March 2025
Friends,
Tough times bring focus to essential work. In these turbulent days, I cope by returning to what drives me—(and/or some dark chocolate…)
- Post-secondary education and skills development make economic mobility a reality for lower-income Americans; however
- It is your parents’ income/assets and education level that determine the likelihood that you will complete post-secondary education, so I
- We’ve got to fix number #2, so #1 can happen
Education practitioners and users prioritize reducing the delta between out-of-pocket expenses plus lost income from time outside the workforce and the economic gains achieved through degree completion and career progression. Many innovators are helping to bridge this divide by developing affordable pathways, such as Campus and Craft Education; and universities are providing embedded workforce training for credit, like the University of West Florida Talent Catalyst Program.
We should celebrate progress but recognize that more work is needed to achieve large-scale change. One such area is access to responsible funding for ‘last gap’ expenses to avert dropout and enable completion in all modes of higher education, particularly for low-income and first-generation learners enrolled and achieving in 4-year degree or higher level certification programs. Even when delivered efficiently, longer and higher-level programs cost more, making them most likely to result in funding gaps. While employer tuition benefits are on the rise, the majority are for repayment, which doesn’t help the student who dropped out just short of completing.
- 14 million undergraduate students in the US utilize $140-160 billion annually in a combination of loans and credit cards to cover their education costs after grants, scholarships, and savings.
- Also, each year, 3 million students who have completed multiple semesters drop out before graduating due to a lack of funding, often because they don’t have a co-signer for additional loans. These students are overwhelmingly low-income and first-generation students.
When lower-cost pathways and skills-based hiring take hold, we might optimistically project that 50% of those students will not need loans or credit cards. However, $70-80 billion in need would remain, likely by low-income students. We can not afford to ignore this uncomfortable truth, especially when education funding cuts are imminent.
Unfortunately, lending to undergraduate college students is often done poorly or harmfully, or, as is most often the case for those who need it most, it is not done at all. If advocates for opportunity don’t want to touch lending, the bad players and ill-suited ones will:, e.g. credit cards with 27% APR, private loans dispersed for low-quality for-profit programs, and more.
But with the right solutions, we can change this trajectory. Funding U offers students a last-gap loan without a co-signer requirement. We base our credit decisions on predictive behaviors that indicate they will graduate and earn enough to repay that loan while living, eating, and thriving as employed adults. Critically, we offer this loan at an affordable rate nationally because we only work with financial institutions and other partners mandated to support low-income students.
Thousands of students have persisted or completed a degree after receiving our responsibly structured loan, with more than half being the first in their families to do so. The responsible lending technology and expertise we built for these students is now also a critical piece of solutions like those offered by Apprenta, which serves employers working to attract and retain critical employees through zero-interest student loans funded by the employer
I’d love to hear about other impact-funded or workforce development financing efforts so I can learn from them. Thanks for sharing!
Warmly,
Jeannie
Disclaimers
