This is part of a larger series on Kiva's strategic initiatives  and innovative loan products, which are designed to expand opportunities for more borrowers. Kiva has partnered with Kenya's Strathmore University  to fund loans for tuition and laptops -- helping to narrow the higher education gap discussed in detail in this blog post.
All countries -- industrialized and developing alike -- are facing the same challenge: How to target funding to maximize growth?
One accepted development model has been to invest in individuals to promote economic growth and reduce poverty. The argument is that skills and knowledge expand institutional capacity, increase economic activity, improve living standards and decrease inequality.
While this rationale has encouraged USAID and the World Bank, among other international donors, to fund education programs in developing countries, almost all of this money has been funneled into primary and secondary education -- leaving universities to compete for scarce resources. As a result, public and private universities are often unable to offer spots to even highly-qualified applicants.
In developing countries, a large number of universities are public and free. Unsurprisingly, these schools often face severe funding challenges. In Sierra Leone, for example, the lack of funding meant that students at Fourah Bay College -- part of the University of Sierra Leone -- were unable to take exams and graduate because the school had run out of paper .
But underfunding is only part of the problem. Institution rigidity makes it difficult for schools to adapt curricula to changing market circumstances. Even students that graduate from public universities have difficulty finding jobs. In the Philippines, for instance, the incompatibility between education and the job market led to the unemployment of 600,000 university graduates in 2011 .
Can private universities fill the education gap?
For a while, private universities -- like  Kiva  partner  Strathmore  University  -- and charter schools have been trying to fill the gaps in public education systems around the world. So much so, in fact, that a third of all universities in Africa are currently privately-funded. Some of them have been able to establish themselves as viable alternatives to public schools, while other have offered lower-quality education at a higher price.
Even with more universities, demand continues to outstrip supply. In 2008, there were about 4 million students enrolled in universities in Africa, while there were 40 to 80 million secondary school graduates that same year. This leaves a large number of qualified young people without access to higher education.
Even if there were enough spots open, low-income students still have difficulty paying the costs associated with advanced education, like room and board, books, and transportation. A few microfinance institutions have attempted to address this problem by offering student loans where government subsidies fall short.
Kiva has supported a number of these partners with its traditional loan model. Nevertheless, it seems that there is tremendous room for impact in targeting more vulnerable groups for broader access to higher education. To this end, Kiva is looking to partner with organizations, like Strathmore University, that have developed new and innovative ways to give underserved students the support they need to worry less about costs and more about grades.
Stay tuned for a more focused look at funding challenges in our next blog on higher education.
Ian Matthews is an intern on Kiva’s Strategic Initiatives team, looking for new partners and loan products to extend opportunities and access to even more people around the world. Ian has an MSc in Global Politics from the London School of Economics and Political Science and has previously done fieldwork in Honduras. Send him your feedback on this blog series at firstname.lastname@example.org .
photo courtesy of JJ Casas .