Prodigy Finance - February 07, 2020
Prodigy Finance launched in 2007, providing loans to international MBA candidates at INSEAD. Funds were crowdsourced from alumni, financial institutions and socially-aware investors to support students who often experience difficulties securing sufficient educational loans in their home or host countries.
We’ve funded thousands of international students since our inception. If you’re thinking of joining this cohort of international explorers, you’ll likely be looking for funding to get you where you’re going.
Prodigy Finance is here to help with an international education loan product that understands your challenges and opportunities. This article will explore everything you need to know about how Prodigy Finance works, your Prodigy Finance interest rate and loan, and the process of getting you to campus.
There is a lot that separates us from traditional banks. From our application process, to our funding sources to our understanding of cross-border lending (and how to use your education loan to help you secure your visa). But what really separates us from the rest is how we value you as an individual with potential.
We’re less interested in your history and more focused on your future. Here’s how we’re able to do that.
One of the key differences between traditional lenders and Prodigy Finance is the model used for underwriting risk on loan products.
Traditional banks work only with historic and current financial data when assessing borrowers. While the data banks consider varies between countries and banks, it’s safe to say that they don’t consider future salary increases post graduation when extending loans to masters students - whether they’re studying domestically or internationally.
However Prodigy Finance’s Future Earnings Potential model does consider the future earning potential of loan applicants, and uses additional data to determine the risk and maximum amount a student is eligible to borrow. Working with a growing number of students and schools over the years has enabled us to continually refine our dataset. This, along with increased funding sources has enabled larger loans with reduced interest rates.
Prodigy Finance loan calculator: Check out an example of how we calculate your education loan interest rate.
We’re able to lend to people from around the world and one of the key factors that allows us to do this, is a credit report. This allows us to understand the health of your credit history so we can determine what will work best for you in the future.
They vary from country to country, so it’s important you understand where to find your credit report.
Prodigy Finance now reports to Experian in the US and are working to extend this to additional credit bureaus. This has immense benefits for international students hoping to remain in their host countries post-graduation. Your Prodigy Finance student loan will reflect on your credit history, establishing borrowers financially in their host country.
You’re not just another borrower to us. We’re an international student loan provider, developed by former international students. We want to stay with you on your journey to higher education.
From arriving on campus, to your graduation and beyond - we care about what you do. We won’t penalise you for early repayments and we don’t ask for a co-signer or collateral.
Your international student loan will be one of the biggest financial decisions you’ll have made to date. That’s why it’s important to understand the details, the maths and variables around your Prodigy loan.
Different loans and lenders use different methods to determine the interest due. Broadly speaking, there are two types of interest:
Prodigy Finance uses a variable interest rate model, as do many educational loan providers throughout the world.
If you have a variable interest loan, these two components will always be there, whether they’re explicitly called out or not.
At Prodigy Finance, we believe that complete transparency better equips potential borrowers to make responsible financial decisions. That's why we will always provide your fixed margin rate as well as the base rate used to calculate your interest rate.
One thing all base rates have in common is that they’re variable. It’s as true for MCLR as it is for Euribor. These rates change according to market factors. They’ll all rise and drop over the course of any loan period.
Prodigy Finance uses the 3-month LIBOR, or US LIBOR as the base rate for loans. The applicable rate is dependent on the currency of your loan.
For example, if you secure a Prodigy Finance loan to study in the United States, US dollars is the currency of your loan and the corresponding base rate is US LIBOR.
One reason for choosing LIBOR is the transparency of these base rates. Not only are the calculations available, but the rate and all changes are public; you can check LIBOR at any time.
It includes the interest rate (which, if it is a variable interest rate, will include both the fixed margin and the base rate - whether it’s Prime, LIBOR, MCLR, or another base) as well as any fees associated with an education loan for abroad.
While APR calculations aren’t used in every country, anyone who plans to study and perhaps live in the US or UK should definitely take a moment to understand APR as it’s legally mandated in these countries as it provides a more-complete picture of your loan costs.
