BREAKING: Kiva Now Funding Education Loans

Kiva, the best known online platform for microlending, has just announced that lenders on their site will now be able to fund loans to students in the developing world, starting with a handful of students in Paraguay, Bolivia, and Lebanon. It's a significant move, both for the company and for the growing education crowdfunding space.

The Kiva Student Microloans program is a natural follow-on to the business microloans that Kiva lenders have been funding for the last five years. The format of the loans is quite similar to their existing loan portfolio, with small amounts requested and a pre-determined repayment timeline.

The move into student microloans is one of, if not the most significant updates to their model since their launch a half-decade ago. While their last big shift -- beginning to include loans to US micro-businesses -- was somewhat controversial, this growth will more likely resonate with Kiva's existing passionate lender base.

By moving into education loans, Kiva is entering a space inhabited by a number of startups, including groups like Enzi who are experimenting with fundamentally different forms of loan repayment (in their case, it is pegged to a percentage of student earning when they leave school). More notable, perhaps, is Vittana, who have been developing a robust pipeline of partners and students on a very similar model.

Already the internet is full of comments asking whether a) Kiva should have just worked with Vittana (or, "merge" with them), b) whether it creates competition with Vittana. Here are my thoughts on that:

1. Kiva has ridiculously powerful assets to move into this space. Kiva has a base of 750,000+ lenders, a huge percentage of which give regularly and continuously. They have a network of more than 100 finance partners around the world who they know and trust. They have (for good and ill) the eye and attention of the media. They can operate, instantly, at a much, much bigger scale than anyone in the space.

2. That's good news if you care about education access. The point is that, forget all the conversations of "competition." If you care about education access, you gotta be pretty excited about the attention and resources that this move brings to the space.

3. The idea that this is bad for the actors already in the space is probably pretty dubious. First, no matter what scale Kiva are playing at, the demand for education loans is going to dramatically outstrip the supply of lenders, which makes the value of consolidating actors in the space pretty low in my book. Second, dedicated services always have benefits over larger platforms. Larger platforms have scale and distribution, but also expectations and a certain lack of mobility. Groups like Vittana and Enzi are far more likely to be able to experiment with key pieces of the model. Third, there is a good argument that having a field leader enter the space actually "raises all boats" by bringing more attention and new money.

I think it's an awesome move, and ultimately will be good not just for Kiva but for the education funding space as a whole.

Read the press release here.

Photo credit: Emily Carlin