Marco Paschina, a Boston University senior who graduated from high school in Italy, knows how different the experience of getting an education is in the U.S. compared to Europe. However, it was the clash between the U.S. education system and its Latin American equivalent that inspired Paschina to start Credyty, a short-term student loans financing platform that aims to promote access to upper education in Colombia.
Let’s take a step back. The journey of Paschina and fellow Credyty co-founders Felipe Garcia de la Ossa and Juan Tomas Leal as student entrepreneurs started with a real journey. More precisely, with a vacation trip to Colombia.
Last summer, the trio spent one week visiting Bogotá, the state capital, and Cartagena, the hometown of senior at Boston University, Garcia de la Ossa. The experience was life changing for all of them, Paschina said. It allowed him to realize that he had always considered education a normal (and almost granted) step in life.
“We realized that this was the reality of few, but not the reality of many,” Paschina said, adding that for many Colombians his age, going to college is “a dream,” or something that happens rarely.
As confirmed by a recent United Nations report, learning achievement levels remain
low by international standards in Latin America and in the Caribbean, where boys massively under participate in secondary and tertiary education.
Like in the U.S., education in Latin American institutions is very expensive. The difference with the U.S. system is the limited access to capital that students get. “In the U.S… anyone can go to a bank and request a loan,” Garcia de la Ossa explained. “He can also apply for financial aid or scholarships. Back in Latin America, it’s really, really hard for students, or pretty much everyone, to get a loan and to get approved by a financial institution.”
Paschina, Leal and Garcia de la Ossa decided to help Latin American students access money to finance their upper education in Latin America.
Students apply for loans through the company’s proprietary fintech platform and receive confirmation within one calendar day, the company said. Financial institutions provide capital to fund loans at no student-default risk; this risk is assumed by Credyty. To account for defaults, Credyty charges a risk-adjusted placement surcharge.
Paschina said that the company is planning on getting access to capital by partnering with traditional banks, international financial institutions (like the Inter-American Development Bank) and impact-oriented funds.
The company said it will launch a pilot program for 100 students during the summer to validate its business model, gather data and gain credibility to secure these partnerships.