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Future Potential versus Past Performance: MPOWER Financing’s Innovation in Student Loan Underwriting

Author

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  • Susan Herbst-Murphy

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.

Suggested Citation

  • Susan Herbst-Murphy, 2016. "Future Potential versus Past Performance: MPOWER Financing’s Innovation in Student Loan Underwriting," Consumer Finance Institute discussion papers 16-2, Federal Reserve Bank of Philadelphia.
    • Handle: RePEc:fip:fedpdp:16-02
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    File URL: https://www.philadelphiafed.org/-/media/frbp/assets/consumer-finance/discussion-papers/dp16-02-future-potential-versus-past-performance.pdf
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    More about this item

    Keywords

    MPOWER; student loans;

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

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