The University of Pennsylvania’s Wharton School is informing international students and applicants that an important source of loans to finance their MBA is about to shutdown, Poets&Quants has learned. The program, financed by Digital Federal Credit Union (DCU), is highly attractive to international students because it doesn’t require them to have a U.S. co-signer to take out a loan up to 90% of the costs of their MBA education.
In an email to both students and applicants, Wharton Vice Dean Howie Kaufold and Admissions Director Ankur Kumar said that DCU plans to discontinue the loan program on Feb. 1, 2012. The pair do not disclose why the credit union, one of the nation’s largest, is withdrawing from the market, and a spokesman for DCU did not return a phone calls from Poets&Quants.
“Our highest priority now is to help our international students who do not have a U.S. co-signer to continue to have access to funding,” wrote Kaufold and Kumar. “Wharton’s senior administrators, including Dean (Tom) Robertson, are addressing the issue directly, and we are currently in discussions with various lending institutions.”
The closure of the DCU program is particularly important at Wharton where MBA students graduate with the highest debt burden of any MBAs (see “The Class The Loans Fell On.”) Generally, about 75% of the MBA student body borrows money to help pay for their MBA education. Wharton has reported that the average debt per student in the Class of 2010 was $109,836. For students in the Class of 2013, that number is expected to balloon to $124,000 a person. Some 37% of the school’s latest entering class of MBA students are international.
It’s not yet clear how many other business schools use DCU to help their international students fund their MBA education. And the problem seems limited to international applicants who hope to enroll in the fall of 2012 or beyond.
“Currently enrolled first- and second-year students who have received a Digital Federal Credit Union loan disbursement this year will not be affected by this cancellation,” the Wharton officials added. “First-year DCU borrowers will be allowed to draw funds from the existing line of credit for the 2012-2013 academic year.”
In order to receive funding, however, current students must submit a loan application before the Feb. 1 deadline. Wharton is asking students who have yet to file a loan request for the 2011-2012 academic year to contact the school’s financial aid office immediately at 215-898-8728. The name of the specific DCU loan program is the “International Graduate Private Student Loan Product.”
The last time there was a problem with international student loans occurred in the fall of 2008 when two highly popular programs underwritten by CitiAssist and Sallie Mae were taken off the market. Those programs allowed foreign students to borrow up to $150,000 without a co-signer to assume responsibility for the loan in the event of a default. Other private lending sources used by international students also went south in 2009, leaving many students and schools in the lurch.
Wharton said it plans to hold an open forum in January for its international students “so that we may personally address your questions on this topic.”
MBA DEBT: A BEAST OF A BURDEN
- PART I: MBA Debt: The Burden Grows Heavier & Gets Scarier
- PART II: A MBA Vows To Graduate Without A Dollar of Debt
- PART III: The Class the Loans Fell On
- Caveat Emptor, Caveat Debtor: A Candid Interview About MBA Debt With GMAC’s David Wilson
- Helping MBAs Manage The Debt Burden
- 25 B-Schools That Lead To The Most Student Debt