MPOWER Featured in Paper by Federal Reserve Bank of Philadelphia Payment Cards Center

by MPOWER Financing | In In The News | 20 September 2016 | Updated on: April 13th, 2021

September 20, 2016 ― Philadelphia ― In a discussion paper issued today, the Federal Reserve Bank of Philadelphia Payment Cards Center (PCC) features MPOWER Financing and explores the company’s innovative way of assessing and managing credit risk. The paper, Future Potential versus Past Performance: MPOWER Financing’s Innovation in Student Loan Underwriting, examines the current state of student lending and focuses on how MPOWER fills voids in the market.

Citing MPOWER as a company at “a point of intersection” of several U.S. education trends, including exponential growth in tuition costs and international student attendance, Future Potential versus Past Performance observes that as the cost of higher education continues to rise, so, too, does the need for new sources of funding. The report concludes that MPOWER meets a lending need by providing additional private student loan options, leveraging a forward-looking manner of assessing credit risk based on a student’s potential.

The paper summarizes a workshop facilitated by MPOWER at the Federal Reserve Bank of
Philadelphia earlier this year.

“There is a great deal of interest in identifying ways to support students’ higher education goals while helping them avoid indebtedness beyond their ability to repay,” said Susan Herbst-Murphy, consumer credit and payments industry expert, Federal Reserve Bank of Philadelphia Payments Card Center. “Because MPOWER’s underwriting model is based on a borrower’s future potential versus past performance, it unlocks possibilities for many students who may not qualify for other federal or private loans.”

In fact, the report points out that while federal student loans are available to any U.S. citizen who has been accepted to an accredited higher education institution, the evolving marketplace is demanding new options as student loan need skyrockets. From 2004 to 2014, student loan borrowers grew 92 percent and loan debt in the U.S. tripled, resulting in a massive $1.16 trillion borrowed. Coupled with the more than one million foreign students enrolled at U.S. institutions who are ineligible for U.S. government loans, new lending sources have become vital to a student’s educational future.

MPOWER’s measured approach to student loans creates more sustainable debt levels for students. With an algorithm that focuses on outcomes, MPOWER not only serves high-caliber students who were previously left out in traditional risk models, it also provides more affordable private loans that are aligned with the student’s future earning potential.

“MPOWER fills an unmet need for international and independent U.S. students,” said MPOWER CTO and Co-founder Mike Davis. “We were thrilled to be asked to present to the Federal Reserve and to share insights into our business approach and how we support students in achieving their full potential.”

Davis was one of the MPOWER executives who facilitated the workshop. During the event, MPOWER shared more about its business, underwriting model, and position in the student lending space. Diving into the rationale behind MPOWER’s forward-looking loan approach, the report summarizes key insights from the workshop and details MPOWER’s role in student lending.

For more information or to download a copy of the paper, visit the Federal Reserve Bank of Philadelphia Payment Cards Center or MPOWER websites.

About MPOWER Financing

As a Public Benefit Corporation, MPOWER removes financial barriers to higher education in the U.S. by working with investors and universities to lend to high-potential students who are left out by traditional banks. In addition to providing students with access to the financial resources necessary to attend and complete college, MPOWER builds students’ credit histories, provides them with personal finance education, and offers gateway financial products to prepare them for life after college. For more information, visit, or follow MPOWER on Twitter, Facebook, and LinkedIn.


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