Although career success is by no means guaranteed in this day and age, it is far less likely to happen without a college degree. In fact, one could argue that college graduates have more economic power and influence the direction our economy takes more than any other group out there. Making college accessible and affordable should, therefore, be a governmental imperative. But Washington doesn’t seem to see it that way.
Yet our Congress has missed the deadline to stop college loan rates from doubling. Across the country, parents and students worry about the impact of that indecision. There is no question we need quick congressional action to address this issue.
Last year, the University of New Mexico undertook a comprehensive process to improve the first year experience for our students. We have addressed a myriad of factors such as academic advisement and the formation of first year classes, as well as how we educate students about financial aid, dorm life, and, of course, parking.
These moves are an effort to keep students in school, by enhancing the path to earning their degree and moving into the work world. On average, a quarter of every freshman class starting at UNM drops out by mid-sophomore year. Seventy percent of them cite financial hardship as the reason.
This challenge requires innovation. UNM and New Mexico Educators Federal Credit Union have fused efforts to create the “Powering Success: Micro Aid for Educational Achievement” project. It is a unique strategy to use small amounts of debt — microlending — to provide underserved and high-risk students with a program that finances education in the same way many small businesses are launched.
UNM provides the collateral that allows students to gain access to a traditional lender, the credit union, which can then operate without high risk.
This groundbreaking approach to student aid recently rose to the top in a fierce competition for a national winner in Catapult! Administered by the Public Strategies Group, based in Saint Paul, Minn., Catapult! is designed to create better outcomes in public service organizations and to illuminate successful strategies for boosting change efforts.
This award provides UNM and NMEFCU with the opportunity to participate in an intensive weeklong design, strategy development and change management planning session. The award is valued at $100,000 but the expertise it provides is invaluable.
Scholarships, financial aid and student loans only reach part of our student population. Microaid can help create greater impact.
The success of microfinance has been proven in countries world-wide, by reducing poverty, offering greater economic mobility and just as importantly, providing a sense of hope, dignity, and determination – just the grit that struggling college students might need.
Our program will provide these students with financial capability training to ensure they access not only financial aid and services but also the support mechanisms we have in place to help them stay on track for graduation.
Even with the legislative Lottery Scholarship and the significant amount of financial aid set aside by UNM to assist students in need, many come from backgrounds that increase their risk of dropping out – rural, first generation, students of color. Paying back student loans can be a challenge for many graduates, but it is much more daunting for those who drop out, never earn their degree and still owe tens of thousands of dollars.
The program discovered that as little as $200 in unexpected costs, fees, emergency needs, family hardship or lost job can impact a student’s ability to continue his or her education. Without access to microcredit, these students often resort to borrowing from predatory lenders, get buried under a huge debt burden and become powerless to climb from the bottom of the educational and socio-economic ladder.
Program leaders look forward to testing the strategies and concepts we learn in the Catapult! lab to build this unique approach to solving a critical need in New Mexico. We can help our students become financially independent and educate these future leaders to better use the entrepreneurial power behind the microfinance concept to create the jobs of the future in our new economy.