With limited, more expensive loan options, some international students struggle to navigate a complex process before they even set foot onto U.S. soil.
Prodigy Financing is a private company that provides loans for graduate and professional international students who may not qualify for federal loans or struggle to get loans from their home country. The company recently gained national attention for the comparatively high interest rates its loans carry, including in a recent article from Inside Higher Ed.
The interest rate for a federal student loan depends on the loan type and the first disbursement date of the loan. The fixed interest rate for Direct Unsubsidized Loans and Direct PLUS Loans borrowed by domestic graduate or professional students and disbursed between July 1, 2019 and July 1, 2020, was 6.08 percent and 7.08 percent, respectively.
Rates for international students taking out private loans, including Prodigy loans, can be up to double that of federal loans, Shannon Doyle, program manager of Partnerships and Financial Education at Lutheran Social Services of Minnesota, said in an email to the Minnesota Daily.
According to Inside Higher Ed, Prodigy’s interest rates are subject to change and range between 7.74 to 11.54 percent. Doyle said these rates are “not surprising.”
Prodigy Financing was unable to be reached for comment.
Neel Chatterjee, a Ph.D. student from India studying mechanical engineering, is a student using Prodigy Financing to attend the University of Minnesota.
“I came here and initially I was sort of hesitant,” Chatterjee said. “The cost and everything was high compared to the education cost in India. … We don’t usually take loans to study for any kind of education.”
Even with help from his father, Chatterjee said he felt that he had to help contribute. But he didn’t feel like he had many options when it came to financing his time at the University. He struggled to get funding while acquiring his master’s degree, and Prodigy Financing was one of very few options.
Chatterjee ended up taking a $20,000 loan disbursed evenly over two semesters from Prodigy Financing in September 2017. With a processing fee and interest rates on these loans ranging from 9.3 to 10.8 percent, he started paying off the loan in January owing $22,091.
While Chatterjee was able to start paying off his loan quickly, he said other students may not have that advantage.
“I think it’s a very good thing what [Prodigy Financing is] trying to do, [financing] students who are trying to study,” he said. “But [international students] don’t really have any other choice … I did not have any other choice at that point and then was sort of happy that I could take my own loan and not worry about it.”
Even without loans, other financial pressures can burden international students.
Betty Deng is an international student from China. Due to China’s previous One Child policy, Deng is the only child her family is putting through college. She struggled to find scholarships before coming to the University for her freshman year, and, even with family support, Deng worries about doing her fair share financially.
“I want to get a part-time job after maybe two years, just like in my third year,” she said. “I just want to be more helpful.”