Social impact has always been part of MPOWER Financing’s DNA. We’ve been a certified B (social benefit) corporation from day one, and our core product – an education loan for international and DACA students in the U.S. and Canada that requires no co-signer, no collateral, and no U.S. or Canadian credit score – is fully aligned with our mission to make socio-economic mobility borderless.
But thanks to a generous grant from Gray Matters Capital, we’re taking our social impact to the next level. In 2018, we used this grant to better understand the needs of our stakeholders – borrowers, investors, and partner universities – and to integrate these needs into a comprehensive social impact strategy with specific objectives and metrics.
In 2019, we’ll continue this momentum by:
- Embarking on an ambitious data collection effort;
- Creating a social impact advisory board that includes impact investors, social entrepreneurs, university officials, and borrowers; and
- Creating initiatives and launching new scholarships, alone or with strategic partners, to drive continuous improvement in these metrics.
Translating these Findings into Social Impact Objectives
Based on the input we received from our borrowers, investors, and partner universities, we developed the following social impact objectives:
- Remove financial barriers inhibiting the enrollment of high-potential students at top U.S. and Canadian universities, regardless of income, family background, or gender;
- Protect students from predatory lending;
- Build borrowers’ credit;
- Put our borrowers on the path to educational and career success;
- Enable tomorrow’s scientists, entrepreneurs, innovators, and leaders to realize their full potential and to make powerful contributions to their home and host communities;
- Assist top U.S. and Canadian universities in diversifying their student body, increasing the representation of underrepresented groups, and adding unique student perspectives from around the globe, while keeping their underlying financial position strong; and
- Spur economic growth and improvements in the quality of life in emerging markets and in the U.S. and Canada by accelerating human capital growth and knowledge and wealth creation.
Measuring Our Progress Against These Objectives
We firmly believe in the adage “what gets measured, gets done,” so we created a suite of performance metrics for each social impact objective. While a single blog post isn’t enough to convey the full scope of our data collection and analysis efforts, here are a few highlights that we find particularly exciting:
- We’ve launched our first-ever in-depth borrower survey this week! This survey will allow us to test and validate some of our preliminary conclusions gleaned from borrower interviews. We’ll be delving deep into the other financing options our borrowers considered so that, ultimately, we can estimate the money they saved by choosing MPOWER. We’ll also be gathering additional demographic data that will allow us to better understand how well we’re serving low-income and first-generation college students. Plus, we’ll be asking about post-graduation employment outcomes, remittances to family members, and other indicators that will allow us to estimate our economic impact both in the U.S. (and Canada, now that we’ve recently expanded there!) and abroad.
- We’ll soon begin tracking our borrowers’ FICO scores over time. Our loan product is intentionally designed to build our borrowers’ credit, and we know anecdotally that it’s working. But now we’re going to be actively tracking and quantifying our impact on our borrowers’ credit.
- We’re in the process of gathering borrower success stories. There’s no substitute for putting a human face on our data. We find these stories so inspiring, and we hope you will, too!
Driving Impact in 2019
Removing Financial Barriers for All—Particularly Women
Our CEO and Co-Founder, Manu Smadja, has made it clear that removing financial barriers, especially for women, is our top priority in 2019. While we are already proud of the fact that 45 percent of our borrowers are women, we’re going to be working hard to increase this percentage in 2019.
First, because it’s the right thing to do. World Bank research shows that the return on tertiary education for a woman in the developing world is significantly higher than the return on tertiary education for men, and this disparity is greatest in sub-Saharan Africa, one of MPOWER’s largest markets.
Second, it’s also great for our business. While we have very few defaults, making it hard to generalize a trend, directional data shows us that our default rate for our female borrowers is slightly less than that for our male borrowers. Female borrowers also have a lower cost of acquisition – at nearly every stage in our process, they have a higher conversion rate than their male counterparts. This may be because, as our borrower interviews seemed to indicate, women have fewer alternatives.
In the coming months, we’ll be rolling out new scholarships aimed at women, expanding our list of partner schools to include more schools with a high proportion of female students, and piloting a conversion campaign that will raise money for charities focused on female empowerment.
But women are not our only focus. We’ve also just launched new scholarships for Latin American and DACA students in partnership with La Unidad Latina Foundation, and we continue to offer our MPOWER Global Citizen Scholarships.
Building Credit and Protecting our Students from Predatory Lending
Our loans help build our students’ U.S. or Canadian credit history, which is the key to financial inclusion. But it also means that they are soon flooded with credit card offers. In 2019, we’ll be developing materials to help our students better understand the importance of maintaining a good credit score – and how to do so. We’ll develop training to help them with understanding key financial terms, sorting through their credit card offers and other financial options, and making informed consumer decisions.
Putting Our Students on the Path to Educational and Career Success
In 2019, MPOWER will be expanding its Path2Success Program. We’ll be bringing in experts to advise our borrowers on financial literacy, career and job readiness, and job searching – not to mention sorting through our borrowers’ immigration options!
Join Us in Driving Impact!
As you can see, MPOWER has an exciting year ahead. If you’re interested in joining forces to expand opportunities for international and DACA students, please complete fill out this form.