CitiAssist replacement loan programs at American b-schools
The credit crunch resulted in CitiBank withdrawing its popular CitiAssist loan program which allowed international students at top American b-schools a such as University of Pennsylvaniaas The Wharton School, Harvard Business School, Chicago Booth School of Business – to borrow up to $ 150,000 as education loan without providing an American co-signor. The Wharton School of the University of Pennsylvania has announced the launch of a custom loan program with Digital Federal Credit Union (DCU) to help international loan applicants who do not have a US co-signor.
A source at Harvard Business School (HBS) said that the school will be announcing details of two loan programs for international students and these would be provided through JPMorgan Chase and Harvard credit unions. Rose Martinelli, Associate Dean, Student Recruitment & Admissions, Chicago Booth Business School said, aWe’re launching a couple of programs currently to support our international students who do not have a cosigner. The school is taking on risk to cover future defaults due to the credit constriction but the plan in the years to come is to have a loan program that will ensure access to all students admitted to Booth.a
The Tuck School of Business in collaboration with Dartmouth college has decided to develop an affordable solution exclusively for international students through an institutional loan program. The Tuck International loan program does not require collateral or a US guarantor. According to Dawna Clark, Admissions Director at the school, aThe repayment term will be ten or fifteen years depending on the amount borrowed. We are in the process of establishing the interest rate for the 2009-2010 academic year and estimate the range to be between 7.5 pc and 9 pc.a
American co-signor requirements at some b-schools
Laurence G. Mueller, Director of Financial Aid at the Darden School of Business says, aIt is not necessary for international students to provide a US co-signor but interest rates are lower for applicants with a co-signor. International students without a co-signor are required to pay an origination fee of four percent and a quarterly interest rate which is four percent above the US Prime Rate. The economic crisis has resulted in an increased number of international merit scholarships and development of new international loan opportunities.a
The situation is similar at Columbia Business School and a student admitted to the school in 2009 says, aThe school is currently negotiating with vendors for international student loans which do not require co-signers. These loans will be provided at a higher interest rate than loans for which applicants are providing co-signors.a
The availability of finances for MBA studies has resulted in students choosing MBA programs in other countries over those in America. Meet Kacchy, a Dubai based engineer, did not enroll at the MBA program at the Tepper School of Business at Carnegie Mellon University (CMU) because the b-school required international applicants to provide a US co-signor for loans. He says, aIall be doing my MBA at XLRI because CMU Tepper was a big commitment for me and my family. I did not secure a scholarship from the b-school and was required to provide a co-signor in order to avail of a loan. The withdrawal of the CitiAssist program has hurt the school.a
At the Haas School of Business, University of California Berkeley a which earlier offered the CitiAssist program, international students who have US co-signors can avail of loan programs offered by CitiBank and Sally Mae. Peter Johnson, Director of Admissions at the schoolas full time MBA program said in response to an e-mail questionnaire, aCurrently, loans from commercial banks which offer student loans to our students require a co-signer or guarantor for loans. The school offers loans to students who do not qualify for loans from commercial banks or government loan programs. These loans have a repayment of ten years and are currently available at an interest rate of 6.80 percent.a
Financing the European MBA
Professor David Bach, Associate Dean of MBA programs at IE Spain told PaGaLGuY.com, aIn these times, students are creatively combining their own finances, third party funds and loans from Caja Madrid, a prominent Spanish bank to pay for their MBA. A number of American applicants are opting to fund their MBA by using a combination of a Sallie Mae loan and a loan from Caja Madrid. The bank does not require loan applicants to provide any collateral or a Spanish guarantor to repay the loan. In these times, banks have become a lot more risk averse and conservative in granting of loans.a
IESE Business School, University of Navarra also offers international students the option of taking up loans without providing a Spanish co-signor. The schoolas Global Loan Scheme is the result of an agreement with Banco Sabadell, a well known Spanish bank. The loan scheme can provide funds up to a maximum amount of the entire tuition fee and has a repayment period of eight years.
Applicants to business schools also opt to take up loans from the Paras Education Foundation which provides loan options to students from across the world. Paras loans are available for majority of the universities in many countries and requirement of collateral or a US co-signor is determined on a case-by-case basis.
ESSEC Business School, Paris has received a higher number of applications for scholarships. The school also offers an apprenticeship program in which the company bears the expenses for the MBA program and also provides a salary to selected students while they are enrolled in the program. The student does not have to commit to work at the company on completion of the program. This year this program has been made open to non-Europeans and two Indians have been selected in this program.
Cameron Stevens, a South African MBA student has started a new funding solution after having encountered problems in securing a loan. Stevens faced difficulties as he had spent several years working in Malaysia and did not have the credit record needed to secure a loan from a South African bank. He could not avail of a local Malaysian loan because he was not a Malaysian citizen. Interestingly, research shows that approximately 60 percent of MBA students in Europe encounter similar difficulties. Stevens along with a Slovenian and a fellow South African have set up Prodigy, a London based company which offers student loans. The firm currently has two schools signed up for the loan program a Insead, Paris and Vlerick Leuven Gent, Belgium.