Nusenda Credit Union has taken the principles of micro-assistance and partnered with the University of New Mexico (UNM) to improve college graduation and retention rates. Powering Success provides options for students that have emergency funding needs due to unexpected life emergencies such as a loss of a job, unexpected medical costs, or something as simple as unexpected transportation expenses. The program is a first of its kind in the United States and is designed to help students that have limited access to emergency funding, encourage students to finish their degree and help them build a credit history. This benefits both the University and the student.
There are limited options for access to quick funding for a student that has no credit or lacks funding support. This can force a student to drop out of school. One in four UNM freshmen drops out due to unexpected financial challenges. Sometimes for as little as $100. Approximately 70 percent of UNM students who drop out cite difficulty with finances. Working together, UNM repurposed existing funds dedicated to graduation and retention rates to collateralize and emergency funding program that is managed by Nusenda. This repurposing of funds means that the program has been instituted with no additional cost to the University. Because financial emergencies can have a sudden impact, Nusenda can provide funding approval in as little as 24 hours.
This is an innovative change in the mechanism in how emergency support is given, managed and delivered. Forgiveness is built into the program based on milestone achievements. Providing micro-assistance from $250 to $2500, the program is designed to keep financial emergencies from derailing a student’s progress. A percentage of the emergency funding is forgiven as the student successfully completes each semester towards graduation with satisfactory academic progress.
The program goes beyond providing low-interest access to funding, but also requires the student to participate in a financial capability program that provide life-long tools for financial success.
There are five key benefits of this program:
- 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 (Nusenda) 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 to help keep students on track and within their budget; and,
- Reallocates existing resources to create a sustainable program providing bundled financial services to students.
The program recently received funding from the Annie E. Casey Foundation 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 from pilot to implementation.