How does funding a student loan work on zomia.org?
Due to the short time between students applying for funding and starting school, we provide funding upfront. We then recover that capital through crowdfunding on the Zomia website. We call this process of funding loans upfront “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 attract enough funds on our website in time to begin classes. Very often, we have less than two weeks between contract signing and tuition deadlines! Our pre-funders include individuals and institutions that have agreed to support students before they are listed on our website.
When you backfill a loan, your funding replaces the pre-funding, and your support is directly linked to the student you fund. You then receive updates on the student’s progress while in school and, once they enter repayment, a percentage of each repayment.
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.
Can I provide a student a scholarship instead of a loan?
No. Although we appreciate these requests, Zomia only provides loan funding. In part, this is because we believe that loans—if structured fairly—are valuable to students. They help students set goals, negotiate salaries after graduation, build credit history, and develop a sense of responsibility and investment in their education. More importantly, loan repayments help us scale to reach more students, ultimately enabling broader impact. If you’d still prefer to fund scholarships, see our partners page for a list of organizations providing scholarships to our 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.
Can I donate to Zomia?
Yes! Partners Asia, our fiscal sponsor, processes donations on our behalf. All gifts, less a 7% fee collected by Partners Asia to cover administrative costs, are allocated to a general student support fund, used to directly fund Zomia student loans. Future student repayments are paid back into the fund and recycled to support new students. Donate here.
How does Zomia find students?
Referrals from current Zomia students are the most common way we find new students. We also work with partners who serve our target student population. This includes schools, NGOs, charities, and universities serving students from marginalized communities. Additionally, students can apply directly on the Zomia website if they meet our eligibility requirements. See here for a full breakdown of our student demographics.
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 as many as 12 years. If a student is unable to repay the loan within 12 years of graduation, no additional interest is charged. The interest does not compound and does not accrue until after the student finishes or withdraws from school.
What is flat interest?
Flat interest is based upon the total amount borrowed and does not reflect the amount repaid. This is different from charging interest based upon the amount left to pay, which is called “declining-balance” interest. As an example, a $1,000 loan that carries 5% flat annual interest would yield $50 in interest each year until the loan is repaid.
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 within 7 or 8 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.
Should I worry about currency exchange risk?
Our loans are recorded in U.S. dollars, so there is no currency exchange risk if you lend in U.S. dollars. Although we disburse funds to students in local currencies, we record transactions using USD midpoint exchange rates when the funds are sent. Once in repayment, students may repay their loans in any currency, and we again use midpoint rates to credit their accounts in U.S. dollars on the day funds are received.
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 do not. By supporting a Zomia student’s education, you are investing in that individual’s future while providing funding where it’s needed most. Where traditional investments yield financial returns, funding a Zomia loan yields increased opportunities to the students you support as well as future generations. You can alter an 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. If you are willing to forego future student repayments and would prefer a tax benefit, you may donate to Zomia via our fiscal sponsor, Partners Asia.
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, so you should never lend more than you can afford to lose. You can view our repayment stats on Zomia’s homepage “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 payment, you are reimbursed based upon your proportional contribution to that loan. For example, if you funded 7% of a student’s loan, you would receive $7 for every $100 payment submitted by that student.
Monthly Lending FAQs
What is Monthly Lending?
Monthly lending is a feature allowing Zomia lenders to automatically allocate funds to students every month. Zomia charges your credit card and allocates loan funding to individual students, normally on the 1st of every month.
Can I Specify Which Students Receive My Monthly Contributions?
Yes. If desired, you may set preferences to prioritize funding based upon student gender, country, or program of study. Additionally, you may prioritize students you’ve already funded in the past. If no student matching your preferences is in need of additional funding, Zomia will allocate your funds to a student of its choosing.
Can I Pause or Stop Automated Monthly Lending?
Yes. You may set the [Monthly Lending] toggle from your portfolio at any time. Set the toggle to “off” to disable the feature. If you do not re-enable your contributions before the end of a calendar month, you may need to re-enter your credit card information to resume.
Are My Credit Card Details Safe?
Zomia uses Stripe for all monthly lending credit card processing. We do not store lender credit card numbers or expiration dates anywhere in our systems. Your credit card details are persisted by Stripe, which does much to protect your data. (Stripe exists to process credit cards securely, and we believe they’re safe!)
Monthly Lending $50 Gift Card Giveaway FAQs
How Can I Earn a $50 Gift Card?
To earn your gift card, you must provide at least $100 in loan funding to Zomia students via automated monthly lending. Sign up to make monthly loans in multiples of $25, and once your total lifetime monthly lending contribution reaches $100, we’ll send you a $50 gift card.
How Will My $50 Gift Card Be Delivered?
Your gift card will be sent to the e-mail address associated with your Zomia lender account.
Where Can My Gift Card Be Redeemed?
We use Giftbit for gift card delivery, giving you a number of options for redemption. After receiving your gift card via e-mail, you may redeem on Amazon, iTunes, and a number of other online retailers.