In Favor Of Education: Learning to Loan (Part 2)

 

Version 3

There’s something at the core of education that’s more important than other services.

Start with financial education.

We all learn how to manage money.

It starts with parents handing us our allowance and it ends with trying to understand the 2008 financial crisis and what a CDO is. Somewhere in the middle – between credit cards, bank accounts, and mortgages – it gets fuzzy.

If we better understand the concepts, we can do more complicated things with our cash. The same goes for the less fortunate and impoverished households around the world. Although there’s less money to be managed, using it wisely is extremely important.[1]

The microfinance sector figured this out a few years ago.[2]

MFIs began collaborating with academics and offering their own courses. The idea was to outfit the client with the tools necessary to use their loan successfully.

Knowledge with credit.

“Perhaps a combination of the two can serve a fruitful purpose to economic empowerment… of the poor at the grassroots.”[3]

I dug up dozens of lines like this, but I sensed something else between the quotations. All the studies and academics, the CEOs and the working groups, were only interested in how education affected repayment. They wanted to know how education could help microfinance instead of clients.

If we make clients smarter, maybe they’ll pay us back more.

This didn’t sit right with me.

Providing education is good, but what if it’s for the wrong reason? Knowledge should serve the student, not the teacher’s money. I didn’t want to serve our loans, I wanted to serve the client! I wanted to know the reason community members thought education would benefit them.

So I asked them.

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I listened.

And what I heard convinced me we should be prioritizing classes for clients, rather than capital for clients.

Technical skills, they said, give you job security.

Financial skills give you financial security.

But an education… well, that was something more.

For clients, learning how to think applied to everything. Not just money and not just work, but everything! Opportunities people dreamed about were only accessible through education. Basic concepts and ideas were valuable to everyday life. From the pride of spelling one’s own name to simply helping their children with their homework, there was a basic human element at the core of education that money couldn’t buy.

Maybe that’s what we should focus on, instead of the hollow triumph of the word ‘profit.’

In part one, I made an argument against debt, because of the negative effects it creates. In education part two, those negative effects don’t exist. Students are susceptible to stress, yes, but in this case, they don’t owe the organization anything. No teacher expects a student to use their knowledge and return it when their done.

The journey is truly their own.

Now, I work in microfinance.

I can’t say that small loans aren’t an effective way to combat poverty – they can be – but we’ve been holding them up as the most important part of financial aid.

Maybe instead of working with loans to understand clients, we should be educating first before we justify the use of loans.

Maybe we shouldn’t be loaning to learn, but learning to loan.

 

[1] Collins, Daryl, Jonathan Morduch, Stuart Rutherford, and Orlanda Ruthven.Portfolios of the Poor. Princeton NY: Princeton UP, 2009. Print.

[2] “Module 6: Microfinance and Education.” Unite for Sight. Web.

[3] Hadi, Rizali, Uyu Wahyudin, Jajat Ardiwinata, and Wamaungo Abdu. “Education and Microfinance: An Alternative Approach to the Empowerment of the Poor People in Indonesia.” Springerplus 4.244 (2015). NCBI. Web.

 

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One comment

  1. I’m sorry we didn’t get a chance to talk more in person about this. When you showed us the community you work in it was a bit overwhelming, the conditions people are working to thrive in… But I came away with a strong sense that education (in general) is probably the biggest differentiator between those individuals who find a way to break free from systemic poverty and those who don’t. I have to believe that financial education is an important part of that, but I think probably ANY education that helps people see alternatives, imagine alternate realities and give them tools and confidence to pursue them is key. Thanks as always for your insightful perspective.

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