft skills approaches with their customers every day:

  1. Building Trust and Engagement

Effective financial coaching relies on the customer feeling comfortable enough to share their personal information about a typically taboo subject. How do coaches build trust and solidify engagement? Create the perfect first meeting. A few things to keep in mind:

Learn from self-mastery: Self-mastery is the ability to modulate your internal thought processes to maintain a helpful and productive presence. When coaches understand their own assumptions and biases, they will be able to acknowledge their internal thought process and create a judgment-free zone for their customer. Accomplished financial coaches can take potentially surprising or charged statements in stride and incorporate their customer’s interests or preferences into goal-setting and action planning processes.

  • Best practice tip: Be conscientious of a customer’s personal priorities. If a customer says that being able to donate money to their church is a non-negotiable area of their spending plan, a coach will respectfully acknowledge the importance of this and help their customer find a way to include it. Even if the coach does or doesn’t think that the customer should be spending their money in that way, it’s imperative that the coach keep their own biases on the issue and remove them from the conversation.

Employ active listening and empathy: Coaches must listen to the thoughts and concerns of their customers, to allow thoughtful responses later on. It’s important to consider what isn’t being said by the customer too! Non-verbal cues can give more insight to how a customer really feels about a particular topic or idea.

  • Best practice tip: Be sensitive to aspects of active listening, including appropriate open body language, validating a customer’s concerns, and asking clarifying questions and reflecting main ideas back to the customer.

Create action-driven goals: Financial coaches take great care to find out what drives their customer. Creating action-driven goals provides immense guidance throughout the coaching relationship. At the Clinic, we encourage customers to create goals that are forward thinking, strengths-based, and passionately held. Coaches can work with a customer to move from a strategy like paying off credit card debt towards an asset-oriented goal likeincrease credit score to qualify for a car loan. Reducing debt can be a strategy that gets a customer closer to their goal, but we want the goal to be something they care deeply about (and when were you last excited to pay off your credit card?).

  • Best practice tip: Be aware of “default” goals like retiring comfortably that are important to the customer but are too general to be a source of daily motivation. Try tying in things that the customer can currently connect to.

2. Challenging Habits, Assumptions, and Thought Processes

Frequently, a customer is seeking out a financial coach because they have tried everything they could think of and are at their wit’s end for a solution. The customer might feel like they are in a crisis and may feel hopeless and dismayed when they come through the door.

“When it is obvious that the goals cannot be reached,
don’t adjust the goals — adjust the action steps.” — Confucius

The building of trust and rapport previously mentioned allows coaches to get a baseline of information about customers’ experiences, goals, and interests. The next important step with their customers is to challenge habits, assumptions, and thought processes to get them closer to their goals.

Use the goal as the driver: Financial coaches use the financial goal (or goals!) as the driver of the coaching relationship. Our simple but evocative framework of creating goals that are forward thinking, passionately held, and strengths-based can open a whole new world of possibility for a customer. These unique and personal goals, like saving up to start a jewelry-making business or securing a loan for a dream home, help customers take ownership of the coaching process, prioritize actions to take, and support them in overcoming obstacles.

  • Best practice tip: If a customer has trouble coming up with a meaningful goal, ask them to consider several different aspects of their life. What do they hope to provide for their family? What do they like to do for fun? Do they have any career or educational aspirations? What might they do to focus on their health? Goals don’t have to be traditional financial goals like saving for a home or retirement to be effective.

Ask powerful questions: Asking open-ended questions helps customers set and pursue action-driven goals. Coaches can use powerful questions with a customer to aid them in recognizing and confronting habits that may be holding them back. It’s important for customers to address their assumptions about what is and isn’t possible, and possibly reframe current thought processes to create a more supportive mental environment for effective action planning.

  • Best practice tip: Know what conversation model or questions you want to use in advance. Create a list for yourself of open-ended coaching questions. You’ll want to note questions that pull out information, create buy-in, identify significance, and more. Practice these with family, friends, or colleagues in advance so you have an idea of how someone will react.

Take a strengths-based approach: Some social service and case management programs have a tendency to focus on needs, weaknesses, and risks. In financial coaching, coaches can shift the conversation to encourage customers to take advantage of their personal strengths when problem solving. Together, the coach and customer can explore the customer’s underlying assets (ex. personal skills, resources, social network, community resources). With this approach, both coach and customer can maintain the attitude that customer has the strength and resources necessary to be successful.

  • Best practice tip: Financial coaches may recognize strengths before the customers do, so having a conversation around why that particular strength is relevant can be a helpful step in the customer coming to agreement that they identify it as a strength.

