PROBLEM: In developing countries, higher education is out of reach for the majority of high school graduates simply because they are unable to pay for it. Scholarships and financial aid are grossly insufficient to meet the level of need. Banks do not give out student loans because uncertainty about inflation makes unsecured loans very risky from a banker’s perspective and/or unaffordable from a borrower’s perspective. This is true even though a university degree can multiply a young person's earning potential by 3-5x.
MISSION: Our mission is to enable investors to safely invest in the university education of talented students in developing countries with a model that financially benefits both students and investors. Despite the high returns, students in developing countries are struggling to finance their higher education. At the same time, the amount of socially responsibly invested assets has grown with 7-10% per year in Europe and North America in the last 5 years.
MODEL: The way Brighter Investment works is simple: funding provided by client investors is pooled and invested in talented students in developing countries. In exchange, students repay a percentage of their income for a set period of time after graduation. A combination of social, practical, and legal incentives coalesce to ensure students make their monthly repayments to Brighter Investment. With the help of universities, banks, and high schools, we ensure that this model runs efficiently and reliably.
Brighter Investment charges a management fee over the invested capital for recruitment, mentoring, career support, collection and a profit margin. Our for-profit model is sustainable and scalable, allowing us to provide increasing numbers of students with access to higher education.
BENEFITS: Tying repayments to students’ incomes means that, unlike with traditional loans, successful students repay more than less successful students. This reduces the financial risk for students, as it ensures that no student will ever end up with insurmountable debt. Since repayment is based on graduates’ wages, and wages rise with inflation, income-based repayment also provides a hedge against inflation.
The estimated financial return for client investors is a stable, inflation hedged and competitive 9% per year. The value offered to the students is even larger. Their income is expected to increase a factor 4. They are also more likely to own a house, have health insurance, have educated children, be healthier and be happier.
MARKET: An estimated 60 million high school graduates per year have the grades and ambition to further their education, but lack access to the required financial means. Based on factors like political stability, corruption, inaccessibility and ROI of higher education, quality of education, unemployment and ease of doing business, we have begun implementing our program in Ghana, where 120,000 qualified high school graduates/year require 1.1 billion in funding to continue education. We are planning expansion to India, where 12 million graduates/year require 140 billion to continue their education.
To learn more, visit our website: www.brighterinvestment.com
1. Link to our Team Bios
2. Link to our Hypotheses and Assumptions
4. Photos of our work so far: