Despite the fact that many would-be students cannot afford the cost of college in the US, at least there are loans for the determined. The Obama Administration pours loads of cash into the hands of those eager enough to pursue a degree and all the Dominos pizza that comes with it. In fact, a recent overhaul of the student loan program in the states makes it even more accessible for young Americans to enter college. In countries less fortunate, your options are very limited as far as attending university. Imagine a vehicle in which people from all over the world would be able to donate as little as $25 towards individuals wishing to pursue higher learning. Imagine no further. Kiva, the pioneer in micro-lending for entrepreneurs in less fortunate countries that has loaned more than $150 million to 408,000 entrepreneurs in 53 countries, has entered the student lending business.
“Student loans don’t really exist in the developing world, like they do in the U.S.,” says Kiva President Premal Shah. “The process is like watching a new baby being born. Everyone wants their child to be able to go to school.” This move to enable peer to peer lending for student loans will empower and motivate youngsters in emerging countries to attend university. Along with this education comes a documented 200-300% lift in personal incomes after graduation.
As Kiva enters this sector of their lending platform, the issue of risk is always a lingering concern. Relying on students in 3rd world countries to repay these loans is up for question and unproven at the moment. Loan officers at Kiva are now being trained to identify potential students for loans in the same way they were trained to identify worthy candidates for small business loans.
“This is really a very public field test. This is like that moment 30 years ago where it was unproven whether unsecured loans to unbanked women would achieve a high repayment rate. That’s what’s so interesting about what’s happening now.” Kiva.org is making student loans available first to individuals in Lebanon, Paraguay, and Bolivia. After the pilot program shows strength, they plan to expand to at least another dozen countries.
Considering students in the U.S. received more than $109.7 billion in federal aid during the 2008–2009 academic year, Kiva is under the impression that opportunity exists on a global scale as well. As Shah states, “it could be the very impetus needed to make education accessible for everyone around the world.” Only time will tell.