Lender-Related FAQs

Can I provide a student a scholarship instead of a loan?

Unfortunately not. Although we always appreciate these kinds of requests, we only provide students with loan funding. Part of this is because we believe that loans, if done right, are valuable to the student. It helps students set goals, negotiate salaries after graduation, and ultimately feel responsible and invested in their education. Repayments from students also help scale to reach more students, which is ultimately what we hope to achieve. If you would still prefer to provide scholarships, please see the list of our partners who provide scholarships.

Should I worry about currency exchange risk?

Our loans are recorded in US dollars, so there is no currency exchange risk if you lend with US dollars. Although we disburse funds to students in the local currency, we record loans using the USD midpoint exchange rate on the day the funds are sent. Once in repayment, we record loan repayments again using the midpoint exchange rate on the day the funds were received.

How does funding a student’s loan work on Zomia?

Due to the short time between students requiring funding and starting school, we provide funding to our students upfront. We then recover that funding through crowdfunding on the site. We call this process of funding loans first “pre-funding” and the process of lenders replacing pre-funding as “backfilling.”

Pre-funding loans prevents a situation in which students are accepted to a university but haven’t been able to raise enough funds on our website in time to start classes. Our pre-funders include individuals and institutions that have agreed to back students before they are listed on our website.

When you backfill a loan, your funding replaces the pre-funding and your support is then directly tied to the student(s) you support. You will then receive updates on the student’s progress through school and, once they enter repayment, a percentage of their overall repayment.

How does Zomia find students?

Referrals by other Zomia students is the most common way we find new students. We also work with partners who already serve our target student population. This includes schools, NGOs, charities, and universities that serve students from marginalized communities. Additionally, students can apply directly to the Zomia website provided they meet our eligibility requirements. See here for a full breakdown of our student demographics.

How can I support a Zomia student?

Supporting students is done with a credit card or PayPal account. To get started, either create an account or find a student to support via our Student Roster. If you choose this latter option then you’ll create your account at checkout. Creating an account is necessary to receive repayments and updates from students.

Why loans and not scholarships?

We are striving to build a sustainable and scalable finance model for higher education. Providing loans instead of scholarships allow us to cover our costs and reach more students over time. Because we exclusively provide higher education loans, repayments from graduates ensure that a future generation of students can go to school.

How does Zomia determine which students receive funding?

The underwriting process on each application we receive typically takes weeks. Students undergo an eligibility screening, application process, interview, and contract review before receiving loan funding. Internally, Zomia team members conduct at least two rounds of evaluations—after eligibility results and loan applications are submitted, then again after conducting interviews with applicants.

Do my loans go directly to students?

It depends. If a loan is marked “pre-funded,” the student has already received funding from Zomia and lender funding is replacing Zomia funding. This allows Zomia to identify and support other students for future funding. Backfilling is critical to the Zomia model, giving students confidence they will be funded for a full term even before funding is secured on the website.

Loans marked “partially pre-funded” have not been pre-funded or disbursed in full. Zomia must secure additional lender contributions to meet the total funding need. In either case, loan funding provided by lenders can only be used to support student loans, and lenders are linked to the students they support for loan repayment. Lenders can search for pre-funded and partially pre-funded loans from Zomia’s student roster.

How much interest do students pay on their loans?

We charge a flat 5% each year on the total amount a student borrows for the first 13 years of their repayments. If a student is unable to repay the loan after 13 years then no additional interest is charged. The interest does not compound and does not start until after the student finishes or withdraws from school.

What is flat interest?

Flat interest means that the interest on the loan is calculated based on the total amount borrowed. This is different from charging a loan based on how much is left to pay, which is called a “declining-balance” method. For example, a $1,000 loan that carries an annual 5% flat interest rate would result in a $50 interest payment each year during repayment.

How many years do students make repayments?

Although our contracts run 10 to 20 years, most students will fully repay their loans in under 10 years. The average student makes full repayment in less than 7 years after graduation.

How much do graduates repay each month?

All of our contracts call for payments between 14% and 16% of a student’s income after graduation (or after withdrawing from a program). If a graduate earns less than our Minimum Income Threshold, then we automatically grant the graduate a deferment based on insufficient earnings.

Do I receive interest on the loans I fund?

No. Although students repay you after they graduate, the act of lending to a Zomia student is still philanthropic in nature, especially if you adjust for inflation over time. Forfeiting profit enables students to borrow with peace of mind at an affordable rate. Neither Zomia nor our lenders profit from a student’s financial need.

Why should I lend with Zomia?

While it’s true that your extra cash could be sitting in an investment account somewhere earning returns, chances are you’re reading this because you care about more than your own net worth!

We’re on a mission to bring funding to parts of the world where financial markets aren’t currently reaching or can’t. By supporting a Zomia student’s education, you are investing in that individual’s future while bringing funding where it’s needed most. Where traditional investments yield financial returns, funding a Zomia loan yields increased opportunities to the students you support and their future generations. You’re altering that individual’s opportunities and life trajectory.

Are my loan contributions tax-deductible?

No. Although the act of funding a Zomia loan is philanthropic in nature, it is not tax-deductible because you receive repayments after a student finishes school.

Will I get repaid? If so, when?

We strive to ensure that every lender is repaid in full, but we cannot guarantee anyone full repayment. Student loans are inherently risky and you should never lend more than you can afford to lose. You can view our repayment stats on Zomia’s homepage under “Lending Snapshot.”

How often do I receive repayment?

Whenever your student makes a repayment, you receive a repayment. Depending on their individual earning characteristics, students make repayments monthly or quarterly. This means you can expect to receive repayments either once a month or four times per year.

Do repayments come from the students I supported?

Yes. When we process a student’s repayment, you are automatically reimbursed for the portion of that loan you funded. For example, if you funded 10% of a student’s loan then you would receive 10% of each payment submitted by that student.