3. Mutual Accountability

At The Financial Clinic, mutual accountability is supporting customers in choosing the right path for themselves by having a broad understanding of personal finance actions and acting as a thought-partner in creating positive behavior change.

Share expertise: Strategically provide well-organized, accurate and understandable knowledge about relevant financial concepts and topics, with customer behavior change always in mind. Present all information with customer-focused language in a clear and confident manner.

  • Best practice tip: Whenever possible, provide supportive materials and information in formats that the customer can understand best. This may mean utilizing multilingual documents, finding or creating simplified charts or infographics for complex ideas, or even using videos in your session.

Hold the customer as the change agent: Understand that skill acquisition and behavior change that lead to independence are important aspects of the coaching relationship. Facilitate coaching sessions that allow the customer to test new skills and knowledge, and embrace the idea that the customer should “choose their own adventure”.

  • Best practice tip: Whenever you and your customer decide on an action for them to complete, make sure they understand the why behind each step.

Honor mutual accountability: Utilize empathy and active listening in the process to help the customer challenge their own assumptions. Hold the focus on the goal for the customer when necessary. Commit to appropriate coach action steps and uphold expectations for the customer to do their own research and take ownership of their process.

  • Best practice tip: Set the expectations of the coaching relationship from day one. Clearly define what your role is as the coach, and what their role is as the customer. Some coaches even utilize “coach contracts” to further solidify mutual accountability.

Of course, being a financial coach doesn’t end there. The most commonly overlooked aspect of financial coaching is the consistent practice of personal reflection. With customers representing different backgrounds, cultures, and personalities, coaches are challenged to meet the widely diverse nature of their work, keeping all personal biases and beliefs far from the session. Whether it’s debriefing with a supervisor, seeking the help of a fellow coach, or taking advantage of professional development opportunities, financial coaches must continuously improve their work — in equal parts financial expertise and soft skills — to ensure their customers find the path to achieve their goals. Then, you can watch the magic happen!

The Clinic’s Endgame: A Vision of a Financially Secure Nation

Mae Watson Grote | Founder and Chief Executive Officer

“If you work full time, you should not be poor” said President Bill Clinton in his 1993 State of the Union Address. But yet that is exactly where millions of Americans find themselves in 2016.

Building financial security by navigating the gap between low-wage work and making ends meet is the founding mission of the Clinic, and the demand for our work is growing at a staggering rate.

How can we possibly deliver our mission to all working poor Americans?

As an organization, this is a question we are constantly asking ourselves at the Clinic. Over the past year, we took a realistic look at how we could expand our reach and our impact with the most efficient use of structure and resources. We quickly came to the conclusion that more brick and mortar was not the answer.

Instead, we sought a strategic approach to scale. We developed Change Machine and recently launched the financial security ecosystem to help bring our tried and tested financial coaching model to more organizations.

A strategic approach to accomplishing mission in the face of overwhelming need is also the subject of “What’s Your Endgame?” an article which appeared in the Stanford Social Innovation Review last Winter. In this article, I was thrilled to find a particularly astute articulation of our current answer to that question: Growth.

Authors Alice Guglev and Andrew Stern encourage organizations such as ours to focus on the “endgame” rather than on “organizational growth.” They define endgame as “the specific role the nonprofit intends to play in the overall solution to a social problem.”

The Clinic’s Financial Security Ecosystem is strikingly similar to what Gugley and Stern call the “Replication Endgame.” We have taken our proven and highly effective Financial Coaching and capacity building models and are using technology as the key driver for expanding it to a wider range of partners nationwide. This approach brings to the table more partners who have strong relationships with their individual communities, and in many cases, substantial infrastructure. It also allows more nonprofits and government entities to scale the Clinic’s mission of financial security for America’s working poor, while simultaneously accelerating their own outcomes.

The Clinic’s strategies for replication would not have been possible without first looking at where we were and where we wanted to go. We needed to pinpoint how we had to change and grow internally, so we could grow our impact. As a result we examined our infrastructure to ensure that it supports our replication initiatives. As such, we will soon welcome three additions to our leadership team: a Chief Operating Officer, a Director of Marketing and Communications and a Director of Social Enterprise. They will have responsibility for areas we have determined to be crucial for expanding our impact.

One of the clichés we often quote in our field is the goal of “putting ourselves out of business.” Unfortunately, that goal is nowhere in sight as we look at the staggering number of America’s working poor. Until then, we at The Financial Clinic will continue to replicate proven strategies that bring added financial security to those struggling to get by.

