1. IFC International Forum on Investment in Private Higher Education Washington DC, January 22-23, 2004 Creating Alternatives for Student Financing: Comparative Models Jean-Daniel Borgeaud

2. contents  programs  sustainability  challenges  performance  recommendations  promoting student financing

3. private student financing programs in Latin America  Fundación para la Producción  La Paz, Bolivia  Compensar  Bogotá, Colombia  Universidad de los Andes  Bogotá, Colombia  SOFES  Mexico City, Mexico

4. sustainability  social dimension:  serving needy students  open access  economic dimension:  financial viability  access to capital markets

5. a balancing act social dimension economic dimension pricing governance coverage collateral

6. governance  not-for-profit foundation  social security organization  private university  corporation owned by forty private universities

7. pricing & terms  subsidized lending rates  no upfront fees !!  reimbursement of administrative cost  5 - 15+ years  grace period

8. coverage  undergraduate & graduate studies  tuition ( )  living expenses (  )  selected vs. all fields of study  low return/low coverage  increased dropout risk ?

9. collateral  personal guarantor(s)  real guarantees on large loans  risk sharing with universities !  Sallie Mae:  USD 5 billion loan portfolio without government guarantee  50% with personal guarantees  50% unsecured

10. performance  moderate to rapid growth  not (yet) profitable  fairly sound loan portfolios  1% - 10.5% delinquency rate  limited track record  jury still out!

11. recommendations  apply market rates  introduce loan fees  5% fee ~ >30% income increase  cover living expenses  be mindful of partially funded students  Increased dropout risk

12. promoting student financing  commercial lenders (?)  schools and universities  governments  guarantor  operator  new private players  new product for microfinance industry  lending expertise  loan portfolio management infrastructure  different risk profile