USAID meeting
The USAID meeting went quite well. The representative from Washington was a Chinese-American who talked non stop extolling the virtues of the risk sharing model. The original model was quite restrictive but many of the guidelines have been relaxed. The result is a very flexible instrument- students in the West would be all over it.
The risk sharing element of the model requires the establishment of a trust which guarantees the students loans, funded by a contribution from student fees. The school receives 95% of the fees and allows 5% to be held in trust. In the event of default, the trust fund makes good on the loss.
When the trust fund is exhausted, the US government contribute to 50% of the loss, up to a maximum of US$500,000. The bank are left to cover any remaining losses.
If the participating school has an innovative spirit and wants to grow their programme, it would be a very workable model.
The risk sharing element of the model requires the establishment of a trust which guarantees the students loans, funded by a contribution from student fees. The school receives 95% of the fees and allows 5% to be held in trust. In the event of default, the trust fund makes good on the loss.
When the trust fund is exhausted, the US government contribute to 50% of the loss, up to a maximum of US$500,000. The bank are left to cover any remaining losses.
If the participating school has an innovative spirit and wants to grow their programme, it would be a very workable model.
posted by Megan at 4:52 pm
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