In response to increasing demand for funding, a prominent lender has expanded its offerings to international students. Prodigy Finance recently announced that it has expanded the number of countries in which it operates as well as adding 150 spring courses. More expansions are planned for fall 2022, the company says in a release.
Loan applications opened on December 7 and the company expects a 50% growth in loans next year. Prodigy can now able to offer loans to students from over 120 countries.
“After a challenging 2020, we certainly saw the resurgence of international student demand in 2021 with students looking for more funding support in light of shrinking scholarships and reduced personal funds,” says Joel Frisch, Prodigy’s head of acquisition.
MORE COUNTRIES, MORE STUDENTS
Prodigy, a fintech platform founded by INSEAD MBAs in 2007, can now offer loans to several large markets that were previously excluded due to eligibility restrictions. Those include China, Russia, Australia, Bangladesh, South Korea, Spain, Chile, Singapore, France, Germany and Japan, as well as most countries in South America.
The move comes after a $500 million funding deal with Canadian Pension Plan Investments, a world leader in institution investing, according to Prodigy’s release. That deal came on the heels of another $250 million deal with the U.S. International Development Finance Corporation.
The extra $750 million in funding couldn’t have arrived at a better time. Prodigy’s application data shows that, over the course of the pandemic, average per-student scholarships and personal savings decreased while the average amount of requested loans increased 20.7% – from $51,846 in 2019 to $62,600 in 2021. (See chart below).
“Prodigy Finance’s loan application data highlights that the need for funding is more pressing than ever, with reported rises in tuition, decreased scholarship and limited personal savings. It is clear that as international graduate student needs continue to shift, access to funding will be a critical piece of the recruitment process,” reads the company’s release.
THE GREAT COVID SHAKE-UP
The move is likely a welcome reverse of fortune for international students interested in pursuing an MBA in the United States and other countries. In March, the pandemic forced Prodigy Finance to temporarily close major markets – including large countries such as Australia, Canada, and Germany – putting thousands of international students in limbo for the fall semester. Then, the company cited funding restrictions to the ongoing COVID-19 outbreak and related investor concerns.
“We are not a balance sheet lender,” Frisch told Poets&Quants this spring.. “We don’t lend our own capital. We are a platform that matches high-potential students with what I would deem impactful capital, so investors who are looking for both financial and social returns …
It is 100% a Covid-related issue and is purely a result of matching investors who are interested in investing in those regions, and that’s something that we’ve been able to successfully do over the years”
The market restriction was the first in the company’s 13-year history. Prodigy reversed those restrictions in July.
The expansions released this week will now only help support the ambitions of thousands more students, the company says, “but it will help the global higher education sector continue to recover from the significant drops in intake due to Covid restrictions. Over the last year and a half, international graduate students have demonstrated their commitment to earning degrees abroad regardless of a pandemic, global economic fluctuations, and challenged job markets.”
ANOTHER LENDER EXPANDS SERVICES
Prodigy isn’t the only international lender expanding services. MPOWER Financing doubled its lending limit this fall – from $50,000 to $100,000 – and announced a new refinancing option for international students a few weeks later. MPOWER does not require a credit score, collateral or a U.S. cosigner for its loans, but awards funding based on students’ future earning potentials.
“The mission has always been very, very personal for me,” MPOWER co-founder and CEO Emmanuel “Manu” Smadja told Poets&Quants. “I was an international student myself 22 years ago. I came from France over to the U.S., and I did okay academically, but struggled financially. That’s really what planted a seed in my head.”
Prodigy’s business model is built on the idea that access to financing for international graduate education should be borderless and based on future potential rather than current circumstance, according to the release.
“It shouldn’t matter where a student has been born or lives, or how wealthy their family is, and is instead based on them being able to access the education needed to fulfil their potential,” the company says. It has funded more than $1 billion in graduate loans to date and served more than 20,000 students from over 100 countries. Learn more about the company here.