- In the Philippines, 73% of employers are only hiring college graduates, even after the K12 implementation (Jobstreet.com, 2018).
- InvestEd helps unbanked students finish university through its high-tech student loan program.
- Vanderes Foundation makes its first impact investment in the Philippines.
PHILIPPINES, JULY 2018— InvestEd, a home-grown startup in the Philippines, provides marginalized college students loan products that are exactly fit for their needs, payable only after they graduate and gain employment. This includes loans for tuition, daily allowance, dormitory, projects, vocational study, laptops, and licensure exams. By 2022, InvestEd aims to slash the college dropout rate in half by reaching a total of 300,000 students.
The Vanderes Foundation was set out to improve the access to quality education. In their first year of existence, they’ve been able to support three student loan providers in Southeast Asia. Through them, Vanderes provides underprivileged students with the opportunity to change their lives for the better. These students are often the first ones in their families to go to university and get a degree. The Foundation believes that those degrees are not solemnly the key to a more fulfilling life for the students themselves, but also for their families and especially their future children.
“InvestEd has an ambitious plan; reducing the number of Filipino youngsters that can’t finish their studies due to financial shortcomings in five years’ time. We are very proud to support this goal with our partnership and will help them succeed wherever we can.”
Enrollment Season in the Philippines: A Difficult Time for Low-Income Students
A big part of Vanderes Foundation’s capital will be used to fund vulnerable students during this year’s enrollment season. Just last month, InvestEd was overwhelmed with hundreds of loan applications—most of these came from students who do not have the money for tuition fees and daily allowance to continue their education.
Carmina Bayombong, InvestEd’s CEO said: “One question I always get, is why education loans are still needed even after the free tuition bill. I think our government’s efforts to make education more equitable is promising. However, there are still many dropouts at the public schools, due to insufficient funds for daily allowance. Even before the free tuition bill, we got public school students saying that their primary funding needs are daily food and transportation allowance.
Besides that, what we have to remember is that free tuition is only implemented in public schools and only 12% of our higher education institutions are public. This means millions of students are still not affected by the free tuition loan bill. Many low-income students end up in private schools just because they did not make the capacity cut-offs in public schools. This leads to a total annual dropout of around 600,000 college students due to financial difficulties.”
A Scalable Student Loan Program for Developing Countries
InvestEd uses a unique credit scoring and verification system in order to make lending possible to unbanked students. This allows them to identify creditworthy and quality students at the application stage, in less than 15 minutes with the use of both non-traditional and traditional data analytics. Currently, InvestEd has a 100% repayment rate from its graduated borrowers.
To attract loan capital to fund students, InvestEd allows individuals, corporations and foundations to lend to students in return for fixed annual earnings. Funds provided by lenders are managed by InvestEd to ensure the spread of risk, return and growth of capital. To-date lenders have loaned a total of 7M pesos at InvestEd.
To ensure that their student borrowers succeed in employment and repayment, InvestEd has a Borrower Success Program. The program includes training and coaching in employment and financial literacy. In 2017, InvestEd’s pilot group of students achieved a job placement rate of 33 days compared to the national average of 180 days.
To-date, InvestEd with the help of its lenders, has loaned out almost 4 million pesos to students across five regions, namely Metro Manila, Calabarzon, Cagayan Valley, Central Luzon and Bicol. True to its mission, InvestEd has been serving the marginalized: 22% of InvestEd’s students previously dropped out of college before getting an InvestEd loan; 43% got loans from predatory lenders before InvestEd, while 90% were unbanked or had no access to formal financial services before InvestEd. InvestEd is also empowering more women to succeed, with 61% of its student borrowers being female. These include women who have dropped out before due to motherhood and women entrepreneurs who have been sustaining their education through micro businesses.
Mirte Gosker, Chair of Vanderes Foundation shares, “What I personally really like at InvestEd, is that it was started by two young women. There is still a huge gap in gender equality in the world and men are overrepresented in governments, boards and also amongst startup founders. I’ve come across many courageous Filipino women and truly admire their strength. I’m looking forward to see Carmina and Melissa succeed in their cause and become role-models for women across the world to fix those things that need fixing.”