In Mexico's higher education sector, public universities are overcrowded and private universities are too expensive for the majority. FINAE is a social impact financial institution that aims to promote a generational shift and encourage more youth to continue with their education. FINAE targets low-resource students, a majority (70%) of who are the first in their families to pursue a higher education, and provides student loans for them to attend private universities.
FINAE partners with individual, private universities to share the costs and risks associated with financing student loans. These universities absorb the marketing and infrastructure costs (FINAE works out of admissions offices) necessary to promote the loan program. Universities also fund a First Loss Collateral Fund in case a student defaults on his or her loans. A small staff, low operating costs, and risk-sharing with university partners permit FINAE to remain sustainable and profitable while providing affordable interest rates (around 15 to 17%) to students. FINAE currently partners with 10 universities in 24 states, totaling 87 campuses and more than 20% of total private enrollment in Mexico.
The loan program's primary product, ennti, is a long-term payment plan that covers up to 100% of university costs and lasts up to 3 times the duration of studies (for example, if a student spends 4 years in university, he or she would have 12 years to pay back the loan). The plan consists of low, predetermined monthly payments that increase after the student finishes his or her studies. FINAE recently launched the first student loan securitization in Latin America, guaranteed by the Inter-American Development Bank, to cater to the growing number of loan recipients and the extended repayment period.
FINAE additionally provides limited support for students to find jobs after they complete their studies.
FINAE originally distributed crédito educativo FINAE, a traditional loan where students paid interest on remaining balances. However, students and their families had a limited understanding of the whole student loan repayment process, so few applied. In 2009, FINAE switched over to a long-term university payment plan, which has since proved popular and accessible to low-resource students.
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BeneficiariesOtherFirst generation college students; low- and middle-income students
FINAE's grants loans to students 18 years and older who have been accepted into a participating private university. FINAE conducts credit checks and a socioeconomic evaluation of the applicant and his or her reference before granting the loan.
FINAE currently partners with 10 private universities, which translates to 87 campuses in 24 states of Mexico, approximately 20% of the country's total private enrollment.
In December 2010, FINAE had provided loans to 923 students for a total of 36 million pesos. By September 2013, a total of 4,939 students had benefited from the program, amounting to some 394 million pesos.November, 2013
Following limited success with its traditional loan program FINAE launched ennti, the long-term payment plan, in 2009. In one year, FINAE's sales grew by 300% and have now provided loans to more than 5,000 students.
FINAE is currently in negotiations with an additional 6 universities in Mexico and hopes to reach another 3,000 students in 2014. It is also considering expanding its reach to other countries in Latin America.
Monitoring & EvaluationYes
FINAE currently tracks its portfolio of loan recipients according to gender and socioeconomic level as well as their access to credit. In the future, FINAE will also look at graduation rates.Ability to reach the poorYes
According to social return on investment (SROI) analysis conducted by the consulting firm SHAERPA, for every US $1 invested in FINAE, the social return is US $3.16.