The world's first microlending website, Kiva.org, believes that a quality education for ambitious students in developing countries may be only $25 away.
The organization, which invites Internet users from around the world to provide small, no-interest loans to poor small business owners, announced Monday it will be extending its loan programs to include educational loans for students.
In the countries that Kiva.org serves, "a one year certificate in accounting can increase a person's income 200 to 300 percent," Premal Shah, President of Kiva.org, told HuffPost. "Education has a high return on investment but the biggest barrier is financial hardship."
American students and financial institutions are used to a robust lending system that allows them to borrow and repay loans over a long period of time to satisfy their academic aspirations.
But in the places like the pilot program's countries of Lebanon, Paraguay and Bolivia, lower and middle class students have few options if their families cannot pay for the tuition and incidental costs of higher education, Shah continued.
"This student loan 'product' doesn't really exist in the developing world because there's no real track record of repayment, so banks won't issue loans or create new programs. It's a chicken or egg problem."
Kiva.org aims to break that cycle by definitively proving one way or the other whether higher education students are good loan candidates and local banks and other lending organizations will follow as they did with small business microloans. "If we can show a high repayment rate, we think it will have a huge demonstration effect."
Original source: http://www.huffingtonpost.com/2010/09/20/kivaorg-expands-microloan_n_730824.html
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