Study Now, Pay Now: Funding Higher Education in the Philippines

In September of 2010, as a Kiva lender who was working in the school system at the time, I was pleased to see the announcement that Kiva would begin to investigate support of higher education loan products in a few countries. The higher education loan was an exciting idea because it had the potential to provide access to financial backing to those who wanted to pursue further education but were often limited by the lack of availability of funding in their country. The higher education loans hold much potential but it also introduces a whole other set of potentially troubling issues. As Kiva President, Premal Shah mentioned in a September, 2010 interview in the Huffington Post, there is often not a clear-cut route to repayment, there is no guarantee that students will complete their education and repay their loans. Are these risks worth the potential gain the higher education loan could bring?

I was excited to find out when I arrived at here that CCT that they had just rolled out a new education loan product in June of 2011. It was a pleasure to sit down with Maricar Santiago, CCT with the Visions of Hope division, to discuss the previously mentioned issues as well as to learn the details of the “Study Now, Pay Now” education loan product.

How do you identify the education loan borrowers? CCT identifies loan recipients in areas where their MFI branches are operating. The first recipients were among current coop members with ability to pay, existing business loan, and from communities in which they serve. The loans were initially announced to staff of MFI and then they would announce it at their borrower weekly fellowship meetings. They were then announced to existing borrowers and community leaders. CCT took referrals from them and then would go to the house of referral to discuss program and assess family.

How do you determine the repayment schedules? Repayment is bi-monthly to coincide with parent’s bi-monthly earnings

Does the loan depend on what type of program the student is attending? Yes, CCT currently limits the loan to courses that can assist in development so in the case of a difficult job market, CCT can hire them. Examples of these courses are social workers, accountants, cooperative/microfinance development, teachers, and 4 year Information Technology programs.

Does this depend on the client’s expected salary? CCT looks into the income and cash flow of the family. They use this as the basis for the amount of the loan that the student can borrow, otherwise CCT is looking more at the potential to be employed. To the students with the parents as co-borrowers.

Do you offer other services with your higher education loans, such as career advising or job placement? They offer job placement at CCT, leadership training, and provide peer counseling.

Do you lend more for technical/vocational schools or colleges/universities? Their loans are currently for just four-year university students.

Do you have data on the demand for higher education loans, both at your organization and the country at large? Higher education exists in the Philippines. Foundations are providing scholarships and loans but they are competitive and difficult to attain. The government has a Study Now Pay Later programs. CCT chose to implement a Study Now and Pay Now program. Their long-term goal is to have a Study Now, Work Now program.

Do you do any other types of evaluation or follow-up for higher ed. loans (i.e. monitoring job placement)? CCT plans to do follow-up but since the program is brand new, they have not done any follow-up yet. CCT is not only planning to evaluate job placement but also improved quality of life for the family.

What is the market for higher education and higher education student lending in your country? What are the future projections? The education system in the Philippines is a big challenge. There is a big discrepancy between the entry/exit rates of high school and college rates. Poverty is large in Philippines, so the correlation between educational progress and employment is low. CCT is looking forward to making university education a movement for Filipino youth in the poorer sector. They want to see a higher and longer lasting impact for students, families and the entire poverty sector.

What type of government support, if any, exists for higher education in your country? The government has “Study Now and Pay Later” programs of government and NGO’s have educational assistance programs.

Does the government make or subsidize higher education student loans?The public universities are intended to make college education more accessible to the poor but often times the poorer communities do not have the resources to educate their youth to the level that will allow them to pass the entrance exams to the public universities.

What is your future plans for higher education loans? CCT would like to tie it into their whole program for children and youth, introduce entrepreneurship, leadership, savings, and volunteer work in the community. Prepare the students with the skills early to be good borrowers and MFI member entrepreneurs.

One thought that Maricar kept repeating to me was CCT’s mission to transform communities and how this education loan was one more step in diversifying services to the communities CCT serves. There are many questions about the success of the education loan, but so many other factors are at stake if they do succeed. Shah mentioned in the same Huffington Post article, “In the countries that Kiva.org serves, a one year certificate in accounting can increase a person’s income 200 to 300 percent”. This is a potential outcome well worth investing in as different organizations begin to see how to appropriately integrate this type of product into their educational infrastracutre. In a country where it is estimated that 33% of the population lives below the povery line and only 3% of the GDP is spent on education, these loans may make the difference in providing opportunites for students that might not other wise have been able to reach their goal of higher education.

CCT does not currently have education loans funding on Kiva but CCT is committed to utilizing these loans for the family members of their current partners. Please take a look at the stories of CCT borrowers in the Philippines and be a part of helping CCT transform communities through the change in their partners lives.

Jill Hall is part of Kiva Fellows 16th class, working with Center for Community Transformation (CCT) in the Philippines. She is very much enjoying all the sights, sounds and food of her new home, the Philippines. Please support CCT borrowers by reading about their stories and making a loan today. Be a part of the movement of Kiva and join CCT’s lending team or check out CCT’s partner page. Former posts written by Jill about her experiences in Manila and Center For Community Transformation (CCT) can be found at:

The Circle of Life; Filipino Style

Work is cancelled; Typhoon Day

Girlie’s Peanut Butter: Borrower Verification in the Philippines