A Sustainable Future Access to Education
Education is one of the most powerful resources for addressing inequality. From offering access to higher education to making sure young girls have access to basic education in finance, meeting education needs helps create a bright future for young people across the world.
The Power of Education
Imagine: Lakshmi, a talented student from India who comes from a low-income family, gets the opportunity to study at Yale University for her MBA. She returns to India to set up a sustainable farm-to-table restaurant-chain, providing labor and affordable, quality food to communities, improving the lives of hundreds of her fellow citizens. Through connections at Yale, she is invited to international roundtables, representing Indian business interests on a global level. This is the power of education. But Lakshmi will not be able to take advantage of this opportunity without the money to fund her studies.
Higher education is correlated with lower unemployment and higher income, making it a powerful tool in combating inequality. But students from low-income countries are often unable to get quality higher education at home and are vastly underrepresented at top universities. This not only leads to a poorer quality of life for those individuals who cannot access education, it also perpetuates the marginalization of low-income countries through the denial of access to elite global networks of influence.
With so many individual and social benefits at stake, it’s no wonder that financial assistance for accessing education is a growing concern. Innovative financing methods can be effective solutions in helping to tackle this problem.
Social and Financial Returns through Impact Investment
Impact investment can help underprivileged and talented students from low-income countries get loans for advanced education. The investor receives financial returns when the loan is repaid. But there are also social returns: the student, society, and the student’s home country all stand to benefit from the student’s education.
In 2014, Credit Suisse launched the first-ever Higher Education Note, in collaboration with Prodigy Finance (Prodigy). Since then, the Higher Education Note has become a continuous product offering, enabling more than 2,500 talented students from underprivileged backgrounds in over 70 countries to access best-in-class universities. This impact investment gives investors access to a diversified portfolio of bonds linked to loans that are awarded to first-class students for the purpose of paying tuition fees for a master’s degree at a top university.
Over two-thirds of the students funded by Prodigy are from developing countries. Almost all students (97 percent) see a salary increase after graduation, and 66 percent of them return to their home countries after graduation.
Impact investing currently accounts for a small share of overall global education funding (less than one percent) so there’s considerable room for expansion. To help address the situation, we partnered with INSEAD business school to publish the white paper investing in future leaders, which sheds light on the challenges underprivileged students face and proposes some innovative solutions for interested investors.
students with access to best-in-class universities
see a salary increase after graduation