Melvin Joseph
How has social finance impacted education globally and in what ways can social finance address some of the fundamental issues and inequities in current systems of education?
The Education Paradox
Every year, more than $4.7 trillion is spent on education worldwide, and only a tiny fraction of that amount is spent in low-income countries. Although there have been improvements in global funding and development in educational systems, especially for low-income countries, Covid-19 has brought out several of the many shortcomings of global education. For example, according to globalpartnership.org, learning losses from missed in-person schooling amounted to more than 2 trillion hours, and as of March 22, 2022, around three years since the WHO declared Covid-19 a pandemic, 23 countries have yet to fully open schools. These statistics are simply appalling in light of the tremendous benefits of improved education, and though nations are generally moving in the right direction, our society and economy would undoubtedly benefit from a faster pace, particularly if such a pace can be achieved without incurrence of donation costs.
The Social Finance Solution
Impact investing can potentially be the means to this ideal end. Securities and investments that provide both a financial return and finance development in areas such as education provide economic, social, and moral incentives while addressing some of the world’s greatest challenges. The convergence of private and public capital can bridge upfront financing gaps, focus investments on proven solutions, and bring forth key outcomes to stakeholders which will all help states and school districts expand programming and prioritize equity in learning opportunities.
The Solution in Effect
The Dreamers Graduate Loan Program is a distinctive impact investment fund that provides loans to more than 1,000 scholarship recipients to pursue professional degrees and advance their careers. The $100 million graduate school loan program provides financing opportunities for those with immigration statuses that hinder access to public loan programs in the United States. The financial education and support that this program provides results in track records of repayments, which help attract more capital from investors, thereby demonstrating the financial incentive of impact investing while financing more loans for future students.
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