F1GMAT Interviewed Liz Reid - the Student Brand Manager at Prodigy Finance, to learn how they have funded hundreds of international MBA students.
1. How did Prodigy come into existence?
Prodigy’s Founder, Cameron Stevens, experienced firsthand the challenges of financing an international MBA when he attended INSEAD as a South African, who had been living in Malaysia. When he got to INSEAD, he realized that this challenge was shared by many of his classmates. He and two other MBA students set out to solve this problem shortly after graduating.
2. How does Prodigy Finance works?
Prodigy offers community funded loans to international MBA students attending top business schools. The loans are funded by a combination of business school alumni investors, the business school community, and institutional investors who have an interest in higher education. Students gain access to funding for their postgraduate degree that they often could not afford otherwise. To be eligible for a loan, students need to be studying abroad (that is, outside their country of nationality or residence). The only exception is that UK students studying in the UK are eligible.
The funds are disbursed directly to the business schools.
3. What is the maximum amount that Prodigy Finance has given as a loan?
The maximum loan size that can be granted is dependent on the tuition cost of the business school program that the student is attending. However, for most MBA programs, the student can borrow up to the full cost of tuition, but it varies according to the profile of individual applicants.
4. What are the evaluation criteria for getting a loan approved?
Students must be admitted to the business school program for which they are applying for a loan (and will need to provide proof thereof). In addition, they will need to provide documentation, including a copy of their passport, proof of their residential address, proof of salary, and a credit report, and where applicable, proof of savings, family support and scholarships.
5. Do students need a guarantor?
No, students do not need a guarantor or co-signer, and no collateral is required.
6. For international students, currency fluctuation is an issue that can increase the cost of funding. How does Prodigy Finance tackle this issue?
There are two things that help to reduce the currency risk for students. First, we don’t have any early repayment penalties and encourage early repayment and bulk payments. In this way, borrowers can build up a credit and choose timing of their payments in advance. Second, we build in a small leeway in that we do accept a payment and don’t charge a fee if the payment is within a specific percentage of the actual payment that is due that month.
7. How is the interest rate calculated?
Interest rates are quoted over a variable/floating base rate of Euribor, Libor or US Libor depending on the currency of the loan. Each applicant receives his or her own individualized interest rate above the variable base. Various factors are considered in calculating this rate relating to both the applicant and the quality of bureau information obtained from them, their affordability and other market rates they may have access to, but also the average target return that Prodigy must achieve for the community of investors. Prodigy gives as competitive a rate as possible up front.
8. How is the interest rate compared to government supported loans?
Rates of government supported loans to tend to be a bit lower than Prodigy’s rates. However, Prodigy will always try to provide as competitive a rate as possible in comparison with other market rates that the applicant has access to. The benefits to the Prodigy loan are that we have local repayment channels in over 30 countries, which many government loans don’t have, and the Prodigy application process is much less arduous that most government loan applications. In addition, being a private loan provider, applicants’ financial profiles are not shared with the government.
9. What is the minimum and maximum repayment period?
The repayment period varies from 7 to 15 years depending on the length of the study program the student is enrolled in. The majority of 1-year program have a repayment period of 7 years, but some have a repayment period of 10 years. The majority of 2-year programs have a repayment period of 10 years, but some are 15 years – for example, a loan for Columbia Business School.
10. When should the MBA candidate pay back the loan?
It is best for the student to pay back their loan according to their schedule outlined in their loan agreement. Typically, this means that they stay within their affordability range post-graduation. It is also beneficial for the community of investors if students pay according to schedule.
However, there are no penalties for early repayment, so student are welcome to settle their loan as soon as they can, if that is preferable for them.
11. Is there a grace period?
Yes, for students doing full-time MBA program the grace period is the study period plus six months after graduation. However, this may be shorter if the student is doing a part-time EMBA, or another program that allows them to work while studying. During the grace period, no payments need to be made, but interest accrues.
12. Who should apply to Prodigy Finance?
Primarily, MBA and EMBA students should apply for a loan. However, Prodigy does offer loans for other courses at some business schools, for example, Masters in Finance at London Business School and postgraduate engineering degrees at Cranfield University.
Students need to be studying outside their home country (the exception being the UK, as specified in Question 2) at a business school or university that has a Prodigy Finance loan program (see Question14 for applicable schools).
13. What happens if a candidate defaults on a loan?
If a student defaults and they get in touch with us, we work with the student to solve any temporary financial difficulties. The next step is to offer a temporary arrangement of sorts, such as a fixed payment (lower than the full amount due) or interest-only payments for a period of time.
Beyond arrangements whether defaults are intentional or unintentional, we then follow the default process, which is to get an award made in the LCIA (London Court of International Arbitration), and thereafter enforcement against the loan due will be made in the student’s local country. Of course, we do everything we can to help the students avoid such situations.
14. How many schools have partnered with Prodigy Finance for 2014-15?
We can currently offer loans to students attending any of the following 38 schools:
Berlin School of Creative Leadership
Cambridge Judge Business School
Carnegie Mellon Tepper School of Business
Cass Business School
Columbia Business School
Cornell University Johnson Graduate School of Management
Cranfield School of Management and University
Dartmouth College Tuck School of Business
Duke University Fuqua School of Business
ESADE Business School
European School of Management and Technology
Georgetown University McDonough School of Business
Harvard Business School
IE Business School
IMD Business School
London Business School
Manchester Business School
MIT Sloan School of Management
Northwestern University Kellogg School of Management
NUS Business School
New York University Stern School of Business
Oxford University Said Business School
Rotman School of Management
Rotterdam School of Management
Schulich School of Business
SDA Bocconi School of Management
UC Berkeley Haas School of Business
UNC Chapel Hill Kenan-Flagler School of Management
University of Cape Town Graduate School of Business
University of Chicago Booth School of Business
University of Virginia Darden School of Business
Wharton Business School
Vlerick Business School
15. How to approach Prodigy as an investor? What are the criteria for investing in MBA candidates?
Those interested in investing should visit the investor page of our website: or email email@example.com
The only ‘criteria’ is that there are specific requirements that need to be met if investing from the US – anyone interested should send an email to firstname.lastname@example.org. Otherwise, there are no specific criteria for investing.
People who are likely to be interested are those who want to support their business school as an alum, and those interested in social impact and impact investing, as most of the student we fund come from emerging markets, and many return home and add value to their home country economies.
About Liz Reid
Liz Reid is the Student Brand Manager at Prodigy Finance, and has been at the company since March 2013. Liz handles all student marketing related activities for Prodigy Finance, and is always looking for new ways to reach out to, and engage with, prospective MBA students around the globe.
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