The company arranges loans for students studying to become nurses, physical therapists, optometrists, and other medical roles. Clasp matches each student borrower with an employer who agrees to hire the student after graduation. The employer also agrees to pay back a portion of the student’s loans in return for a commitment of two to three years of work.
The result is more workers for participating employers and a reduced debt burden for their workers, according to Clasp chief executive Tess Michaels.
The company announced on Wednesday that health care providers including Boston Children’s Hospital, Memorial Sloan Kettering in New York, and multi-state network Novant Health would participate in the program.
The idea for Clasp, which changed its name from Stride Funding last year, germinated while Michaels attended Harvard Business School. Pondering her own tuition costs and asking around, Michaels said she had an “a-ha” moment. “What if you could actually tie the cost of education to the outcomes [and] connect the education to the employment?” she said.
Michaels has raised $30 million of venture capital backing and struck a deal this year with financial lenders to loan $75 million to students. Unlike most other private student loan programs, Clasp’s loans don’t require a co-signer.
Since the company was founded in 2018, more than 10,000 students have gotten loans through its platform, Michaels said. The company makes money from fees it charges participating institutions, but Clasp does not charge students or receive fees on loans.
Some prior employment and loan repayment programs foundered because they included penalties if a worker decided to leave a job before their commitment was up, according to George Washington University professor Patricia Pittman, who studies health care workforce issues.
Clasp’s agreements don’t have penalties or allow employers to claw back prior payments. Employers also can’t reduce a promised salary or cut benefits. If a worker leaves before the end of their commitment, they face only the loss of future loan repayments.
Claw-backs and other harsh repayment provisions are “potentially exploitative” if workers are financially penalized for leaving early, Pittman said. “Without the ability to quit, employers have fewer incentives to create healthy, ethical working conditions,” she said. “The use of these contract breach fees is common with internationally recruited nurses and has led to many abuses as well as below-market wages.”
Solving worker shortages will require more worker-friendly terms, Michaels said. “In order to make a workforce sustainable, you’ve got to think about how you build trust and loyalty,” she said.
North Carolina-based Novant Health started working with Clasp to recruit nurse anesthetists. The goal was to hire nurses for hard-to-fill positions and reduce turnover. “The workforce of tomorrow depends on how we support students today,” Sebastien Girard, Novant’s chief people officer, said in a statement. “By relieving financial burden upfront, we’re building loyalty from day one.”
The overall shortage of health care workers is getting worse as a growing aging population requires more care and workers from the Baby Boom generation retire. By 2035, the US system faces a shortage of more than 230,000 registered nurses and almost 270,000 licensed practical nurses, according to the federal Health Resources and Services Administration.
In Massachusetts, the problem is already acute. A survey last year by the state’s Center for Health Information and Analysis found 17 percent of registered nurse positions, 20 percent of licensed practical nurses positions, and 11 percent of physician roles were unfilled.
Michaels wants Clasp to provide a model for the industry to become more creative and generous in recruiting the workers it needs.
“Part of my mission is to reimagine how we think about investing in talent,” she said. “That just requires a shifting mind-set of what is the art of the possible.”
Aaron Pressman can be reached at [email protected]. Follow him @ampressman.