“Raising the Floor” – Turning Good Theory into Good Practice

Mae Watson Grote
Founder & Chief Executive Officer

Helping the Working Poor Back into the American Dream

Helping the Working Poor Back into the American Dream

The evidence is loud and clear. Real wages have barely grown for decades and with fewer middle class jobs available, prospects for the working poor are dim. Does that mean we’re casting low-wage workers and their families into lives of financial instability? Does it mean that because there is no clear trajectory, there is no clear path out of financial problems for this country’s millions of working poor?

Absolutely not.

As far back as 2004, I wrote in Unrealized Gains: “Often workers struggle. Whether they lack sufficient skills to command higher pay or employers fail to provide adequate wages, frequently there is a gap between what new workers received and what they need.”

In their compelling report, Build Ladders and Raise the Floor: Workforce Strategies Supporting Mobility and Stability for Low-Income Workers,” Maureen Conway and Steven L. Dawson argue for helping workers raise their pay and pursue career mobility whenever possible. But they also acknowledge that for the vast majority of low- wage workers that will not be possible, and thus they pose a critical question:

“What strategies can we offer for those millions of U.S. workers who are destined to remain trapped within our country’s expanding low-wage labor market?”

While there is no one right answer and no all- encompassing approach, our accomplishments at The Financial Clinic have created a number of options for helping low-income Americans build greater financial security, even in the context of low-paying jobs. Many of our initiatives address the issues raised by Conway and Dawson including: very practical, day-to-day, job-quality elements that include stable and predictable hours, adherence to health and safety standards, good supervision, sufficient training for job demands, well-designed workflow, cross-training, internal career ladders, access to external public benefits, participative decision-making and shared ownership.


The Clinic’s approach brings the battle to the front lines of nonprofit organizations and public sector entities. We provide training and technical assistance that embed financial security strategies into the daily interactions of the front-line staffs of organizations already delivering social services. Just as Conway and Dawson suggest, at the Clinic we:

  1. Help our customers build better budgets by accessing public benefits and work supports;
  2. Facilitate access to emergency loans; and
  3. Establish long-term savings for financial goals, like retirement funds.

In addition to these capacity building efforts, we use data and research learned from on-the-ground practitioners to keep us and our partners in the forefront of best practices. We deliver financial coaching and legal support to clients with more complicated financial security concerns, creating a financial security ecosystem. The Clinic has even developed a web-based financial coaching platform — Change Machine — to enable widespread use of its strategies and to connect the dots between its own initiatives.


The Financial Clinic has applied our three-pronged capacity building process to dozens of organizations across the country including housing services in Boston and Chicago, community colleges in San Francisco and domestic violence shelters in New York City.

The results of this approach are real and measurable and have positively impacted thousands of lives. By helping their working poor customers focus on improvements in their current situation, our partners have seen a wide range of positive outcomes for their customers including: higher earnings, improved working conditions, more bank accounts and more frequent savings deposits.

For example, the Clinic worked with New York City Department of Small Business Services (SBS) to train Career Coaches to include financial security strategies in their work with low-wage earners. Low-wage workers whose career coaches assisted them in establishing automated savings had a 31 percent increase in weekly income. Those whose coaches assisted them in opening low-cost bank accounts had a 33 percent increase in weekly hours worked.


The Clinic is committed to lasting change for the working poor. Using the power of Change Machine to more comprehensively integrate financial security strategies into workforce programs, we have launched WorkBOOST NYC*. Like two sides of a zipper, this initiative meshes the Clinic’s strategies with the mission of our workforce development partners to provide a more complete solution for ending poverty. Our vision for WorkBOOST NYC is to leverage what we learn on the ground for lasting change that can be felt far beyond the parameters of this project.

“The world has changed,“ says Bret Halverson, a NYC-based workforce development consultant. ”Long term changes in the labor market require workforce programs to enhance and expand their services to effectively serve job seekers. The WorkBOOST NYC comprehensive approach to integrating financial security strategies into workforce organizations offers great promise for achieving better workforce outcomes for program participants.”

In Unrealized Gains, I also pointed out: “Employment does not necessarily guarantee solvency — that is, the ability to meet all one’s financial responsibilities.” Unfortunately, more than a decade later this is still the economic reality, but as Conway and Dawson argue and the Clinic has demonstrated, we can “provide hundreds of thousands of low-income people an essential level of stability and dignity.”

