Homero Coss, 23, moved with his family from a border town in Mexico to Texas when he was just three. Growing up in Laredo, he decided he wanted to become an osteopath. But, like other Dreamers, he didn’t have access to Pell Grants or federal student loans to attend college, much less medical school.
Coss ended up winning a scholarship from a program for immigrant youth called TheDream.US to attend the University of Texas Rio Grande Valley. But medical school still seemed out of reach. So he returned home, teaching science in his hometown, figuring he’d work and somehow save money for tuition.
A year-and-a-half later, he got some good news: TheDream.US was piloting a new initiative called the Dreamers Graduate Loan Program. Was he interested? As soon as he could, Coss applied and got a loan covering his tuition at a low interest rate. He’s now in his first year of medical school at the Texas College of Osteopathic Medicine. “Every day I wake up and I can’t believe I’m here,” says Coss, who’s the first person in his family to attend graduate school.
Coss is benefitting from a recently-launched $100 million graduate school loan program for Deferred Action for Childhood Arrivals (DACA) and Temporary Protected Status (TPS) recipients who want to pursue professional degrees, but can’t access public loan programs thanks to their immigration status.
Impact finance and advisory nonprofit Social Finance is the fund manager. And Funding U, an education lending platform serving high-performing, underrepresented college students, is processing the applications and originating the loans.
Filling a Gap
The initiative grew out of TheDream.US’s college scholarship program. Launched in 2014, it’s awarded money to about 7,500 Dreamers to attend over 75 partner colleges. Students are more likely to graduate than the average American and with higher GPAs, according to Tracy Palandjian, CEO and co-founder of Social Finance.
But program officials realized there was another need: helping students pay for graduate school. A year ago, the organization decided to fill that gap, focusing on loans, since raising the money to pay full scholarships would be prohibitively expensive. Working with Social Finance, they hammered out the details. Then they asked Funding U to be the loan originator. The goal: to match the federal subsidized graduate loan program open to American citizens, including an interest rate significantly lower than the amount required by private loan providers.
Ultimately, the fund wants to raise $100 million to allow 1,500 TheDream scholarship recipients to attend graduate school. The focus is on institutions with a high graduation rate and a “comfortable debt-to-income ratio, says Palandjian. That means degrees in such areas as dentistry, law and engineering, as opposed to, say, the humanities.
So far, they’ve raised $30 million in grant equity and repayment guarantee from the Pershing Square Foundation, along with several other philanthropists and impact investors. That money will take a first-loss, subordinated position, the better to encourage participation from other investors. The Ford Foundation provided grant funding to develop the program.
Funding U is also providing financial education, to make sure applicants understand the terms of the loan and the payment plan. The four-year-old company’s regular business is helping underbanked students get “last-mile” money for anything from tuition to living expenses, using data and analytics to make better lending decisions. (For example, its analysis includes “academic” and “grit” scores to underwrite loans).
Meanwhile, Coss is studying hard, considering whether to focus on neurology or psychiatry. “It’s a challenging curriculum, but it’s getting you ready for the rigors of the job,” he says. “And I’m enjoying it.”