Edu-Loan: Providing commercially viable financial services to support education for the poor

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Publication Date: 
01 September 2007
Author: 
Farid Baddache
UN Millennium Development Goal: 
Develop a global partnership for development
Related group: 
Abstract: 

For decades during apartheid South Africa's public authorities neglected the education of the vast majority of the country's people - now referred to as the historically disadvantaged. In the new South African economy, there are big needs for skilled and educated workers to sustain development. But post-secondary education is not free, and most historically disadvantaged people do not have money to pay. Nor do they qualify for traditional modes of financing. Edu-Loan, a for-profit company focused exclusively on loans for post-secondary education, offers simple repayment options - at affordable rates - to historically disadvantaged applicants interested in advancing their skills. Since its inception in 1996, Edu-Loan has financed close to 400,000 students with loans totalling more than $140 million. Edu-Loan's commercial success mirrors its social impact: the company offers shareholders a return on capital employed of 30%. The case examines how two social entrepreneurs saw an opportunity for a profitable business venture in a niche market that would also have an impact on human development.

After decades of violence and segregation during the Apartheid era, South Africa was recovering and establishing an inclusive society based on equal rights and opportunities for all. For decades, public authorities neglected the education of the vast majority of its people- now referred to as "historically disadvantaged" (HD) people. In the new South African economy, there are significant needs for skilled workers and access to education to sustain development. However, post-secondary education is not free and most HD people do not have enough money to pay for it, nor do they qualify for traditional modes of financing.

Edu-Loan is a private company focused exclusively on post-secondary education loans. It is a for-profit company offering simple repayment options at affordable rates to HD applicants interested in advancing their skills. Since its inception in 1996, Edu-Loan has financed close to 400,000 students with loans totaling more than US$140 million. This case examines how two social entrepreneurs saw an opportunity for a profitable business venture in a niche market that would have a positive impact on HD people.

Citation: Baddache, Farid. "Edu-Loan: Providing Commercially Viable Financial Services to Support Education for the Poor." GIM Case Study No. A018. New York: United Nations Development Programme, 2008