“Several years ago, when my daughter was an intern with the Grameen Foundation, I began reading about microfinance programs through which a nonprofit organization made small loans to needy borrowers, often in underdeveloped countries, and the funds repaid by the borrowers provided an ongoing fund from which future loans could be made on the same basis. This motivated me to contact Penn State about starting a microfinance program for undergraduates in need. Even if you are already supporting other worthy Penn State programs, please consider making a contribution to the Microfinance Match Fund.”
– Tom Sharbaugh
Innovative Matching Gifts to Help Students in Need
For a limited time, Penn State parents and supporters Tom Sharbaugh ’73 and Kristin Hayes are challenging fellow alumni and friends of the University to assist undergraduate students who are facing extraordinary and unexpected challenges in earning their degrees. Through the new Microfinance Match Fund, Tom and Kristin are offering to match 2:1, up to a total of $100,000 in matching support, for any gift to a revolving growth fund that offers small loans to undergraduates requiring urgent assistance that could make the difference between dropping out and graduating. Both principal and interest are returned to the fund’s pool of resources and then directed to new recipients, and the impact of a gift to the fund will, therefore, grow over time.
Microfinance and the Need for Emergency Student Support at Penn State
For many undergraduates, the costs of an education strain their families’ financial resources to the limit. An unexpected crisis, be it a death in the family, job loss, or other unforeseen emergency, can jeopardize their educational hopes and dreams.
Currently, more than three-quarters of Penn State undergraduates apply for and receive financial assistance, mostly in the form of loans. The federal student loan limit does not cover the full amount of tuition, fees, books, and living expenses, and recent federal budget proposals would reduce student aid further. Many families are forced to turn to conventional private loans, which can require repayment while the student is still in school or, if payments are deferred, immediately begin to incur interest at rates that can reach 9 percent or higher.
Too often, there is no safety net for students and families facing a crisis. They are caught without the funds to pay their education costs, including tuition, living expenses or private loan repayment. Their plight is compounded when they lack credit, but now they can take advantage of microcredit.
How It Works: The Microfinance Match
- Donor gifts (there is no minimum contribution) are pooled in the fund.
- Current fundraising goal is $50,000 in order to obtain maximum benefit of $100,000 match.
- Students who qualify may receive loans ranging from $1,500 to $2,500, starting in fall 2011.
- Criteria for loans include unforeseen hardships and other financial challenges.
- The interest rate is lower than with private educational loans.
- Student payments are deferred until after graduation.
- When payments are made, both principal and interest are returned to the fund and then directed to new recipients.
- Penn State’s Office of Student Aid, which awards support and oversees repayment, is the fund administrator.
This loan program is intended for students who would qualify for federal student aid consideration and who encounter emergencies or unexpected circumstances during the semester that are beyond what available financial aid or their family can address. Loans are available primarily to assist students in their last two or three semesters before graduation who are facing these unusual situations. The purpose is to ensure that a personal or family crisis does not delay a student’s completion of his or her Penn State degree. Awards typically range from $500 to $2,000, and the amount of an individual loan will be determined by the specific circumstance of the student and the availability of program funds.
Macro Incentive for Microfinance Gifts
You can instantly double the impact of your support. Through June 30, 2012 or until the $100,000 commitment is reached, Tom Sharbaugh and Kristin Hayes will provide a 2:1 match for all gifts to the Microfinance Match Fund. If you share Tom and Kristin’s commitment to helping Penn State students in overcoming financial obstacles, you can click here to make a gift today.
Tom is a partner with a large law firm in Philadelphia, and Kristin is a retired federal prosecutor. Both of them have been involved with Penn State philanthropic activities for a number of years.