Every day, we help our partners “raise the floor” through our financial security ecosystem which is rooted in our belief that the working poor shouldn’t be dealt out of the American dream.

* WorkBOOST NYC is made possible by a grant from JPMorgan Chase & Co. The grant is part of JPMorgan Chase’s efforts to enable community partners to help individuals and families save money, build credit and improve economic opportunities in communities around the world.

Quantifying Financial Security

Financial Capability Scale and Well-Being Scale

Navigating the field of financial coaching, although intensely gratifying, can often be a difficult and confusing journey. Organizations and practitioners providing financial coaching serve customers from diverse backgrounds and unique situations, which makes it important to pinpoint the specific needs of each and to have a system to understand the nature of various financial situations. Thanks to a new national study that conclusively demonstrates that financial coaching can make a measurable difference in an individual’s financial well-being, we look for ways to define an individual’s own sense of financial security.

In this article, the Clinic explores two tools that were created to measure this very issue: the Consumer Financial Protection Bureau’s Financial Well-Being Scale and the Financial Capability Scale (“FCS”) created by the Center for Financial Security at the University of Wisconsin-Madison.

Both the FCS and the CFPB Financial Well-Being Scale comprise a series of questions that can be asked of financial coaching customers with a system for scoring customer responses. The generated score can then be utilized at the programmatic level both by comparing scores across customers and by tracking progress of the same customer over time. The scales also offer highly insightful questions, the responses of which can be used by financial coaches to identify the most appropriate next steps in a financial coaching engagement.

The FCS asks highly detailed questions and offers response options that are mostly binary. 1 Conversely, the CFPB Financial Well-Being Scale asks significantly shorter questions that offer a broader range of options. The scales also differ due to their intended design: The FCS aims to measure its respondent’s financial security or financial capability, while the Financial Well-Being Scale seeks to further measure its respondent’s financial well-being. It is a slight difference in language, but a rather large difference in meaning. Financial security or capability is more focused on behavioral measures, for example paying bills on time and consistent savings, while financial well-being is more focused on an individual’s perception of their financial situation, including level of financial stress and other less tangible factors.

A sample question from each scale is presented below:

When the Clinic developed the online platform Change Machine to provide practitioners with the tools and resources to increase the impact of their financial coaching, the FCS was integrated to better understand customers’ financial insecurity. Since implementing the FCS in 2012, the Clinic has seen positive correlations between the financial security outcomes achieved by customers and their change in FCS score. Where Clinic customers have more outcomes, they also tend to have a greater rise in their FCS score, as depicted in the graph below:


This analysis shows a positive correlation (.251) between changes in customer FCS scores and quantifiable outcome achievement. For example, customers whose FCS score increased by 2 or more points on average, also achieved 1.8 quantifiable outcomes. (For information on the Clinic’s outcomes framework, please read Building Financial Security through Financial Coaching)

When asked how the FCS affects her work with a customer, Clinic coach Alma Rojas describes how “the FCS questions are so aligned with the Clinic’s mission that I intuitively used them to create a framework for my coaching meetings. Based on how customers answered the questions, I would know what we needed to focus on during the meeting.” She agrees that customer responses to these questions determine her next steps, especially in the very first meeting with the customer when they are asked about their ability to pay for unexpected expenses and emergencies, if they had late payments in the last two months and whether income is more or less than expenses.

Alma also feels that using the FCS inspires her to learn more about her customers’ well-being by expanding upon their answers:
“I find it interesting that although the questions have fixed responses (often binary), you can still learn a lot about a customer’s behavior/mindset and current situation…. Sometimes, the answer is like an emotional-reaction: They don’t believe they are capable of achieving their goal or they just don’t know how, because they might not have the knowledge or resources. But I always remind them that they took the hardest step already by reaching out and coming to me and that together we can try to find solutions. This serves to boost self-esteem and build trust.”

As with Alma, when a coach is able to understand a customer’s situation, they are better able to serve the customer in current and future sessions.
Given the Clinic’s mission to build the financial security of the working poor through our own work in direct services as well as partnering with providers of varied social services, we have decided it is best to use both an outcomes and a well-being approach to financial security in order to fully serve our customers.

Financial coaching programs face the constant challenge of tracking customer outcomes. The Clinic conducts extensive data collection and analysis to measure its programs. However, not every social service organization has the capacity to deliver the depth of financial coaching services the Clinic has to offer. Additional measures, such as introducing insightful short surveys like the FCS or CFPB Financial Well-Being Scale can reduce the burden on the program, and play a significant, positive role in meaningful service delivery.

