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Microfinance: Giving Kids A Little Credit Could Make Your Day

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Could you imagine waking up at 6 a.m. every day and going to work for a 14-hour workday -- when you were eight years old?

What if you were earning just 10 or 20 cents an hour for your work? Perhaps you deliver tea to day laborers, scavenge through garbage dumps, hustle tourists, work as a servant, or perform one of countless other menial or hazardous jobs "suitable" for children.

That's life for millions of kids who work instead of go to school. One of them transformed my life.

You've seen the kid. Maybe on a trip to Mexico or some other 'exotic' place. Perhaps on television during a late night infomercial with Sally Struthers, or in a movie like "Slumdog Millionaire." For me, it was on a trip to India in late 2006 to attend my nephew's wedding, when I visited the Taj Mahal.

Having been born in India and completing high school before immigrating to the U.S., I had seen children working countless times before, but had managed to avoid really noticing them. However, returning there after so many years, I saw things from a new perspective.

Seeing this young boy working in the midst of a tourist haven in modern, booming India was simultaneously depressing and infuriating to me. It wasn't because he was the youngest child working there, or the most destitute, or doing the most difficult work, because he wasn't. Rather, I think it was that nothing seemed out of the ordinary. In the 25 years since I had left India, it was still normal that a child his age should be at work sweeping floors at a shop instead of learning in a classroom. I don't even know his name, but my mind wouldn't let go of this child.

I began reading obsessively about poverty and possible solutions. I read about how microfinance can help break the cycle of poverty, how education pays through a lifetime of increased earnings, how small incentives called conditional cash transfers can improve school attendance and achievement, how mobile phones and the Internet now reach most villages in Africa and Asia, and how student loans can give needy students a real opportunity to break out of dire circumstances. I was attracted by the hopeful promise offered by so many innovative high-tech and low-tech tools that could transform lives.

Why couldn't a child like the one I saw get a break? What if the solution to child poverty lay in a student's ability to get a little credit?

Imagine if every family could invest in their children's education and possibly pay it back (or maybe pay it forward) over the next 10 or 20 years, just like your regular student loan for college. Only now the loans would be tailored to younger kids who want to go to a better school - or go to school at all.

That's when I decided to quit my job at Cisco and get some on-the-ground experience.

I went to work at NamasteDirect, a microfinance organization providing loans to borrowing groups in Guatemala and Mexico, and saw first-hand what a useful tool microfinance could be for entrepreneurs. Many of the borrowers, however, were not entrepreneurial and needed to learn skills to get a job. Furthermore, some parents were using their expensive, short-term microloans to pay for their children's schooling in hopes that a better education would result in a better life.

Despite the recent boom of microfinance, affordable loans for poor families seeking to further their children's education were simply not available. As a result, my colleague and co-founder, Brynna Jacobson, and I decided to start an organization to make education microloans and scholarships available to children and youth in developing countries. We called it Janta, or "the people" in my native language of Hindi.

We were impressed with how Kiva.org tapped into the public's hunger for making a direct impact on peoples' lives, and felt that the peer-to-peer model held the key for bootstrapping student loans for children.

JantaLoans.org would allow individuals to support children and young adults in the developing world through microloans and scholarships with as little as $25. We would reach high-need and out-of-school children who would not have a chance to improve their education without financing and link them with individual lenders and donors seeking to make a direct impact in a child's life.

Although people could already sponsor children through many existing child sponsorship organizations, we felt it was of utmost importance that our model be truly direct from sponsor to student. We chose a model where impact could be measured and dollars tracked from source to destination without dissipating along the way.

JantaLoans.org began pioneering person-to-person loans from lenders in San Francisco to children in India. India is home to one-third of the world's poor and the largest population of illiterate people of any country -- and the child who inspired me to start this journey.

Our first partner was the Drishtee Foundation, which receives support from the Acumen Fund, the Clinton Global Initiative and Microsoft. Drishtee serves thousands of villages across India, encompassing the vision and geographical reach that we felt such an endeavor would require.

We then conducted a year-long pilot project with Drishtee to develop affordable microloans for primary, secondary and vocational students. We offered education microloans in 25 villages throughout four states in Northern India and were amazed to see a huge response.

As the pilot results started trickling in, we became convinced that we were on the right path. There was a strong demand for education microloans; the students and families were really willing to pay reasonable interest rates for their loans and were actually repaying their microloans. Some aspects of our program didn't work as we first intended and have been adjusted, but being a small organization, we've been able to adapt and respond to the students' needs. It's exciting to be able to make such an impact.

While it's still just the beginning of a journey, I'm thrilled to be able to work on helping children around the world go to school. A single individual can make a positive difference in another person's life. I'm reminded every day of the child near the Taj Mahal who changed my life. I go to work every day with the hope of changing his.

About JantaLoans.org

JantaLoans.org is a San Francisco-based education microfinance non-profit that allows people to help alleviate global poverty and directly affect the life of a child with as little as $25. Through microloans and scholarships, Janta enables poor families to invest in their children's education in primary, secondary, and vocational school. Janta's goal is to make education microfinance widely accessible and affordable, with an emphasis on small loans and scholarships for high-need and high-potential students.