Loans for students in developing nations help fight against poverty
Mercedes White, C/O Vittana
As she cared for her ailing grandmother, Alice Benitez dreamed of becoming a nurse. Growing up in Villarrica, Paraguay, she worked hard and earned good grades so that she could one day go to college. But in 1996 at age 12, her world fell apart. Her mother died and her grief-stricken father abandoned the family. Seeing her precarious situation, Benitez’s uncle took her in. Although he was not well off, he promised Alice if she were admitted to college, he would pay for it.
Years passed and Benitez found herself living her dream: taking a post-secondary course in the medical field. True to his word, her uncle helped pay her way. But then tragedy struck again when her uncle was diagnosed with cancer. Expensive medical bills made it impossible for him to continue to assist with school fees. Without her uncle’s financial support, Benitez was forced to drop out of school.
Not being able to pay for higher education is not a problem unique to Benitez. Close to 80 percent of youth around the world live in families that earn less than $10 a day, according to the World Bank.
Families in the developing world understand that higher education is their children's ticket out of poverty, but saving is impossible when every dollar brought in is needed to pay for necessities like rent and food, according to a report for the World Bank by the Task Force on Higher Education and Society.
Scholarships are limited, and outside of the United States and a few other industrialized countries, student loans simply don’t exist, according to data from the Task Force on Education.
One solution to this problem is Vittana, a Seattle-based non-profit started by Kushal Chakrabarti. Vittana uses the microfinance model to extend credit to young men and women in the developing world.
“When you ask street kids (in the developing world) what they want to be when they grow up, they say the same things American kids say,” Chakrabarti said. “They want to be doctors and lawyers and teachers.” But if they can’t pay upfront for college, they can’t enroll — no matter how bright, talented or hard working they are, he added.
In 2006, Chakrabarti started to explore the possibility of using the microfinance model to provide student loans to young people in the developing world, but financiers were skeptical about the prospects.
Microfinance programs have shown how lending money to a person to buy something like a cow generates revenue. Milk and other dairy products sold at local markets for cash provides the owner income to repay the loan and rise above subsistence living.
But people told Chakrabarti it didn't work the same way with education. “I was laughed out of meetings and told that ‘education isn’t revenue generating,’” he said.
Chakrabarti knew from personal experience what people were telling him wasn't true. After all, he had more money than he knew what to do with because he went to college. “Education is the biggest revenue generator in the world,” he said.
How a Vittana loan works
Since its founding in 2008, Vittana and its supporters have provided loans for more than 5,000 students in 10 countries around the world
When a student applies for a loan, they meet with a Vittana representative in their country to discuss their needs and educational objectives. “I am agnostic about the kind of education it is,” Chakrabarti said, “It just has to be economically viable. Vocational programs, English classes and traditional college degrees are all funded as long as the student can demonstrate it can improve their earning power. Vittana found that on average, loan recipients’ earning power triples after completing their education.
- Which U.S. cities are the best for upward...
- What consumers need to know about chip...
- Saving just $4 per day can make you a...
- Many taking too many risks on public Wi-Fi,...
- Sex and violence harm rather than help...
- Is paying for extended warranties worth it?...
- Vail set to announce that 2 Utah ski resorts...
- Dave Ramsey says: Make a written game plan to...
- A more family-friendly minimum wage 27
- With Boston out, another Salt Lake... 14
- Hillary Clinton offers energy plans,... 10
- Saving just $4 per day can make you a... 9
- What consumers need to know about chip... 6
- Court orders EPA to relax air-pollution... 4
- Fed is likely to delay 1st rate hike in... 3
- The art of complaining about a product 2