What is the Financial Security Ecosystem?

Ecosystem Features | Change Machine | Why Bundle | Learn More | Partners & Funders

the Clinic and its ecosystem partners provide a more complete solution for Americans in need.
The financial security ecosystem or “ecosystem” is a holistic partnership approach that builds financial security for the working poor at scale and accelerates sector-specific missions and outcomes. This complete bundle of the Clinic’s best practices and services is designed to seamlessly collaborate with a partner organization’s existing services.

The goal of the ecosystem is to ensure that financial insecurity isn’t keeping working poor families and individuals from achieving other facets of the American dream, like full-time employment, a secure home, education and financial mobility. Like two sides of a zipper, by meshing strategies that build financial security with other sectors’ strategies for ending poverty, the Clinic and its ecosystem partners provide a more complete solution for Americans in need.

What are the features of the ecosystem?top

Capacity Building
Providing technical assistance and training to build financial security strategies into the daily interactions of front-line staff of the partner organization.

Direct Services
Delivering financial coaching and legal supports to those clients with more complicated financial security concerns.

Field Solutions
Using data and research to leverage lessons learned from on-the-ground practitioners to create high impact far beyond an initial program by informing best practices, the field and public policy.

Completed Actions Metrics

Powered by Change Machinetop

The Clinic created a web-based financial coaching platform called Change Machine, that makes the financial security ecosystem possible. Change Machine seamlessly connects the three strategies in the ecosystem bundle, making it easy for partners to adopt the strategies, integrate them in their existing services, and sustain the work far into the future. Change Machine also makes it possible for the Clinic and its partners to identify barriers to financial security and provides the hard data needed to make the case for systems change.

Why bundle the services?top

A staff member from The Financial Clinic assist a client with financial training. Financial coaching (direct service) is a proven strategy for building financial security, but it is time intensive and a single coach can only reach 500 families in a year.

Training front-line staff (capacity building) to utilize strategies that build financial security makes it possible to reach thousands, but families might only receive that support once.

By meshing the two approaches, front-line staff are able to give an entry level approach to financial coaching to thousands, and refer those with the greatest need to a financial coach – increasing both the scale and impact of services. We also have evidence that integrating strategies to build financial security into the work of other sectors – for example workforce development – improves outcomes.

Beyond the customers themselves, by implementing both approaches using Change Machine, the Clinic and its partner are able to collect important data to analyze progress, identify the strengths and weaknesses in program delivery, and propose solutions that reach well beyond the partnership (field solutions).

Want to learn more?top

Training at The Financial ClinicCheck out the following articles and publications.
For evidence that building financial security in other sector work improves sector outcomes, check out Scaling Financial Development:

Improving Outcomes and Influencing Impact.
To see the results and analysis of the national study on financial coaching conducted by Urban Institute and commissioned by the CFPB, check out A Random Control Trial of Financial Coaching:

The Practitioners’ Overview of “An Evaluation of the Impacts and Implementation Approaches of Financial Coaching Programs”
To learn about financial coaching as a strategy for building financial security, read: Building Financial Security Through Financial Coaching:

The efficacy of financial coaching for customers prepared to work holistically. While financial insecurity is pervasive, not everyone needs a financial coach.

For more information on The Financial Clinic and the services and strategies it employs, visit

Ecosystem Partners & funderstop

Ecosystem Partners:
Coming Soon!
Ecosystem Funders:
JPMorgan Chase & Co.
Bank of New York Mellon

An Interview with Change Machine’s Creators

Aubrie Fennecken | Director of Development

Becky Smith, consultant and former chief business development officer, and Mae Watson Grote, founder and chief executive officer of The Financial Clinic, at the public launch of Change Machine.

Aubrie: I’m here today with Mae Watson Grote, founder and chief executive officer of The Financial Clinic, and Becky Smith, consultant and former chief business development officer, to learn more about their early conversations in 2010 to move the Clinic’s proven model for financial coaching from a ToolKit in a three-ringed binder to a versatile, multi-function online platform. After years of planning and development, a software platform has come to life, Change Machine, incubated and launched by The Financial Clinic. With more than 1,000 users after its October 2015 launch, the platform has the potential to dramatically improve the way social service organizations address financial insecurity nationally.

Get an inside look at the birth of the platform, and hear about what you can expect from Change Machine in 2016 from the changemakers who brought it to life! (For news on the latest releases, check out the Change Machine blog)

Aubrie: So Mae, in a nutshell, what is Change Machine?

