Chloë Foden, Head of Marketing at Prodigy Finance, wraps up the 3-part series on international MBA loans by covering the MBA financing options for Indian students and the differences between getting an education loan for overseas studies from Indian banks versus approaching an international lender like Prodigy Finance.
In this post, Chloë invites Padmapriya (Indian student at HEC Paris) to share her experiences and views on the various lending options she evaluated before taking a call.
Padmapriya Iyer dreamt of doing her MBA at HEC Paris. Originally from Chennai, she studied Computer Engineering at the University of Pune, and after working in the consulting industry for three years, she decided to shift direction and pursue another passion: marketing.
She wanted her day-to-day interactions to be not just with computers, but with people. In particular, she wanted to pursue a marketing career in the luxury goods industry.
Padmasees luxury as a fascinating industry, where marketing principles are turned on their head; craftsmanship and artistry are valued over mass efficiency. Additionally, she sees a very promising market for it in emerging economies like India.
In an interview with Prodigy Finance, she explained that through extensive research she knew the best vehicle to help her make this industry shift would be to complete her MBA at HEC Paris, in the fashion capital of the world.
She also wanted to experience an entirely different culture and meet people from different countries, which would be made possible given HEC’s 90 percent international student body for their MBA programme.
After being accepted into HEC Paris’s MBA Programme – Padma’s first and only choice – it was time to address the next step in the road to her MBA: financing her degree.
Initially she looked at overseas education loans in India, where the bank interest rates were high as a result of increasing inflation – banks she spoke to offered rates of between 10.5 percent and 13.5 percent. In addition at some of these banks, depending on the required loan amount, borrowers may be asked to provide 100 percent collateral – a hurdle that many students are unable to overcome.
Padma’s view is that “unless you have really good family backing or you have property to show for it, it’s very difficult to get overseas study loans in India”.
“I was looking at all of my options, and Prodigy Finance came along at exactly the right time”, she adds.
She learned from the HEC MBA Council that Prodigy Finance was in talks with the business school about starting a loan programme, and was very intrigued. Once the official agreement between HEC Paris and Prodigy Finance came through, she applied immediately.
We asked Padma to share her thoughts and experiences of applying for alternative international student loan options, and why she made Prodigy Finance her final choice to finance her MBA.
“The banks in India do not give you the APR. I heard of the APR for the first time when I looked at the Prodigy loan offer and saw that it is a much more transparent way of communicating exactly how much you would end up paying.
In addition, the process itself is somewhat less laborious. I applied for loans in India with banks and the processes were very convoluted. I would approach the customer relations department and tell them what I want to do and they keep asking for documentation, a lot of documentation. A loan in India would take about a month and a half to come through.
With Prodigy the application process is really simple. And the terms were pretty simple to understand – there was just a five page document which explained everything, including how to go about restructuring and how to make the payments. Everything was all there. I did not have any questions once I read the loan document.”
While Padma’s family was willing to support her as an alternative option, she said she wouldn’t have felt good about it with both of her parents being close to retirement. That was the final factor that made her decide to go with Prodigy Finance – it allowed her to finance her degree independently.
Since Prodigy Finance education loans don’t require any collateral or a co-signer it allows more student borrowers to stand on their own two feet to fund their studies – something that is important to many.
Padma also appreciates the six month ‘payment holiday’ after graduation, before repayments begin with a Prodigy Finance loan.
“Even if you get a job, in your initial couple of months all that money goes into setting up your accommodation, travelling, getting used to the new place, if you’re moving to a different city, et cetera.”
Prodigy Finance offers access to funding for those who may not have other options
For Padma, the access to an international student loan option that she could take on her own was a driving force in enabling her to attend the HEC Paris MBA programme.
“Coming from a developing country myself, it’s very good that it’s not the finance aspect of things holding me back from pursuing my dreams.”
|Indian Banks*||Prodigy Finance|
|Loan amount||Most cap maximum amount at Rs 20 Lakhs||Dependent on the individual application and school (max amounts vary from 80% tuition costs to full CoA for STEM programmes) Average loan size: $38,000|
|Interest rate||9% – 14%||5.5% – 8.5%|
|Collateral requirement||Some collateral, sometimes up to 100%||No|
|Grace period||Variable||Study period + 6 months after graduation|
|Fees||Varies||2.5% of loan amount|
|APR||Uncertain||Specified on a ‘per school’ basis|
*Aggregate information from 2 Indian banks for student loans to study abroad.
Also read, How to pay off your student loan early?
Bio: Chloë Foden is the Head of Global Marketing at Prodigy Finance and joined the company in September 2014. Chloë is particularly interested in driving social value and community building, and looks to grow Prodigy Finance into the leading global option for international student loans.