In the case of Prodigy Finance loans, APR includes the interest rate (fixed margin plus base rate) plus the Prodigy Finance processing fee, also known as the admin fee.
If you have the APR of two loan products with the same currency, you can use it to compare them directly. That’s not possible when comparing interest rates (as you won’t get the impact of the fees associated with your loan). You also cannot compare interest rates to APR.
The 7-step Prodigy Finance application process is vastly different to the approach most financial institutes take:
And because we provide you with a commitment-free quote while you’re researching your options, you’re able to apply whenever it suits you.
Understanding how to complete the loan application is easy and our international team is always on-hand to help you through the process. You apply, we verify and you’re all set.
Check out this infographic for an idea of how easy our entire process is.
Budgeting for your international student loan repayments should be an important consideration for anyone ready to study abroad.
We know that and our team works hard to make repayment as simple as possible for you. We've developed an app (available in iOS and Android) that helps you access your loan information wherever you are so you can pay your loan on time.
Here’s a recap of some other Prodigy Finance repayment features:
If you’re ever worried about not being able to repay your loan, our team is there to develop a payment strategy for you. We understand what it’s like to be an international student and we’re always ready to help.
Every year brings more international students, and lenders are responding to these needs where possible.
Prodigy Finance has grown too.
From INSEAD, the list of supported schools has grown tremendously over the past decade. Currently, Prodigy Finance supports international grad students attending more than 600 programmes across 18 countries.
With growth comes some misconceptions. We’re going to debunk a few personal loan myths, and dive into some misconceptions that will help you understand the truth about your Prodigy Finance loan.
Incorrect. Prodigy Finance loans have no hidden fees.
You’ll be able to see exactly what’s attached to the amount of money you borrow. There is also a 5% admin fee.
There are no other fees attached to your loan so long as repayments on the loan are up to date or ahead of schedule. It's important to note though that we're currently offering loans in USD only. If you take a loan to study outside of the US, and your loan needs to be converted to GBP/EUR, you'll be responsible to cover any shortfalls if your loan amount is lower than your approved loan amount.
Provided you make the minimum required payments, you’ll never see forex conversion, additional Prodigy Finance processing fees, sanction letter fees, payment charges, insurance, taxes, or any other fee on your Prodigy Finance loan. The only applicable fee is your admin fee, so long as your account is in good standing. We add a maximum of 5% of the amount you borrow from Prodigy Finance to the total loan amount.
The admin fee is only applied to the amount you borrow. It’s possible to reduce the size of your loan from Prodigy Finance to the minimum amount for your programme and school - even after accepting your loan, but before signing your loan agreement when arriving on campus. Doing this reduces your admin fee accordingly - and is one of the reasons why you don’t need to pay the admin fee when you initially accept your provisional loan offer.
The maximum loan amount that an international student is able to borrow from Prodigy Finance is dependent, in part, on the university and programme they pursue. In some cases, this may be up to 100% of the total Cost of Attendance (CoA), which equals tuition plus living expenses, as provided by the university.
However, not all students are approved to borrow the full amount based on their personal financial profile and the financial earnings potential data available for the course in question.
When 100% of the CoA is not borrowed from Prodigy Finance, it's critical that borrowers demonstrate to Prodigy Finance that additional funds are available for their education. The demonstration of adequate funding is required to secure international study visas.
Demonstration of available funds is different from having this amount in your bank account; funds do not need to be liquid at this stage.
What’s critical is that you’re able to demonstrate the remaining amount needed to meet the school’s stated cost of attendance. Students wishing to study in the United States must prove they have access to the full CoA at the same time as you must submit proof to receive your I-20 form - and there is no way to apply for a US F-1 student visa without the I-20 form and you are not officially enrolled in a university until this occurs.
Students who are unable to prove to the university that they have sufficient funds to meet the stated CoA will be denied an I-20 form and will not be able to submit an international student visa application.