Mae: Change Machine is an online, financial coaching platform for the social service field. It provides users with financial coaching tools they can use in their work with customers, and the professional development supports they need to be successful in delivering their services. It’s home to 10 years of field experience, lessons learned and best practices. We’ve assisted over 15,000 families and over 320 organizations, and our accumulated knowledge and field developments are completely accessible.

Aubrie: Becky, rumor has it you were “keeper of the ToolKit”, which I understand was the Clinic’s original blueprint for financial coaching … a heavy binder you shipped all over the country to train all of these organizations. What made you decide to move your Financial Coaching ToolKit online?

Becky: Mae handed me a napkin and said, “Make it happen.” Kidding!

When Mae asked me to start the Strategic Initiatives Department in 2009 and scale our training and technical assistance, we didn’t know what the journey had in store. In our first year we teamed up with workforce programs, domestic violence shelters, housing organizations, legal service providers and community colleges … and that was just the tip of the iceberg.

The work took off, and every new experience demonstrated how dynamic and versatile financial coaching is. We thought, “Hey, this stuff could transform a lot of social services!” But there was no way could we do it one nonprofit at a time … we certainly didn’t want to ship binders forever, … so we needed to move the well-worn ToolKit online and “wiki-fi” it. That’s how I experienced it anyway. Mae?

Mae: Many factors got us thinking that the ToolKit should be online. Just as the Clinic was getting off the ground, a mentor observed that what we were doing belonged online. I filed that away … and then the field took off. We experienced wild growth, and the demand for our training and technical assistance services outpaced our ability to meet it. In other words, we had a pipeline before we had a product.

We were methodical every step of the process to build Change Machine. We studied the growing field carefully, and approached a few other tech players to partner and bring the ToolKit online. Technology was taking the world by storm, but nonprofits are often several steps behind the market. The Clinic has always been data driven with multiple parts of the ToolKit corresponding to quantifiable outcomes. We could envision how technology could make coaching conversations come to life in a powerful way.

Aubrie: So Becky, Mae handed you this napkin, then what? Were there other versions of the platform before you landed on Change Machine?

Becky: Oh yes! It was “GreenPrint” in its proposal stage. The first version of Change Machine was built in 2011 using Ruby on Rails, and we called it ToolKit 2.0. The tech juices weren’t flowing quite yet! Then we found our development partner-in-crime, Familiar Studio, and Change Machine was born on the platform.

Aubrie: How has building a web-based platform changed the way the Clinic operates?

Mae: I can’t say that we knew exactly what we were signing up for. I remember the day Becky walked into the office and said, “You know we’re building a software company?”

Becky: I came back to the office from a meeting with the developers who said, “How quickly can you read The Lean Startup? Little by little, we learned the tech vocabulary that described the way we were working with each other. Stand-ups and sprints became a part of our day-to-day operations.

Mae: Apparently we’d been working agilely before we knew there was a word for it! Now we’re bringing these practices to the entire organization.

Aubrie: Wow, it sounds like quite a journey for a nonprofit to build a software company from scratch! Change Machine officially launched this year. What does that mean for the platform?

Becky: From a technical standpoint, the launch means the first product roadmap is fully developed and the software is ready to bring to the market. Of course, we’ve been delivering Change Machine to our partners for nearly three years as we’ve been building different functionality and content. Now we have the full infrastructure and team in place to operate the platform on a larger scale.

Mae: And from an organizational standpoint, the launch means Change Machine is able to serve the Clinic’s mission in two distinct ways. First is the central reason we built Change Machine — it enables us to achieve our mission and vision more effectively and efficiently. The second is that as a social enterprise, Change Machine allows the Clinic to achieve sustainability, so that we can continue to bring the most cutting-edge tools and resources to the field.

Aubrie: What’s the next direction for Change Machine?

Mae: The entire Clinic is actually in the process of a transition. For the past eight years, the Clinic has offered its capacity-building services across the nation. With the launch of our “financial security ecosystems” this year, the Clinic will now be able to provide the full range of its strategies nationally. We’re growing rapidly, but we’ve been planning for this growth for years.

Aubrie: That sounds like an announcement is in the works. Can you share any spoilers?

Mae: I can’t share anymore surprises today, but keep an eye on the Clinic this year for lots of news!

Introducing the Financial Security Ecosystem

A Holistic Model for Scale and Impact

“Ecosystems are dynamic and co-evolving communities of diverse actors who create new value through increasingly productive and sophisticated models of both collaboration and competition.”

