Once a student has been accepted to receive HCP financing, they will enter into a three-way contract with HCP and their university.

HCP will commit to providing the university fees and maintaining the HCP alumni. The university will commit to providing the degree and abiding by the MoU.

The student (“HCP scholar”) will commit to completing their degree and then contributing 10% of their income back to HCP for a fixed period of time (either 5 or 10 years depending on which university they attend), starting from the time they enter the job market.

HCP financing is only for students who have no other option. It is a last resort.

HCP finance is not a charity.

HCP finance is not a loan. Repayments are not linked to the original size of the scholarship, but are linked to the income of the scholar. If a scholar gets a high income then they will pay significantly more than the original cost of the degree. This is why it is better to self-finance if possible. This approach is called “personal equity”.

HCP scholars are not just helping themselves, but also committing to help other Cambodians get the advantage that they received, and therefore helping Cambodia develop.

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How does “personal equity” work?

Hypothetical cost of a degree = $1000

Average Income/year     Repayment/year     Total repayment (10 years)

$0                                        $0                               $0
$500                                   $50                             $500
$1000                                 $100                           $1000
$4000                                $400                          $4000
$10,000                             $1000                        $10,000

HCP is taking the risk of failure and also receives the benefits from success. Students who succeed and become relatively rich will pay more, while students who don’t succeed and remain relatively poor pay less.

The money paid to HCP is used to re-invest in more students, thereby helping more Cambodian students to get an education and a better job.

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Why use “personal equity” instead of a loan?

Personal equity (PE) is different to a loan because the supplier of the funds (ie HCP) is taking on the risk of failure. This has two obvious advantages for the recipients of the finance:

* It can be difficult for poor families to get credit at market rates because they can provide no collateral and they therefore offer a bad risk.

* Under a loan approach, if a student fails (ie doesn’t finish degree, no job, low-pay job) they must still re-pay the debt. Under PE the student only repays if they succeed in getting a job above the non-university income level.

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What happens if somebody doesn’t pay?

For many Cambodians the honour of the contract, the recognition of the benefits they’ve received and the chance to help other people will be sufficient to ensure their voluntary compliance with the contract. However, it is also necessary to have sanctions against those who would be dishonest.

HCP and the university will pursue multiple avenues for ensuring the honest repayment of dues from HCP scholars.

* Additional fees for fraud/deceit
* Legal & political action to force payment
* Pursuing money from the student’s sponsors
* Suspension from the HCP & university alumni
* Public notice of refusal to pay
* Blacklisting of the school/village
* Withholding of the degree (the university will only provide photocopies until the obligation is complete)