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USAID and Kyrgyz Investment and Credit Bank (KICB) Jointly Launch Student Loan Program

USAID and the Kyrgyz Investment and Credit Bank (KICB) are pleased to announce an innovative, new project – the Student Loan Program – that aims to increase access to high-quality education for prospective students and access to better qualified graduates for prospective employers. Under the Student Loan Program, USAID has set up a loan guarantee fund that will provide up to 50% in loan guarantees for the student loans. KICB will provide loans to university students, with the possibility of expanding to vocational school students in the future. In addition to providing loan guarantees, USAID is funding the Eurasia Foundation of Central Asia (EFCA) to provide technical support for the program. The program is an excellent example of a Public-Private Partnership, which aims to create a viable student loan model of education financing that can be replicated on a continuing basis by the Kyrgyz Government and/or the private sector.

With the current economic situation in Kyrgyzstan, many students are faced with the prospect that they will not be able to afford to attend university or vocational school this year. Student loan programs have been introduced throughout the world as a way of enabling students to pay for their education after its completion. In Kyrgyzstan, current loan packages do not meet the needs of students and their parents. Interest rates are too high, many families do not have the necessary collateral, and repayments need to be made while students are still studying.

USAID Director in Kyrgyzstan, Pat Shapiro, explained the program’s concept in more detail. Ms. Shapiro states, “the Student Loan Program in Kyrgyzstan includes two key components to help young people in Kyrgyzstan: a credit finance component that provides access to higher education for qualified students who are unable to afford tuition; and a technical assistance component to create linkages between graduates and Kyrgyz employers to increase opportunities for employment after graduation.”

In the first year, KICB plans to provide loans to students studying in selected universities throughout the country. The loans will be provided at reasonable interest rates and with repayment terms of up to 5 years. KICB is also planning to provide a “preferential student loan program” for the best-qualified students at a significantly lower interest rate with longer repayment terms. KICB’s Chief Executive Officer, Mr. Kwang - Young Choi commented that, “the introduction of an education loan program will certainly contribute to the sustainable long-term development of Kyrgyzstan by providing quality education opportunities to deserving students who want to study in universities and vocational schools who lack the necessary means.”

EFCA will work with KICB and its partners, the EdNet Association and the Bishkek Business Club, to provide technical assistance for the program. EFCA will help identify the educational institutions for inclusion in the student loan program, using criteria such as the needs of the labor market and the quality of education. The program will work with KICB and another lending institution partner to identify the selection process for students and to ensure that the loans are compatible with student needs. The program will build links between these students and businesses, creating internships and short-term work opportunities and will inform students about the benefits and risks involved in the loan process. Finally, EFCA will provide training and resources to help students better prepare themselves for finding jobs upon graduation.

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