Why doesn’t Zomia provide traditional loans at 0% interest?

Our goals when we set out included making loans affordable and helping as many students as possible realize their educational dreams. We sought to ease the burden that traditional loans place on students. By accepting repayment as a percentage of income and imposing a minimum income threshold before repayment is expected, the burden of loan repayment is decreased. You repay gradually, as your income allows. What’s more, given our finite contract periods, you’re not on the hook for the rest of your life.

Yet in implementing this model, we’re almost certain to incur losses on a subset of our loans. That’s the cost of easing the financial burden for our students. Those students who cannot repay in full effectively don’t have to. If our model involved traditional loans with 0% interest, the anticipated losses would make it difficult to sustain. We still anticipate being forced to cover some losses, but we can come closer to sustainability if students who do well financially after graduation pay what amounts to modest interest. In effect, we’re asking those who do well financially to chip in for the good of the Zomia community and their fellow loan recipients.