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In a bid to help MBA students get affordable loans, London’s Cass business school at City University has signed up with Prodigy Finance, the UK-based company that issues bonds to support student loans.
The Prodigy MBA Bond enables MBA alumni and other investors to earn a return on their investment - 5 per cent per annum - while funding the next generation of Cass students. Since 2007, Prodigy has committed £18m worth of loans to more than 680 students from 80 different countries, with no repayment defaults.
Student loans for MBAs have been increasingly difficult to secure since the financial crisis of 2008, particularly for students from developing economies or for those who have lived in several overseas locations.
Most loans are calculated using localised lending templates and based on students’ historic earnings. Prodigy, by contrast, uses a predictive scorecard to calculate an applicant’s future earnings, and calculates the loan on that basis. According to the FT’s Global MBA rankings, alumni from Cass earn, on average, $111,552 three years after graduation.
With between 80 and 90 per cent of Cass’s MBA students coming from outside the UK, Cass deputy dean Steve Haberman says the school is one of the most diverse in the world. “With almost 35,000 alumni worldwide this innovative, borderless finance option gives alumni a sound and sustainable investment option and ensures the very best candidates have access to world-class business education.”