My Story: Microloans for Penn State Students in Need


My Story: Microloans for Penn State Students in Need

Penn State alum Tom Sharbaugh is starting a microloan program to lend students emergency cash at low interest rates.

What prompted you to start this program?

I’ve been giving to Penn State over the years, but I wanted to fill a gap that wasn’t being addressed. I began reading about microfinance and I wondered whether such a program could be useful at the university.

Don’t students get enough financial aid?

There’s a misperception that plenty of money is out there and all you need to do is borrow it. The typical annual need for a student at Penn State is $27,000—and that’s before books and transportation. Their aid packages typically top out around $15,000.

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How much will the loans be for?


They’ll range from $1,500 to $2,500.

Will they have an impact?

The office of financial aid says that students routinely come in with emergencies, often in the middle of a semester. The stories are really heartbreaking, such as students whose parents have lost their homes or jobs. They often need extra money to cover the rent or maybe fix a car they use to commute to campus. Some have to drop out of school.

Where’s the money coming from?


Our initial goal is $50,000 in donations, which my wife and I will match two-to-one. That $150,000 will be available at low interest rates starting in the fall semester through the office of financial aid.

How confident are you that the loans will be repaid?

We’ve learned from microfinance in the developing world that repayment rates are high because people with a common bond are embarrassed to default. I think that there will be a similar experience with students. If a student defaults on his or her loan, it’s not hurting some faceless organization. Because repaid money will go back into the fund, a default will hurt a future student who won’t be able to get a loan.

How are you raising money?

I’ve e-mailed every alumnus I know, and younger alumni have been tweeting and posting on Facebook, which spreads the word through social networks. I’ve seen our program mentioned on a microfinance blog from Pakistan, and I’ve gotten an inquiry from Brazil, so the message really is flying around the world.