ShareThisAn innovative method of helping students pay for college in Latin America has landed in the United States -- and 15 California students serve as its willing guinea pigs.
"For me, it's absolutely wonderful," said 20-year-old Alex Jasiulek of Oakland, Calif., who has been president of his class for two years at Columbia University in New York.
He's one of thousands of students across the country who have taken out as many loans as possible, who may get financial aid and who work part time -- yet still fall short of covering their tuition.
For Jasiulek, the gap has been about $5,000 a year. A company called Lumni USA pays that bill.
Finance wizards Felipe Vergara and Miguel Palacios founded the for-profit company in Chile in 2002. It takes the notion of microfinancing -- giving small but critical infusions of money that have been wildly successful in helping poor people start businesses, particularly in regions such as India or Africa -- and applies it to helping students pay for college. The company, funded primarily with venture capital, opened its U.S. office in San Francisco three years ago. Its name combines "lumen," for light, and "alumni."
Lumni USA financed its first students in 2009: Jasiulek and Rena Stone, also from Oakland.
Now there are 15: Nine are the first in their family to attend college, 11 are low income, 10 are black or Latino. They attend schools from San Francisco State to New York University.
In exchange for financial help, Jasiulek agreed to pay Lumni a percentage of his eventual salary for a period of time. In his case, it's 3.71 percent for 10 years.
If he earns $100,000, he'll owe $3,710 a year for a total of $37,100. If he earns $40,000, he'll owe $1,484 a year, or $14,840.
Payments are made during any 120 months of employment. If a graduate must skip a payment, there is no penalty. The company doesn't allow faster repayment and discourages lump-sum payments with a hefty surcharge.
With programs in Chile, Colombia, Mexico and the United States, Lumni has financed about 2,000 students and raised about $17 million from some 100 investors. Among students now at work, 97 percent are making timely payments, said Elliot Peterson, operations coordinator for Lumni USA.
"In my particular circumstance, I think Lumni will be cheaper than a loan," said Jasiulek, who expects to go into politics. "And the only way I'd be able to get to Columbia is with this Lumni money."
Noga Leviner, Lumni's CEO, calls this "student financing" through a "human capital contract."
The company works nothing like a typical lender.
"Students are committing a percentage of their income after graduation for a set period of time," Leviner said. "And they're done after that, regardless of how little or much they've paid."
The contract is valid regardless of changes in a student's income. Say Lumni gives $10,000 a year to a premed student who eventually will pay 6 percent of his salary for 10 years. Then the student becomes a teacher instead of a highly paid doctor. Lumni might get $20,000 instead of $90,000 for its $40,000 investment.
The opposite is also possible.
"It shifts the risk from students to the company," said Matthew Denhart of the Center for College Affordability and Productivity in Washington, D.C.
Yet Denhart doubts the system will catch on in the United States, where student loans are more available than in Latin America. Here, high earners might not want to commit part of their salary, he said, and low earners might not provide sufficient return to the company.
Lumni won't give money to everyone. Its scoring system measures each student's initiative and potential. The company examines grades, SATs and even the graduation rate of the college they hope to attend.
Then the process gets personal.
"We interview every student," Leviner said. "We look for evidence of resilience, drive, ability to set long-term goals -- and for the value of the education they're getting."
"Wow! That's totally revolutionary," said Diana Fuentes-Michel, executive director of the California Student Aid Commission, which oversees Cal Grants. "Recognizing where students are and where they want to go -- that could have some promise."
The company saw potential in Carla Hernandez of East Palo Alto, who e-mailed Lumni repeatedly after representatives showed up at her high school last year. Now she's at Wheelock College in Massachusetts, with $6,000 so far from Lumni.
"It's really helpful," said Hernandez, who hopes to be a parole officer or social worker. She'll pay 2.26 percent over 120 months. If she earns $60,000, that will be just over $1,300 a year.
"It doesn't scare me," Hernandez said. "It's called 'pay it forward.' "
(Email Nanette Asimov at nasimov(at)sfchronicle.com.)
(Distributed by Scripps Howard News Service, www.scrippsnews.com.)
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