Update about Wharton Loans..
Positive Progress: The Current Status of Student Loan Programs for Wharton MBA's
February 3, 2009
Dear applicants,
Though the matter is still under discussion, we wanted to give you an update on the current status of student loan programs.
The turmoil in the capital markets has had a significant effect on the availability and cost of funding for graduate education, especially for international students. As you know, the main provider of loans to international students at all major US b-schools, Citibank, decided last fall to stop lending altogether to international students (and also terminated its custom-priced programs for domestic students at major universities). Many other lenders have also stopped lending to international students without a domestic co-signer. This problem is affecting all graduate programs at UPenn and all graduate programs across the country.
This issue has engaged University administration at the highest levels. The University issued a Request for Proposal (RFP) to identify alternative loan providers and has been reviewing a number of options with the goal of keeping adequate loan financing available to all students, and to international students without domestic co-signers.
Though we don’t yet have a program to announce, we wanted to let you know that we are in active discussions with several lenders. We are pursuing any and all funding options for international students, and Wharton hopes to announce a new loan program towards the end of February. The new loan product will not require a domestic co-signer, but is likely to have significantly higher interest rates and origination fees than the discontinued Citibank product. In addition, there will be a risk-sharing arrangement with the University whereby Wharton will be financially responsible for a percentage of loan defaults. The increased costs of loan financing to all MBA students and potentially to Wharton are an unfortunate necessity given the current market conditions. It is our hope that the loan pricing will improve over time.
We have also been in discussions with some overseas financial institutions to explore loan programs for students from their respective regions, but it is premature to say whether these discussions will result in special loan programs for Wharton students and under what pricing/repayment conditions.
With respect to domestic students (and those with domestic co-signers), Citibank and other private lenders have indicated their interest in continuing to offer loan programs. We do not know their pricing parameters yet, but it is likely that their interest rates, too, will be substantially higher than in the past. It behooves all our students to explore all possible funding options for the coming academic year.
We will keep you informed of our progress and announce more details as they emerge.
With best regards,
Peter Degnan; CFO, Senior Associate Dean, The Wharton School
Anjani Jain; Vice Dean, Director of Wharton Graduate Division
Nov 20
01 Feb 2009, 06:46 