Eamonn Kelly. Business Ecosystems Come of Age, April 2015. Deloitte University Press.

A Fully Developed Financial Security Ecosystem

After creating and evaluating three very different service-delivery models over the last 10 years, the Clinic has honed in on a “best practice” model that we are calling a “financial security ecosystem (ecosystem).” Through a decade of building financial security, the Clinic has found that everyone experiences some level of financial insecurity, but different resources are appropriate for different issues and outcomes. With this in mind, the Clinic designed the ecosystem around the mantra, “everyone experiences financial insecurity … but not everyone needs a financial coach.”

This driving mantra manifests itself in the Clinic’s new ecosystem: the bundling together of the Clinic’s best practices and services in collaboration with a partner organization to maximize its ability to build financial security for the working poor and the partner’s ability to achieve its mission.

“Diverse Actors” Innovate

Alongside our new social service partners, we will create a dynamic community that achieves both scale and impact. Our collective strengths, like diversity of perspective and shared passion for mission, are the foundation for our new ability to learn collaboratively, ensuring sustained success.

“Sophisticated Model of Collaboration” Builds Scale

First we will “bake in” financial security strategies into our partners’ programming to build financial security at scale. For example, thousands of job developers, domestic violence advocates, re-entry specialists, and career coaches have already opened bank accounts or prioritized debt for their customers, as these are roadblocks that risked the practitioners’ ability to achieve mission. By building capacity and innovating systemic solutions, the Clinic and its partners are able to build financial security at scale.

Impact and “Increasing Productivity”

Because thousands of practitioners are building financial security, hundreds of thousands of working poor people are simultaneously screened for issues that are better addressed by a financial coach or personal finance attorney. In an ecosystem, the practitioner addresses the issues best correlated to their mission, and those that require additional financial or legal expertise receive heightened scrutiny by a financial coach or personal finance attorney.

This improves the efficiency of all employees and therefore the organization. Financial coaching has demonstrated impact on the debt, credit and savings levels of working poor Americans, those earning on average $23,000 a year, or just above the poverty level for a family of three.

Providing Financial Security-Building Services

This impact, in turn, deepens the value of the partners’ mission. For example, in a partnership with the New York City Department of Small Business Services, the Clinic trained career coaches to provide financial security-building services as part of their workforce development with customers. The study found that customers achieved significantly higher retention and advancement outcomes–27 percent additional income earned and 67 percent additional hours worked–when they also achieved financial security milestones with their career coach.

Whether it’s a practitioner’s increased productivity, or a “faster, better, cheaper” model for ending violence or recidivism, the financial security ecosystem builds financial security at scale, and accelerated outcomes for its partners.

Funding a Financial Security Ecosystem

To learn more, read about the investment from JPMorgan Chase & Co. to fund a financial security ecosystem in New York City, which is part of a $1 million multi-faceted project that will build financial security for working poor Americans nationwide.

Change Machine: Built for ‘Transformative Scale’

SSIR image

Stanford Social Innovation Review: Informing and Inspiring Leaders of Social Change

The last few weeks of 2014 abound in top trends: Best books, most Google hits, favorite movies.

I have a few “best of the year” observations, but a singular article stands heads and shoulders among all my reading for the year, “Transformative Scale: The Future of Growing What Works” by Jeffrey Bradach and Abe Grindle, published in the Stanford Social Innovation Review. Not only does it confirm the validity of the $900,000 investment The Financial Clinic has made to scale its mission and accomplishments, but affirms our investor’s expectations, like The Prudential Foundation’s recent $500,000 grant to promote financial security outcomes for neighborhoods across the country.

The subject of these investments is the Clinic’s Change Machine, cloud-based platform that enables nonprofit organizations and public agencies to incorporate powerful financial coaching strategies into their programs.

Bradach and Grindle put forth “nine strategies for transformative scale” that are so illustrative of what we’ve set out to accomplish with Change Machine that it’s worth reviewing each point, grouped into internal and external themes:

“Organizational pathways: Building on and expanding what individual organizations can do”
Change Machine combines the Clinic’s financial coaching blue print, outcomes framework, content guides, customer engagement tools, specialized content for at-risk populations, and active community forum under one roof and makes them accessible to programs working with individuals and families on their finances. All of these resources advance an organization’s capacity to embed financial development services into its program and consistently measure its performance, reaping enormous benefits from its investment.

