A new pilot loan program will provide expanded options for international MBA students at a number of top programs in the United States, according to a recent report in Poestandquants. The program, offered by Prodigy Finance, will extend to international students and U.S. residents with non-permanent status who are studying at 16 top schools, including Harvard Business School, the University of Pennsylvania’s Wharton School and MIT Sloan School of Management.
Especially in recent years, banks have been reluctant to lend to students who are studying internationally. Prodigy Finance seeks to fill this need using a “community finance” model. Basically, alumni from participating schools fund loans for current students, banking on the value of a degree from their alma mater and the likelihood that future alums will repay. Interest rates on the loans vary between 6 and 12 percent, depending on the school, the individual borrower’s profile and current rates. Prodigy’s loans are capped at the cost of tuition and can only be used for tuition. An administrative fee of 3.5 percent of the loan amount is also charged. Borrowers have a six-month grace period after graduation before loan payments are due. The loans feature a ten-year payback, with no penalties for early repayment.
Prodigy, which was launched in 2007 by three MBA students at INSEAD, reports that it has distributed roughly $50 million to 1,300 students to date. It provides loans to students working toward their MBAs at a range of leading global business schools including HEC Paris, Oxford University’s Said Business School, IE Business School and others.
For a complete list of the 16 schools that are part of the U.S. pilot program, read the complete PoetsandQuants article.
