Impact Investing Can Close Education Gaps, Report Says

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Greater levels of impact investing are needed to address gaps in college graduation rates between low-income students and their more affluent peers in the U.S., a report by Avivar Capital says. The report was commissioned and sponsored by the Kresge and Lumina Foundations.

Why This Report Matters

Multiple trends are converging that require bolder action and more out-of-the-box innovative financing solutions, outside of reliance on government or policy intervention.

Among the trends – decreasing college affordability, soaring student debt, demographic changes in the nation’s population, increasing college student diversity, digital technologies that offer ability to democratize delivery of educational services, and emerging threats in robotics and increased automation that promise to impact the future of work. Example numbers (via Atlantic)

  • $62.6 billion is needed to cover tuition payments for all public university students
  • 44 million Americans now owe around $1.4 trillion in student debt
  • U.S. spends 47% of GDP on higher education, the highest worldwide
  • Average annual tuition in the U.S., third highest internationally

Successful impact investing in the sector can be leveraged to promote opportunities in other areas. The report identifies some examples including improving student transition from K-12 to postsecondary, real-world financial literacy, college readiness, coordination of support to students who are disadvantaged, undocumented, or low-income.

Additionally, anticipated policies by Trump and new Education secretary Betsy Devos to cut billions in student aid, research and education programs will drive the need for newer kinds of capital and “EdTech” innovation by nonprofit and philanthropic groups.

“America needs talent and the education system, from K12 to postsecondary, must change radically in order to provide it. There are large, powerful and influential forces at work to make this happen; from the White House to entrepreneurs to philanthropy. This is not only a national imperative, it is a human and moral imperative,” the report urges.