When Carmina Bayombong was studying industrial engineering, she saw dozens of fellow university students struggling due to financial concerns. “They were taking on extra jobs and failing to meet their academic potential,” Carmina explains. “Some even dropped out.” This at a state university, where tuition costs less than private institutions. “The issue was mostly transport and food costs,” Carmina adds, “which average at $1350 a year.”
Carmina Bayombong
Laureate 2019
Carmina Bayombong
PHILIPPINES
InvestEd
An investment platform providing student loans to underserved youth using a proprietary credit rating algorithm.
Website:
Loans for the unbanked
InvestEd is a student loan service which prioritises poor and low-income students. With no credit scoring, they are shut out of traditional bank loans. Even government loans are little help, since they require proof of income for the parents. “Most marginalised and unbanked students’ parents have informal jobs, they cannot prove their household income.”
To overcome this problem, InvestEd has developed a three-tier platform to select likely candidates, draw investors and ensure repayment. Its proprietary credit-scoring algorithm measures the probability of timely graduation, career success, and non-payment risk, and is reiterated at regular intervals to constantly improve the model. “By 2020 we plan to licence it to banks and schools to develop more effective loan programmes,” says Carmina. Its investment platform targets institutional lenders, to whom it repays an average 7-12% per annum.
Lending itself to success
One of Carmina’s previous jobs was in mentoring and training for young entrepreneurs. On the strength of her experience, InvestEd has also developed the Borrower Success platform, a training and coaching programme focusing on employment and financial literacy to ensure borrowers get their job and can ensure repayment. Thanks to its input, the average time between graduation and employment for InvestEd’s borrowers is just 27 days, well below the national average.
Currently open to students in the last two years of university, to date InvestEd has loaned a total $200,000 to 276 students and enjoys a 100% repayment rate, of which 82% is repaid on time. Having left its initial peer-to-peer lending model and taken on liability for its students’ loans, it is now drawing even more investors and is setting its sights on 2,000 students for its loans.
Entrepreneurial background
Carmina’s father is an entrepreneur and her parents are a true inspiration. “They came from great poverty and worked hard to succeed,” she says. “When I was young they founded a cooperative in our village that has now grown into a small bank. They taught me from a young age how to save and use money wisely!” Clearly that education has paid off. Having initially trained as an industrial engineer, Carmina says she “wanted to be a person fixing systems and processes.” With InvestEd she seems to be doing just that.
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