Yes, Vittana has a website. In fact it’s a pretty good one. The Vittana website facilitates peer-to-peer micro-lending where people (mostly in the United States) provide loans to students in the developing world so that they can attend college and technical school.
But we’re not JUST a website; not by a long shot.
Our mission is to empower young people in the developing world by helping them access student loans and complete their education. We want to do this not for hundreds, or even thousands, but millions of young people. With a vision this big, there needs to be some method to our madness.
If you’re wondering how those students magically keep appearing on our site day after day, then this is the post for you!
Here’s a quick primer into our work.
Why we do what we do:
To start, it’s important to remember that almost NO ONE in the developing world has access to student loans. FAFSA-like programs for higher education are virtually unheard of outside of the wealthy Western world, and private banks in the developing world will often only lend to young people if they meet extraordinary high bars (like owning one’s own home and/or business). Therefore, attending college and getting post-secondary training is an impossibility, unless of course, you come from a wealthy family.
Microfinance (the idea of providing financial services to the poor) has been around for 40+ years and has an amazing track record of creating dramatic change in people’s lives. And while there are many banks working hard to serve poor clients, very, very few of these organizations (MFIs) provide services to young people.
So, if you’re young, and you’re poor… you’re probably not going to college. You’re stuck.
Just how many people fit that bill? Right now, there are more than 600 million young people graduating from high school who can’t afford college.
Where Vittana Comes In:
Our job is to help banks and financial institutions build a track record of successfully serving young people. Virtually every single MFI that we talk to says that they see a need for education-focused loans in their community (i.e. there are lots of kids who want to go to school, but who can’t because they’re poor).
Even though these banks and MFIs see the need, they’re timid about jumping in themselves because there are very few examples of how to lend to young people. At a strategic level, MFIs don’t know if young people will repay; at a tactical level, they’re not sure how to create a student loan product because they’ve never served young people before. It’s too big of a risk.
So, we manage the risk, and we help them build programs that are successful. We are proving that students will repay (our students have a 98% repayment rate!). Once we do this at scale, other banks all over the world will start doing this important work as well.
We’re trying to create a chain reaction of TRANSFORMATIONAL CHANGE. We’re changing the way banks do business;we’re changing the way young people invest in themselves, and we’re changing the way education is democratized across the entire planet.
Our audacious goal: Empower 1 million young people with access to life-changing student loans by 2015.
That means we’ve got a lot of chain reactions to start in the next five years. It keeps us pretty busy, but we love it.
So, now do you see what I mean? More than a website, right?
The Nitty Gritty:
Before a student ever makes it onto the Vittana website, there’s a lot of legwork to do.
1-4 months: DUE DILIGENCE
- Before we can even think about getting students on the site, we first have to find the right countries in which to work, and the right MFIs in those countries with which to partner. We’ve developed a sophisticated due diligence process that helps us narrow down countries based on a variety of economic factors and socio-political indicators. (For example, we don’t work in countries with active or recent wars, and we want to make sure that there are potential jobs for students once they graduate.) Then we find banks and MFIs who are interested in innovation and ready for a challenge.
2-6 Months: MARKET RESEARCH
- Once we’ve found the right MFI partners, we help them better understand their new client base (young people) and industry (education). We work with the MFI to survey what jobs are available in their economies, and what schools are training students successfully.
1 Month: PROGRAM DEVELOPMENT
- This is the Vittana Secret Sauce, so forgive the brevity here.
We help our MFI partners define loan terms, develop relationships with local universities and technical schools, market their new product to students and train their loan officers.
1 Year: PILOT
- Finally! Students are interviewed and the best student loan candidates are selected by our partners. We upload them to the Vittana site and fund them with our low-cost capital.
Ongoing: SCALE UP
- We’re obsessive about growth. Smart growth… but growth nonetheless. If things are working well, we find ways to make sure our partners have all the funding they need to grow their student lending programs. If things need to be tweaked so that the program works better for students, and so that processes flow better at our MFI partners… we help them with that as well.
In addition to all this work we do directly with our MFI partners, we also spend a lot of time collaborating with other leaders in the microfinance industry and sharing what we’ve learned.
So that’s Vittana in a nutshell. We’re more than a website – that’s for sure.
Want to learn more? Let us know what you’re still curious about by leaving us a comment or sending us an email at questions@vittana.org. We’ll happily continue the conversation. We can talk about this good stuff all day!
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Thanks for the update! Love it. I don’t want to be one of those snarky self-righteous critics, but shouldn’t you share the secret sauce (1 month program dev) if you want to start chain reactions? If Bank of America learned from you guys and suddenly started making student loans based off your sauce, wouldn’t that be a good thing?
But whatever the reason, I LOVE what you guys are doing and wish you the best best best.
Josh,
Thanks for the feedback and excellent question. My comment about sharing our secret sauce was a little tongue and cheek, because the truth is that we do indeed plan to share all of our learnings, not just with our MFI partners but also with capital markets and other organizations and governments interested in expanding financial services to young people. We’re waiting to publicly release some of our findings until next fall (specifically at the Microcredit Summit in Spain later this year), but are actively spreading our findings within the microfinance industry as we speak.
To answer your question.. yes; if Bank of America started making student loans, that would indeed be a very good thing. There are 600M young people in the developing world who are graduating from high school with no possibility of attending college or post-secondary school. In banking terms, this is a huge potential market. Our job is to prove to the world (to the world’s Bank of Americas) that young people will indeed repay and that they’re a trustworthy credit risk.
By proving that, millions of young people could then access the capital they need to finish school and build a better life for themselves.
Thank you again for the question.
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