Student loans to the developing world
When I was researching my book on P2P lending, I came across Kiva and learned about microfinancing. If you’re not familiar with Kiva, it’s an organization that focuses on microfinancing, or microlending, which involves giving loans in small amounts. For instance, you might lend $25 to a woman in Paraguay who owns a farmer’s market. The borrowers are recommended by partner microfinance institutions, known as MFIs. There’s risk as there is in all things, but the stakes are pretty low.
You don’t gain interest from the loan, but you’re giving someone a better chance at a successful life. You do get back your $25 (at least, that’s the plan), so it’s not charity. Since the cost of living in some of these countries is so low, these small amounts can make a huge impact.
Yesterday I came across Vittana, an Internet start-up that offers person-to-person lending in the form of microloans to students in developing countries. It uses a similar MFI partnership to find deserving students. With Vittana, I see a great opportunity for young people to get an education. I write a lot about ways to pay for college, so this concept caught my eye. I think I’ll have my kids pick a student to sponsor. The holidays will be here soon and if you’re looking for a family project, consider lending money to a student profiled on Vittana.