1. “Distribute though existing platforms”: Bradach and Grindle observe that successfully scaled solutions “hitch a ride” to existing systems. The Clinic’s theory of change is premised on the hard reality that all the communities social service providers seek to support experience underlying financially insecurity. Whether its job seekers stymied by credit checks or formerly incarcerated individuals overwhelmed by debt, the Clinic has yet to encounter a system that can’t benefit from greater financial security.

2. “Recruit (and train) others to deliver the solution”: Since 2006, the Clinic has been training case managers and social workers on the front lines of anti-poverty efforts. After building the capacity of over 1,600 practitioners in 260 organizations across 19 states, we’ve honed a set of strategies and tools that enables practitioners across diverse sectors to build their own participants’ financial security. This early success inspired us to cast Change Machine’s goal as reaching all 1.8 million practitioners
in the country to work to alleviate poverty.

3. “Unbundle and scale up the parts that have the greatest impact”: While the Clinic defines its mission as a combination of its six outcomes around assets, banking, credit, debt, taxes and financial goals, a critical turning point in our evolution was decoupling these activities to focus on the specific participants’ barriers. Unlocking identity theft for domestic violence survivors or building credit histories for individuals seeking to own homes allows us to zero in on the most relevant and impactful aspects of financial security.

4. “Use technology to reach a large audience”: The Clinic didn’t need to spend untold hours printing ToolKits or spend outrageous sums on shipping to appreciate how powerful a cloud-based platform could be. Instead, we honed in on how technology facilitates access to new audiences. Scores of programs and practitioners have sought the Clinic’s training and technical assistance, but don’t have the same resources as many larger organizations and networks. Enabling technology can radically reduce costs, thus Change Machine allows us to better meet the market demand and unlock interest among vast new audiences.

“Field-building Pathways: Pushing the field and its constellation of actors towards a shared target”: Bradach and Grindle argue that to be truly transformative, strategies must also bring together disparate actors to advance the field in concert. This reflects the Clinic’s distinction between its mission and vision. While our day-to-day is all about building financial security one milestone and outcome at a time, our vision is to transform those on-the-ground lessons into large-scale, system-level solutions and social innovations that will have an impact on working poor people nationwide.

5. “Don’t just build organizations and programs, strengthen a field”: Throughout its history, the Clinic has consistently applied a systemic-change lens to its programs and services. It’s why we were eager to participate in the Consumer Finance Protection Bureau’s randomized control trial assessing the impact of financial education and coaching. The evidence base created though the study will be key to establishing new “best practice” standards to lead the field, build the case for additional resources and investments, and expanding financial security for working poor Americans. Change Machine is a dissemination tool well-positioned to take the lessons we are learning and share them with the field. For example, during the study we have learned more about customer outreach and retention, and those observations were immediately translated into practitioner tools now featured in Change Machine.

6. “Change public systems”: Systemic change can also be reflected in new strategies for public systems. Bradach and Grindle put forth “a simple truth: the path to transformative scale in sprawling public systems requires changing the systems themselves.” The Clinic illustrated this in a partnership with New York City’s Human Resources Administration Emergency Intervention Services in identifying financial obstacles among domestic violence survivors seeking support, and then knitting solutions into the fabric of existing services. As a result, HRA-EIS’s contracts with service providers prominently feature financial security activities
as a core component of the services delivered at community-based domestic violence programs.

7. “Embrace the need for policy change”: A driving impetus for building Change Machine has been the promise to drive policy change. Already Change Machine is generating “big data” –an unprecedented body of information about working poor people’s financial security and the steps required to achieve their financial goals. We are eager to engage researchers and policy makers to analyze the data for policy and advocacy efforts.

8. “Don’t ignore for-profit models for scale”: Change Machine must be a viable business in order to be sustainable. The Clinic will learn a lot over the next year as Change Machine comes to market, and it is likely that we will modify the business model as a result, but like all widgets, its long-term success will depend on practitioners finding and paying for its value.

9. “Alter people’s attitudes, beliefs, and behaviors”: Here, Bradach and Grindle point to the very essence of financial coaching. At the core of coaching is to emphasize people’s strengths and hold them accountable to their goals, which is what makes this intervention so powerful. So powerful, in fact, that in training, practitioners typically apply their new skills and tools to themselves and their families first. In doing so, they become advocates for the very capacity we are looking to build and the systems we are seeking to change.

As if the preceding themes weren’t enough, the Clinic knows Change Machine will achieve transformative scale because it was built by practitioners, for practitioners. The platform is fundamentally a solution created locally to resolve the financial insecurity among the communities we care so deeply about. As such, Change Machine will transform the lessons the Clinic has learned on the ground into large-scale, system-level solutions.