SoFi – Alumni Funded Student Loans

International student funding have a hard time when it comes to finding funding for graduate school.

This is mainly because most colleges are afraid to loan to international students because they have a much higher chance of defaulting on their loans. But there may be new options soon, as private startups begin to look into reaching out internationally, the Financial Times reports.

These new startups rely on investors to provide the capital for such loans and therefore, can take more risks on loans.

One such startup, SoFi, just securitised its loans for $60 million through Morgan Stanley, which will allow it to start seeking more investors and move into the international sector.

SoFi – Alumni Funded Student Loans

Recently, SoFi has begun talks with several US business schools to start issuing loans to students through the schools.

Mike Cagney, the CEO of SoFi, said that the company lends itself well to addressing the risk of default because borrowers will feel a connection with the alumni investors and not want to let them down.

SoFi connects students and alumni through a dedicated lending pool and an original social community approach where students, alumni and schools all benefit. Alumni earn a compelling double bottom line return, students receive a lower loan rate than their private or federal options, and both sides benefit from the connections formed.

sofo alumni funded loans

Another option that is starting to become popular with graduate schools is the Affiliated Loan Program for Students (ALPS) program, which was founded by the Graduate Management Admission Council in 2008.

It has made over $600m in loans funded by the Deutsche Bank (located in Germany) and is guaranteed by the schools that provide the funds.

The thing with any of these loan programs is that there are only a small number of certain schools that offer them so far.

Also, many of these loans are unproven. Most of the programs don’t require payment until 9 months after graduation and even then, they can be pushed back even then.

So there isn’t a lot of information coming out of these programs about defaults or repayment. After a few years though, information will be available and investors will be more willing to provide money.

The best advice for now would be to research your options so far and check if your school offers any loans to international students through these programs.

Also, check if there is a group of alumni from your school from your country. Oftentimes, they have a lot of helpful information, including networking and international student funding ideas.