How to Get or Refinance an International Student Loan

Securing educational financing as an international student is no easy feat. You might think getting into grad school is the tough part, but even securing a seat in a prestigious, competitive MBA program is likely to seem easier than finding the financing to accept it.

And, it’s difficult to imagine affording an international MBA (or any other degree without it). The average annual cost of attendance at Harvard Business School is $109,000. And, that’s before considering the study treks and travel which the program absolutely recommends.

Though it’s a challenge, international MBA candidates in the US do have options.

The most obvious is usually a loan from a bank back home; that’s where most people go when they need money. But it’s not always that easy to get the funds for an international education.

  1. In some countries, it’s impossible to secure financing without collateral worth significantly more than the loan itself.
  2. Banks in other countries have a maximum loan amount equivalent to the cost of pursuing the same degree locally.
  3. Interest rates can still be significantly higher than can be found from an American bank with a local co-signer.
  4. What’s equally tricky is the fact that credit history doesn’t cross borders. Every country has financial information metrics – and they don’t always track the same things, making it difficult to assess. It’s difficult to price the risk without a local credit report. International students who want to secure an educational loan from an American bank must find a local co-signer.

A handful of universities, Harvard included, have made it easier for international students to secure a local loan without a co-signer. The school itself acts as a co-signer, allows international student loans through its credit union, or has secured a partnership with private firms that provide the financing.

Even then, interest rates are higher than an American student would secure; without automatic work authorization in the US, they carry a greater risk. The higher the risk, or at least the perceived risk, the higher the interest rate.

The case for refinancing

Higher interest rates are just something international students believe they must live with, even as American grads seek refinancing to reduce their interest rates.

But, with an MBA and US employment in hand, it seems crazy to continue paying interest rates of seven percent or more; the higher risk at which the loan was previously assessed has decreased substantially.

And, in addition to the (usually) higher salary, there’s also a local credit history. Yet, that’s not the only thing banks need to refinance a loan; without citizenship or a green card, it remains tough to refinance a loan.

There is, however, another option.

And it’s not a bank.

In 2007, Prodigy Finance offered its first loans to international MBA candidates attending top programs using a risk algorithm based on future earning potential in addition to past financial data. The model allows for larger loan amounts than students are likely to secure from home banks, and without the need for a co-signer, they’re one of the few options for international students attending universities that don’t have an in-house, co-signer-free option.

Over 80 percent of Prodigy Finance-funded students have no alternative source of educational financing. And, over the past decade, the company has provided $480 million in loans to more than 9900 international students.

The Prodigy Finance loan application process is swift. After a 30 minute application, it takes just a few days to receive loan terms – and there’s no application fee.

It’s also good news for international students who previously accepted an American loan with higher interest rates; it’s possible to refinance that loan with Prodigy Finance. The process is equally swift and there’s no admin fee. Better still, it’s an opportunity to reduce those high interest rates.

Getting an acceptance to an MBA program, after all, should be the difficult part – not financing it.