Raise your hand if you (or your parents) have an outstanding student loan. Okay, now put your hand down -- people are starting to stare.
Probably about two-thirds of you raised your hand if you went to college in the United States. That means that two-thirds of you are accustomed to the excruciating realization that, after years of monthly payments, your balance never goes down.
Now, imagine for a second what you would have done if student loans didn’t exist. Would you have worked a part-time job? Gone to a cheaper school? Not gone at all?
After high school, we all have a choice to make. Often, it’s a delicate balancing act between exalted dreams and financial realities. Student loans give our dreams a leg up, allowing us to explore our interests and maximize our potential.
But in the rest of the world, financial markets for education are lacking  and sometimes nonexistent. Few teenagers have the collateral they need to borrow money against their future earnings, but the price of education continues to climb across the globe. Now more than ever, we need newer and better cost-sharing mechanisms to help more young people go to college.
This attitude has led to a rapid expansion in public education spending since the 1950s, and student enrollment has skyrocketed accordingly. During the 1990s alone, worldwide enrollment jumped from 68.6 to 110.7 million  and doubled in developing countries from 29.3 to 58.3 million.
None of this has slowed demand. By 2015, it’s estimated that the number of college-eligible students will triple in at least 10 countries on the continent -- including Tanzania, Ethiopia and Rwanda -- representing a significant challenge to already packed public universities.
The stop-gap solution
Cuts to government social spending, paired with the rising cost of living, has led to protests in many developed countries  and a systemic loss of trust in public institutions in their developing neighbors. These trends have also degraded the rationale behind public education in the first place: equity.
In Malawi for example, the majority of public funding for education is, paradoxically, funneled to the top 10% of income earners. They’re the ones who can pay for tutors and better secondary schools to increase their kids’ chances of scoring well on entrance exams. The net result is that wealthier students get accepted to and benefit from free tuition at public universities, while only a small sliver of the poor can hope to get in, much less afford it.
Increasingly, private universities and charter schools offer viable alternatives to those left out of the public system. In many cases, these institutions have proven more agile to changing circumstances by offering functional curricula and more egalitarian admissions policies. Nevertheless, high costs continue to marginalize students from remote regions and lower income brackets.
One of Kiva’s Field Partners, Strathmore University  in Kenya, is seeking to bridge this gap by offering loan programs to vulnerable and underserved students. Kiva’s flexible, risk-tolerant capital is ideal to offer longer-term, cost-effective loans to students who wouldn’t otherwise be able to afford a private education. Now Kiva lenders have the ability to help students pay for tuition, computers and other necessary school expenses.
So far so good, but the crisis in education financing is widespread and complex. Other innovative cost-sharing mechanisms are vital if universities are going to keep up with rising demand and ensure that poorer students don’t get left in the back of the class.
In the meantime, Kiva is thrilled to be contributing to the emerging market for education financing, and we plan to aggressively expand our higher education portfolio. Stay tuned in the coming weeks when we will announce and profile a new partner that offers very unique loans based on the fundamentals of work-study programs.
If you are interested in becoming a strategic partner please contact our Community Service team by emailing firstname.lastname@example.org.
photos courtesy of Brad Ruggles , Lester Public Library , Earlham College