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Opening the Door to Higher Education for Low-Income Students in Mexico New Options for Aspiring College Graduates College degrees are hard to obtain in Mexico, but especially so for students from low-income families. Only one in four Mexicans between the ages of 19 and 24 is enrolled in college—a number that drops to one in 30 for young people at the base of the pyramid. A loan from the Inter-American Development Bank (IDB) through the Opportunities for the Majority (OMJ) initiative will help the Mexican education finance company FINAE expand its student loan offerings, allowing more low-income students to get degrees and training that will lead to better jobs and brighter futures.

was established in 2007 by a group of Mexican investors in response to universities’ requests for financing alternatives for students who would otherwise not be able to attend college. It works with a select group of well-known private universities. Loan recipients must maintain higher than average grades and must be pursuing a degree in a field for which there is demand in the job market. Because Mexico has little history with student loans, FINAE works hard to educate potential clients about how its loans work and the advantages of financing higher education. FINAE’s loans finance between 20 and 100 percent of the total cost of a university degree, or from US$2,000 to US$20,000 per borrower, depending on the students’ earning potential after graduation. FINAE has developed an effective, computerbased system for managing relations with its borrowers and receiving their repayments after they leave school.

Barriers to Education

A Brighter Future for College Graduates

In 2010, 2.4 million Mexicans were enrolled in higher education, two-thirds of them in public universities and onethird in private colleges. Mexican public universities currently are able to accept only about one in five students who apply. Private institutions provide alternatives, but their tuition fees are well out of reach for low-income families. As a result, each year millions of young adults in Mexico are turned away from the path to job opportunities and social advancement that a college degree represents. This situation will become only more difficult over the coming decade, when the Mexican college student population is expected to nearly double.

A US$2 million loan from the IDB’s Opportunities for the Majority initiative will allow FINAE to expand its loan offerings. By partnering with FINAE, Opportunities for the Majority will not only help thousands of low-income Mexican students earn college diplomas, but will also let them establish formal credit histories, which will help them access a variety of financial services in the future, from bank accounts to mortgages and business loans. Most importantly, the college graduates will be able to pursue skilled and professional jobs that will bring them higher incomes and better prospects for supporting their families in the future.

Financing Now Available for Low-Income Students FINAE S.A. de C.V, a Mexican financial institution, is one of the few options available to students seeking loans to help finance their education. Only 2 percent of Mexico’s college students have an education loan, as compared to 76 percent in the United States and 59 percent in England. FINAE

For more information about the program, contact: OM-IDB@iadb.org


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