Buddy, can you spare the tuition fee?

Harvard Business School

Harvard Business School Photograph: Stephen Rose/Getty Images

Harvard is not usually associated with images of students struggling to make ends meet. But many actually need scholarships and hefty loans to get through their degrees - and they now have a new source for financial aid: a personal appeal to generous "old boys" for interest-free loans.

Three graduates from the elite university have created UniThrive, an innovative firm that links cash-strapped undergraduates directly with alumni prepared to lend to them. A student seeking help posts a profile on the website outlining their academic and leisure interests and why they need the money - and a Harvard alumnus can browse the site and pick a student to lend to.

One 21-year-old neurobiology undergraduate, for example, posted an appealing picture of herself on the website and explained her situation. "This summer I plan to take the medical college admission test and I currently can't afford the registration fees or the adequate preparation materials ... thus a loan from UniThrive would help me out a lot," her profile stated.

Postings are anonymous, to protect the student, and can only be accessed by those applying with a Harvard email address. UniThrive acts as a non-profit middleman, linking lenders and borrowers without taking a commission. The business is functioning on grants and investment from the founders, though they hope to raise funding from donations in future.

Progress reports

Students can request up to $2,000 (£1,250) a term, interest free, but could have access to more in future as the scheme develops. The loans must be repaid within five years of graduation, or the student risks a blot on their credit rating and attention from a debt collector. And as part of the arrangement, the alumni are promised progress reports from their pet students five times a year updating them on their studies or the benefit that they enjoyed from the loan.

"It's powerful because we are only requesting micro-loans, but they add up to a big difference for the student - and the lenders can see they are investing directly in someone," says Josh Kushner, who graduated from Harvard in government studies last year and is one of the three founders. He currently works at Goldman Sachs in New York.

The echo of charitable sponsors receiving letters from poor children they support in Africa, or from the developing world entrepreneur to whom they extended a small loan, is no accident.

Another of the three founders, Tanuj Parikh, is a cousin of Premal Shah, the president of micro-loan organisation Kiva, which lets lenders browse the profiles of entrepreneurial would-be borrowers in developing countries. They often need only a tiny loan to acquire raw materials to start a small business or buy something for their farm. Parikh did work experience with Kiva during his time at university and graduated from Harvard this year.

The third founder, Nimay Mehta, who has also just graduated, in economics, did his work experience at a venture capital firm and says he was influenced by that and the micro-lending concept of Kiva. "It inspired us because the person making the micro-loan feels a very tangible connection to the recipient," says Mehta.

The three friends launched UniThrive only last month, and immediately signed up eight students seeking loans. They were then flooded with more than 175 alumni interested in potentially becoming lenders.

"I was fascinated by the concept," says Nick Downing, 24, a 2007 chemistry graduate who is now in management consultancy in New York. "I was in the rowing team at Harvard, and when I looked on unithrive.org I was happy to find an undergraduate who shared my passion for the sport." He chose a member of the rowing team after "flipping through the profiles", so that the student could spend more time training and less time working at a job to pay for tuition, which at Harvard typically costs around $40,000 a year.

"I've given money to the college and their big fund but the thing that's exciting about this is that you can target exactly who receives the money and you feel as though you are making an impact," Downing adds. He prefers not to disclose the amount he has lent, but is looking forward to hearing how his beneficiary gets on.

Cheques do not go directly to the student; UniThrive pays them to Harvard, which then knocks it off the tuition bill. Students are means-tested and only those already studying with the help of financial aid are eligible to request loans.

Ricky Kuperman, 20, from Toronto, has just finished his second year at Harvard and is the brand new recipient of a $2,000 UniThrive loan. He is studying psychology but with a minor discipline in the dramatic arts, and is an aspiring dancer. "The loan goes towards my university bill, but it allows me the freedom to explore creative opportunities this summer and during term time as a choreographer and a dancer that I wouldn't be able to do otherwise," he says.

When not studying, Kuperman normally teaches dance and martial arts. But with the comfort of the loan he intends to spend the summer volunteering with a dance company in Toronto and rubbing shoulders with people who could one day help him develop a career in the arts. He says his loan had been provided by small amounts from six different Harvard alumni, ranging from a 1983 graduate to a 2004 graduate. "It's cool that there are faces behind the money," says Kuperman.

Tough times

Tough economic times make things harder for students and philanthropists everywhere these days. Kushner says the signs so far are that the personalised nature of UniThrive and the fact that loans can be as small as $50 are encouraging alumni to come forward despite the recession. The fact that Harvard has some of the most wealthy, powerful and famous alumni in the world does no harm either. Some prominent old boys and girls have already signed up as lenders, apparently, though privately.

Kushner says that alumni and undergraduates could develop strong mentor-mentee relationships that would help Harvard students get careers advice and jobs later. But those who wish to have minimal contact or remain anonymous can also do so - and anything that borders on harassment, for example, can be reported to the site as abuse.

"The idea is to lower the cost of tuition and also to bridge the disconnect between student and alumni communities," says Kushner.

Dipak Chaudhari, 22, graduated last year in applied maths and has just lent $100 to a student to support the cost of textbooks because the recipient, like him, comes from an immigrant family. "The amounts you can lend are low enough that alumni can get involved right away and feel they are making a difference directly," he says.

Meanwhile, the three founders are keenly aware that there are many more institutions where students have much graver financial needs than at Harvard. They began at Harvard because it is their alma mater, but are already in talks with a number of other, as yet undisclosed, universities across the US about expanding their concept. If successful, they also have ambitions to spread the idea internationally in the future, including to Britain.

• Would it work well here? education.letters@guardian.co.u