For some college students, job loss, unexpected medical costs, or a broken-down car could mean the end of a post-secondary education. In fact, one out of four freshmen at the University of New Mexico (UNM) drop out due to unexpected financial changes; approximately 70 percent of UNM students who drop out cite money difficulties.
Our first-in-the-nation Powering Success program aims to create options for students with emergency funding needs that could financially derail a college education. We partnered with UNM to repurpose existing funds dedicated to support retention and graduation rates to create $250 to $2,500 loans for students in need who have no access to mainstream financial services or safety nets. The program goes beyond providing low-interest access to funding - also requiring the student to participate in a financial capability program that provide life-long tools for financial success.
In most cases, the loans can be made in 24 hours; loan recipients then receive wrap-around services, such as financial capability training, to help keep them on track and within budget. A percentage of the emergency funding loan is forgiven as the students successfully complete each semester. This is an innovative change in the mechanism in how emergency support is given, managed and delivered.
- Opens doors for students in need who have no other access to mainstream financial services;
- Improves student retention and degree completion.
- Provides credit at an established credible provider at reasonable rates to individuals who would otherwise pursue predatory lending credit and/or drop out of school;
- Empowers students with financial capability training and other supports that are provided for every applicant.
- Re-allocates existing resources to create a sustainable program providing collective financial services to students.
The program is also funded in part from the Annie E. Casey Foundation; this grant allows us to offer this program to students who are in or have been in foster care.
This program has also received the Ideas for Action Award from Spotlight on Poverty and received a Catapult! award to move the program into implementation.