Student Loans

[Guest]

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[NumboJumbo]

Hi

Do you think the microlending Kiva model could be applied to student loans in developing countries for students who are seeking college or university places. The money will be paid back in installments, once they get a job. Obviously, the money would take a lot longer to pay back and there would be a greater risk to your loan, but hey none of us are lending to Kiva to make money.

I wonder how many Kiva entrepreneurs there are out there who would have loved to have had an opportunity to get the education they dearly wanted, but were unable to, because of lack of funding.

Is this a practical idea or an impractical one. Any thoughts, anyone?

Mike

[Carol]

I like the idea. 
Carol

[AccountAbility]

On another thread here, (I think it was titled "good loans, bad loans") there was some discussion on this topic.  We personally are in Kiva for the income production possibilities of entrepreneurship. 

In many parts of the world, there is no "job" waiting after education.  That's why one of our loans is to an entrepreneur with a clothing kiosk in eastern Europe, even though he is an attorney by training.  The creation of jobs or income-producing businesses is an essential goal of development.

[AGullen]

In many parts of the world, there is no "job" waiting after education.  That's why one of our loans is to an entrepreneur with a clothing kiosk in eastern Europe, even though he is an attorney by training.  The creation of jobs or income-producing businesses is an essential goal of development.

I do agree with your above statement, although to some extend it shows the limits of microlending. Micofinancing alone cannot cure world poverty. An attorney selling shoes at a kiosk is a sign of something larger thats wrong in the economy than the ability to finance cheap loans. The most important factor that needs to change to lift these nations out of poverty is the governments themselves. Other than that however, microfinancing, along with aid and other loans (student loans for instance) can help shore up the short comings of a particular nation. I myself would be nearly as interested to fund a loan to a student in need than any other activity here. I myself am a student, and I wouldn't be where I am if it wasn't for available credit. It's as necessary there as here... just my 2 cents

[AccountAbility]

Basically I agree with you.  But Kiva has positioned itself to make loans to "entrepreneurs" with the goal of helping "the poor" become more productive.  The general agreement here seems to be that home loans and student loans are good uses of credit-- and availability of credit is vital in lifting the poor out of poverty-- but that they stretch the template that Kiva has set up. 

To be successful, home loans assume the person is in some way already productive enough to handle the payments toward paying back the debt.  And student loans need lenders who have the patience for loan terms extending for years.

[Carol]

Hi all

I helped financed this one.  A student making money to help pay for studies.  Sort of the same thing. 
Carol

About the Entrepreneur Location: ZACUALPA, Mexico
Business Name: ANTONIA CARLOTA HERNANDEZ PEREZ
Activity: Animal Sales
Loan Requested: $375.00
Repayment Term: 16 months - repaid monthly
Loan Use: To buy chickens and feed

About the Field PartnerName: AlSol (Alternativa Solidaria Chiapas) 
Partner Since: May 21, 2007
Kiva Businesses: 131
Total Loans: $81,850.00
Active Loan 1+ months late: 0.00%
Default Rate: 0.00%
More about this Field Partner >> 

Antonia is 17 years old and is single. She is in the third year of high school. She raises chickens and sells them to people in the community and also in the city market. This is how she finances her studies. She wants to buy more chickens and feed with the loan, and thereby increase her income.

[AccountAbility]

That's a great "student" loan.      And more power to her.

[AGullen]

Basically I agree with you.  But Kiva has positioned itself to make loans to "entrepreneurs" with the goal of helping "the poor" become more productive.

I do see your point. Constant evolution is necessary however, and I'm sure as the Kiva experiment evolves our options will continue to change as well. I just wish there was more that average people could do. Selling shoes and raising chickens is important, but there are only so many people needed for each activity in each country. What about all the other short comings of these nations? Take for instance the lack of available student and home loans. Kiva is supposedly marketed to the most poor, disenfranchised people in the market. What does it say that students are here looking to finance education and that families are looking to shore up their living arrangements? The people symbolize huge needs in these nations, showing first hand some of the structural shortcomings that aren't allowing these needs to be met. Sorry for the rant, just giving background to where my earlier statements came from...

[AccountAbility]

While what you say is true, we have to separate "needs" from needs to see where loans will work.  Many needs are critical-- even life threatening-- but can't be met with loans because there is no means to repay them. 

Investing in productive enterprises provides the increased income necessary to repay the loan.  Student loans might work this way if (1) there is a job or other productive work waiting when the education is complete and (2) there are investor/lenders who will be patient enough to wait for this to happen.

Probably not within the scope of Kiva, but maybe a three-party arrangement could be worked out between a lender, a student and a future employer who "underwrites" the student loan against providing a job at the end-- Loans for apprenticeships as it were.

[Agent001]

Awesome topic! A group of us are looking at doing something RIGHT along these lines, although probably with a pay it forward model instead of pay it back model. Already researching the beta version for launch to at least guage the potential support! Anyone interested get in touch - Kiva is amazing, but there are lots of great ideas out there and the "average" person is just as capable of creating impactful change as Matt and Jessica and the rest of the Kiva crew - I'm sure they'd say the same.

Take this momentum, and the core of this idea of supporting people to gain self-sufficiency and break the cycle of poverty, and go forth and multiply :-)

--Shawn

shawn.smith "at" agentsofchange.ca
www.agentsofchange.ca