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Vittana Founder Kushal Chakrabarti

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Last week President Obama signed a bill that will make the government the primary provider of student loans, stripping banks of that power. This will lead to vast government savings, which will be reinvested to provide grants to students from low income families and make it easier for them to repay current loans. It will be a welcome relief to U.S. students, who took out a record $95 billion in student loans last year and were saddled with an average of $23,200 in debt upon graduation. #

While American students are drowning in debt, needy students in the developing world face a very different challenge. No loans are available. Though microfinance has helped millions of poor entrepreneurs lift themselves out of poverty over the past 30 years, one of its most salient oversights is that it has not been applied to student loans. Rather, recipients use microfinance to increase their incomes so that they can finance their children’s educations. #

Former Amazon.com engineer Kushal Chakrabarti seeks to simplify this process. He founded Vittana so that lenders in the developed world could extend loans to deserving individual students in the developing world via the Internet (think Kiva for student loans). Vittana, which is funded by donations from its lenders and some angel funding, pays back all of its Internet lenders in full as the loans are paid. #

The startup topped a 2009 Huffington Post poll of "ultimate game changers in philanthropy," a sign of growing interest in the model. Vittana currently works in Paraguay, Nicaragua, Peru and Mongolia, and plans to increase this list soon. Ultimately, Vittana hopes to leverage its impact not only by expanding operations, but by inspiring imitation. The aim, according to a December 2009 New York Times profile, is to "demonstrate that students are as good a risk as any other microfinance borrower." #

Photo: Kris Krüg #