Kiva Extends Micro-Loans to Students

Image credit: Kiva.org

Kiva, the world’s best known micro-lending online platform, has launched a pilot of student micro-loans across Paraguay, Bolivia and Lebanon.

The San-Francisco-based company’s has so far focused on connecting lenders with small business owners in the developing world. 

The test program, which presupposes that students in developing countries will repay these loans, seems buoyed by the idea that trust engenders responsibility.

"Without being given the opportunity, students don't have the chance to demonstrate fiscal responsibility,” said Premal Shah in a press release. “We believe the internet community is in a unique position to share the risk of student lending in the developing world and if these students repay their loans -- as we believe they will -- it could be the very impetus needed to make education accessible for everyone around the world.”

Students on the site are currently asking for loans to cover costs ranging from $150 to $1200.  The base loan price a lender can offer is $25. 

While Kiva says the repayment rate on the $108,709,400 of loans with completed loan term is 98.9 percent, it also notes: “this repayment rate is not necessarily indicative of borrower repayment rates since many Kiva Field Partners chose to guarantee or cover individual borrower defaults.” 

Vittana, a comparable student microloan online platform, says that it sees a repayment rate of 97 percent on student loans. 

While Vittana, and other services like Iduka, are already in the business of extending microloans to students, it will interesting to see how Kiva’s new endeavor plays out – both in terms of how the lending community reacts, as well as how successful Kiva is in recovering the loans.