With these rigorous standards in mind, and because the majority of Prodigy Finance borrowers pursue their masters degrees in the United States, Prodigy Finance works with best practices to assist students and their universities to ensure the minimum financial benchmarks needed for visa processing are met.
At Prodigy Finance, we believe it’s important for potential borrowers to review all of their available loan options before making a decision that’s personally and financially responsible.
For example, international students pursuing an American masters degree, should consider loans from US banks, alongside a Prodigy Finance loan, alongside loans that may be available from a student’s home country.
The last part is where it becomes quite tricky as you can easily compare the APR of a loan from a US lender to the APR provided from Prodigy Finance as they’ll both be available for a US dollar loan amount. But, what are you supposed to do when the loans available in your home country are in rubles, rupees, or reals?
And, if you don’t have a finance or economics background, you might be tempted to run a search on Google for a tool to help you compare interest rates between currencies, such as interest rate parity.
However, to understand the behaviour of your currency, you can’t look at interest rate parity in isolation.
There are several variables you must bear in mind:
Borrowers without an economics background should always be careful of using such models to make financial decisions - and may want to consult financial advisors if they’re concerned about potential forex losses.
That’s not to say, however, that international students shouldn’t be concerned about currency exchange rates.
In our example of an international student pursuing an American masters degree, Prodigy Finance mitigates at least one major forex concern by disbursing the principal loan amount directly to the school in US dollars. For students wishing to gain greater experience by remaining in the US with a valid work visa may find a loan in US dollars to be the easiest for them.
Prodigy Finance is both an international loan provider and a responsible lender. That’s good news for borrowers as we adhere to the highest financial standards. And, it’s important to note that there are other factors that may impact your choice of loan offers than simply the APR or amount of loan you may qualify for.
In some countries, you may receive tax breaks on the interest paid on an educational loan. As an international loan provider you won’t qualify for these deductions.
If you or a co-borrower (which is not the same as a co-signer) has an exceptionally high income and would benefit from such tax exemption, you may indeed want to consider a local loan if you live in a country that provides for such a tax break.
On the other hand, to reap these benefits, you’ll need to repay your loan over an extended period rather than paying it off as quickly as you possibly can. It’s impossible to advise generally on the correct balance between interest and tax deductions; this is something to discuss with a private financial planner, as there are plenty of variables that will affect your situation.
Over the past decade, Prodigy Finance has found that many students are interested in:
Either one of these points separately, but definitely both together, negate the benefits many borrowers might receive from tax breaks. It’s worth looking at your long-term intentions.
Not everyone has a full range of choices when it comes to international student loans. The banking norms in some countries attach certain minimums, requirements, or stipulations that some students simply can’t meet.
However, borrowers that do have a choice should consider all of the education loan details. While we can’t speak for other loan providers or their borrowers, we know that having a no-collateral, no co-signer option makes a big difference to many of our borrowers. Not only that, but we support students through their international masters study through career services and future networking events.
Ready to get a Prodigy Finance loan?
Our collateral-free loans can help you fulfil your dreams of studying abroad.
Post updated for accuracy and freshness on June 5, 2020. Originally published on April 15, 2018.
The purpose of this article is to provide general information on some of the concepts and topics, such as education loan procedure, APR, Prodigy Finance interest rates, fees and comparison of loan offerings, as it applies to student loans. This article and its contents do not constitute financial advice directed at any particular person nor an offer to apply for a loan from Prodigy Finance.
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© Prodigy Finance Limited 2007 - 2021. All Rights Reserved. Prodigy Finance Limited is incorporated in the United Kingdom (Company Number 05912562) with its registered address at Palladium House 1-4 Argyll Street, London, W1F 7LD and registered with the Office of the Information Commissioner (Reg. No. Z9851854). Prodigy Finance is authorised and regulated by the Financial Conduct Authority (firm registration number 709641) for certain consumer credit activities and for investment activities for investors who have agreed to its terms. Prodigy Finance loans are offered to eligible borrowers and these loans are governed by English law.