by Rose Larsen | KF20 | Dominican Republic
The Dominican Republic may be a small island nation in the Caribbean, but it has a quickly growing economy based on a shift from exports of sugar, coffee and tobacco to services like telecommunications and tourism.
However, according to a study done by the OECD in 2012, this economic growth has been limited by deficits in human capital – more specifically, the education levels of workers are insufficient.
This problem stems from the low quality of primary and secondary educations – public schools are overcrowded, dangerous, and lacking supplies. Even students from lower-middle-class and poor families are attending private schools, which in the Dominican Republic can range from less than $50 a month to incredibly expensive.
By the time students manage to graduate high school, many families cannot afford to pay university fees, forcing the young people directly into whatever work they can find, often in the informal sector. If the Dominican Republic wants to continue to grow and bring a significant percentage of its population out of poverty, it needs to employ more workers in the formal sector – and to qualify for these formal sector jobs, workers need university or technical degrees.
On the more individual scale, it has been proven over and over that getting a tertiary degree increases lifetime earnings. If the Dominican Republic cannot find a way to help students from poor backgrounds obtain higher education degrees and have access to private universities, inequality (already a huge problem here in the DR) will only increase, and the economy will stagnate due to the lack of human capital.
ENTER KIVA AND FUNDAPEC
Kiva has been supporting entrepreneurs in the Dominican Republic since 2007 with Esperanza International, extending its reach in 2012 with a new partnership with ASPIRE. Up until now, all the loans Kiva has disbursed in the DR have gone towards small (often informal) businesses or personal expenses – stocking a corner store, buying supplies for a beauty salon, constructing a house.
Meanwhile, Kiva’s newest partner, FUNDAPEC, has been giving out student loans for 46 years, and is the Dominican Republic’s only student loan provider. In the past FUNDAPEC has maintained strict minimum salary requirements for loan guarantors – usually the parents of the students. These requirements are meant to make sure that students’ families will be able to repay the loan, and are important in maintaining FUNDAPEC’s long-term sustainability, but they also mean that many poor students are turned away and simply cannot continue their studies.
FUNDAPEC has long wanted to provide loans to students from poor backgrounds, and through Kiva has finally found a way.
FUNDAPEC’S NEW LOANS
With the help of Kiva, FUNDAPEC has developed a new loan product specially designed for students with limited resources.
The loans can be used for undergraduate studies or for a technical (2-year) degree. Instead of having a minimum salary requirement for their guarantors, these loans actually have a MAXIMUM salary requirement – the guarantors of the students can have incomes no higher than 3 minimum monthly salaries ($480 USD per month or $5,760 USD per year).
These loans have some of the lowest interest rates on Kiva – 8% per year – and the terms are very generous. Students don’t have to make capital repayments on their loans until after they finish studying, and even then have up to 7 years to pay back their loans, keeping the monthly quota payments low enough that a recent graduate in his or her first job can keep up.
FUNDAPEC’S FIRST LOAN
When I arrived at FUNDAPEC’s offices to start getting the first Kiva loans going, the management team already had someone in mind to be the first borrower. They had received a letter from a girl who had no idea about Kiva’s program, but in desperation had sent a letter asking for help in finishing her education.
Crisley is only 20 years old, but has already been through a lot. An excerpt from her letter reads:
“3 years ago, studying was a distant dream due to a circumstance which changed my life and that of my family. I was diagnosed in 2009 with a chronic health condition. After multiple admissions to the hospital and after spending 6 months hospitalized on-and-off, I went into surgery.”
Crisley, instead of being defeated by her illness, has used it to inspire her. She is currently finishing her first year of studies in medicine, participates in a dance group, volunteers with the Red Cross, and hopes to one day be a doctor herself, so that she can help other people with similar conditions.
Unfortunately, in the Dominican Republic, years of hospitalizations and surgeries can bring even a middle-class family to the brink of poverty. Crisley’s parents have invested so much in her health that they can no longer afford to pay her fees at INTEC, the school she has been enrolled at. She still has special needs due to her condition, and continues to need some medical care and supplies, so the fees are still coming. Desperate to continue her education, she wrote a letter to FUNDAPEC hoping that somehow, even though her parents are now too poor to qualify as guarantors for FUNDAPEC’s normal loans, they would be able to offer her something.
Her letter came just at the right time, and we have just posted her profile on Kiva as the first Kiva borrower from FUNDAPEC, and the first borrower on Kiva to seek a higher education loan in the Dominican Republic. She is hoping to raise $9,700 which will pay for the next four years of study she has left on her medical degree.
Crisley embodies the hope and strength that Kiva looks for in its borrowers. She wrote in her letter to FUNDAPEC,
“I truly believe that everything in life happens for a reason, and maybe all of this was just the push I needed to know that my place is where I can serve, help and turn my experience into something positive in the life of someone else.
“Finishing my degree successfully is the dream I most want to fulfill, and with the help of God and while there is still life in my body I will continue fighting until I see it reached.”
Though Crisley is ready to fight, I think she’s already had enough struggles. With Kiva’s help, Crisley will not have to worry about her university expenses, and will be able to pay back the loan slowly once she finishes her studies.
FUNDAPEC’s loans are not for everyone. Lenders will not begin to see repayments for many years – in Crisley’s case, for five years – and won’t get the full amount of their loan back for up to 12 years. However, I can guarantee that these loans will change someone’s life. Lend through FUNDAPEC and support a young person who simply wants to get an education.
After serving as a Kiva Fellow in the 19th class in Barranquilla, Colombia, Rose Larsen is continuing her tour of the Caribbean with a placement in the Dominican Republic, as part of the 20th class of Kiva Fellows. She has been working with ASPIRE and FUNDAPEC. Click here to lend to a Dominican borrower today. To find out more about the Kiva Fellows Program and to apply to be a Fellow, visit www.kiva.org/fellows.