Travel Loans

The International Organization for Migration's (IOM) Travel Loan Program helps to provide loans to refugees arriving in the United States. Refugees who accept these travel loans are required to sign a promissory note prior to departure, committing themselves to repayment of the debt within a determined period after arrival.

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IOM arranges travel for refugee using funds furnished by the Department of State and is mandated to subsequently receive refugees' repayments on behalf of the Department of State. Repayments made are remitted to a revolving fund created between the Department of State and IOM for use by the Bureau of Population, Refugees, and Migration (PRM) to defray the cost of future refugee travel. 

A Travel Loan repayment is initially assigned either to IOM itself or to a resettlement agency.

The core belief of the Program is that refugees' financial participation in making repayments against their debt will strengthen their determination to make a success of their migration. Furthermore, repayments are utilized by IOM and other receiving agencies to help establish the credit worthiness of the newly arriving refugees. Not only does that help refugees better integrate and contribute to the US economy, it also serves as a protection tool against abusive and predatory lending markets for those without credit worthiness.

Background

The International Organization for Migration (IOM) has extended travel loans to refugees since 1958, when the Council resolved that refugees "should be requested to pay, in the form of prepayments or in the form of reimbursement with appropriate delays, the highest possible amount towards the cost of their movements, due consideration being given to humanitarian factors, to the situation of refugees and to the necessity for early and successful assimilation in the country of immigration."  

In 1960, acting on authorization from the Council to seek opportunities to increase the proportion of refugees moved on a loan basis, the Director General established the Refugee Loan Fund. The purpose of the Fund is to permit the financing, in part or in whole, of the cost of transport and related services of refugees by interest-free loans made to refugees whose movement to areas of permanent resettlement is included in programs approved by the Council. Repayment of such loans shall be secured by promissory notes duly signed by the refugee, his legal representative or his sponsor.  

In 1964, the Council recommended to Member States that they contribute funds to capitalize the Refugee Loan Fund in order to enable IOM to assist a larger number of movements not fully financed by direct contributions.

Objectives

The key objectives of the travel loan program are:

• To reduce overall host country resettlement costs and thereby allow more refugees to be served than under a system of forfeitable subsidies.
• To strengthen the refugees’ determination to make a success of their migration through financial participation in making repayments against their debt.
• To help refugees establish their credit worthiness which maximizes their chances of success and contribution to the greater US economy.
• To serve as a protection tool against abusive and predatory lending markets taking advantage of borrowers without credit worthiness.

Impacts

• Credit reporting increases recoveries by ~18% than if not credit reported. 
• Refugee credit scores generally improve over time, and refugees who pay off their IOM travel loans tend to have distinctly higher credit scores than refugees who do not. 
• Refugees with superior credit scores achieve rates of home ownership above the national average.