Future Potential Versus Past Performance: Mpower Financing's Innovation in Student Loan Underwriting

12 Pages Posted: 21 Sep 2016

See all articles by Susan Herbst-Murphy

Susan Herbst-Murphy

Federal Reserve Banks - Payment Cards Center

Date Written: 2016-09-20

Abstract

The Payment Cards Center hosted a February 2016 workshop featuring MPOWER Financing, a start-up public benefit corporation created to be a source of student loans for high-potential scholars who either do not qualify for federal aid or who face a gap between federal aid maximums and the full cost of their educations. MPOWER has taken a unique approach to loan underwriting that is based on future potential rather than past credit experience and has developed a scoring model that helps predict loan repayment for young adults who have yet to establish a credit history. This paper summarizes highlights from the MPOWER workshop.

Keywords: MPOWER, student loans

JEL Classification: D14

Suggested Citation

Herbst-Murphy, Susan, Future Potential Versus Past Performance: Mpower Financing's Innovation in Student Loan Underwriting (2016-09-20). FRB of Philadelphia Payment Cards Center Discussion Paper No. 16-2. Available at SSRN: https://ssrn.com/abstract=2841598

Susan Herbst-Murphy (Contact Author)

Federal Reserve Banks - Payment Cards Center ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

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