Microfinance for Student Loans: Giving Youth a Little Credit : UC Berkeley, Feb 24

I am a big fan of this topic ... super cool event!

The next Silicon Valley Microfinance Network Speaker Event on Thurs, Feb 24 @Blum Center for Developing Economies, Blum Hall, UC Berkeley Campus, Berkeley, CA.


photo: Blum Hall, UC Berkeley campus

The event will feature Kushal Chakrabarti (Co-Founder & CEO, Vittana), Michelle Kreger (Regional Director for Francophone Africa and the Middle East, Kiva) and Noga Leviner (General Manager, Lumni), as they discuss the challenges, successes and future landscape of the new frontier of harnessing microfinance for students loans, both in the US and abroad.

Industry leaders are leveraging debt and equity-like investments as well as P2P lending models to provide youth (both in the US and abroad) with the tools necessary to pursue higher education. As a result, the student-loan market has experienced explosive growth. SVMN is proud to present this unique opportunity to hear the nation's leaders talk about the rise of using microloans for education and answer your questions. We look forward to seeing you there!

Register early! Online registration closes the day of the event. At-the-door admission is $10 more. Tickets are limited! Speaker bios also listed on the evite.

Paying for College : yet another way.

In the past I've covered Vittana, Kiva's higher education loans, life investments, and peer to peer loans. Moving onto the next installment ... social investment funds that invest in the education of college students.

Lumni is a company that invests in the education of college students in Chile, Colombia, Mexico and the USA. Lumni doesn't cover a student's full tuition - only the balance left over after students have received assistance from grants, federal loans, and scholarships. For the USA program, the max you can apply for is $5,000/year.

For the USA program, Students must be citizens/have a SSN, must live in California or South Florida, and must be enrolled in a four-year college. More info about the application process here. If you want to apply then send an email to bayarea@lumni.net or southflorida@lumni.net. Check out some of the students who received funds from Lumni here.

In exchange for the funds from Lumni, each student commits to pay a fixed percentage of income for 120 months after graduation. The exact percentage of future income they are committed to pay varies based on a number of factors including a student's school, time until college graduation, grades, and major. The student’s obligation is complete at the end of that period regardless of the sum paid to date.

Plus, grads don't begin making payments until they have their first job, so the grace period extends as needed. They can pursue any number of careers after college since they pay nothing when unemployed and are exempt from payments when earning small stipends through programs such as Peace Corps or AmeriCorps. But grads DO have to pay for 120 working months; months during which you were unemployed just don't count towards that total. If you are unemployed for 24 months then Lumni then asks you to pay based on household income, not personal income.

The company also offers a career coaching program.

In order to minimize risk, Lumni lends to the children of existing microfinance clients, targeting students in their final year at vocational schools.

Lumni isn't the only one out there.

XacBank, a Mongolian microfinance lender, tends to lend to second-year students, who at least have some record of attendance.

Qifang operates in China, raising money online for Chinese students from Chinese lenders.

Enzi has just put students from India and Iran through Stanford University; they are paying investors up to 6% of their income for five years. Their founder noted that the big challenge is to come up with enforceable contracts.

This Holiday Season, lend $25 to a Student to help them achieve their Higher Ed Dreams.

This video pretty much makes me cry.



Lend a minimum of $25 here on Vittana. 100% of the money you lend through the Vittana website goes to the student, via two intermediaries - Vittana and a partner microfinance institution located in the student's own community. When the student repays the loan, the $25 comes back to you. For further details go here.

I blogged about one of Vittana's co-founders a while ago, here. Tonight I discovered that Vittana's Partnerships Manager, Nick Cane, is a former Kiva Fellow!

Kiva launched its own student loan program on Sept 20. Through the Student Microloans program, Kiva lenders can make a $25 loan to students in Bolivia, Paraguay and Ecuador.



The new program got off to a good start! Just saw this: "Today, Kiva.org posted profiles for 36 students, seeking a total of $19,250.00. We are currently on track to fund all of those loans in full, within 12 hours of being posted on the site," said Kiva president Premal Shah, in an email. "While this pilot is only a small step toward broadening access to student loan funding around the world, we plan to keep a close eye on the program's success in an effort to expand the organization's reach to a number of different countries and a larger group of students in need of funding."

I recently volunteered for one of Kiva's partner organizations located here in San Francisco - Opportunity Fund. Opportunity Fund serves as an intermediary between Kiva (and Kiva's lenders), and the clients. I called Opportunity Fund clients who had graduated from the savings program. Most of these clients had engaged in the savings program to finance higher education opportunities. Calling the clients to congratulate them on achieving their savings goals was a lot of fun!

In addition to Kiva, Opportunity Fund also works with another institution also offering higher education loans to students - Lumni. From the Lumni website: Individuals can invest in local students in a variety of ways including through a tax-deductible donation or by purchasing a low-interest note with a fixed return. In addition to the dual financial and social return of this investment, contributors are helping prove an efficient, sustainable new system for giving students access to college without the burden of a traditional student loan.

Lumni does not allow individuals to make small ($25) loans to students, but since I love what they are doing, I thought I'd mention them:) Also love that two members of the team are linked to Ashoka.

Here's how they work, and the story behind Lumni:



Lumni's business model reminded me of a thought-provoking discussion that took place at a March 3 event that I attended here in San Francisco, about Life Investments. Just something to think about! :)