The platform, which provides loans to students studying at business schools overseas, is also planning on expanding to include funding for master’s students on other courses of study.
Since its inception in 2007, Prodigy Finance has established partnerships with almost 100 universities worldwide, including Harvard Business School and Esade Business School, and has so far lent more than $200m to over 5,000 students overseas.
“It’s been a very interesting growth spurt,” Ricardo Fernandez, the company’s head of business development, told The PIE News.
“There’s no collateral, no co-signer and nothing attached”
The platform has now facilitated funding for students from 116 different nationalities. India is the company’s biggest market, followed by Latin America. Around 10% of the loan funding also goes to students from Africa.
Prodigy Finance was established by three alumni of Insead Business School after they saw how much some of their international classmates from emerging economies struggled with funding their studies. “They found this problem and they got about trying to solve it,” said Fernandez.
However, despite their difficulties in obtaining funding, the company’s founders observed that students from developing countries “were getting the same jobs as anyone from the Western world was getting”, he explained.
The loan is therefore based on students’ future earnings potential. “That’s one of our key differences with other banks,” added Fernandez.
“There’s no collateral, no co-signer and nothing attached.”
Instead, the company relies on a “social pressure for students to repay”, according to its website. Investors and school administrators can review each student’s repayment status on an online dashboard, resulting in repayment rates of over 99%, it adds.
“They found this problem and they got about trying to solve it”
The loan is community funded, with investors investing in a pool of students.
If a student defaults on a loan, the company will resort to “legal enforcement processes which can be enforced all over the world”, the website outlines. However, Fernandez said it works on a one-on-one basis with all students.
“Last year we had two Ukrainian students that could not pay because they were in the middle of where the war was,” he said. “We helped them, we gave them an additional grace period.”
Full time students are offered six months after completion of their studies before they start repaying their loan, while part time students begin their repayments three months after studies commence, with an interest rate of between 5.25% and 8.5%.
Now in its ninth year of operation, the platform is branching out from lending to just business school students.
“We’re also expanding lending to engineering students, to law students and to master’s in public policy,” said Fernandez.