Harvard Inks Custom Loan Deal to Help International Graduate Students

Student Loan Girl — Tue, 03 Mar 2009 23:47:00 GMT

At a time when large numbers of lenders exiting the student loan marketplace has made it more difficult for international students to find college and graduate school funding, Harvard has announced an exclusive agreement with JPMorgan Chase that will allow the school’s international graduate students to borrow up to the full cost of attendance without a co-signer, reports The Harvard Crimson (“Harvard Strikes Loan Deal,” March 2, 2009).

Considered the first deal of its kind for the banking giant, the new private loan agreement may make it easier for international students — who are ineligible for U.S. federal financial aid — to get the money they need for school.

The JPMorgan deal was arranged after Citibank announced it would no longer offer loans to Harvard’s international graduate students in October of last year, citing the frozen credit markets and higher loan default rates among international students compared to their American counterparts.

Citibank also cancelled similar arrangements with MIT and the University of Michigan, The Harvard Crimson reports.

Harvard’s arrangement with JPMorgan is part of the school’s pledge to maintain its current levels of graduate student aid for the next school year even at the expense of other programs, says Harvard President Drew Faust — a commitment she deems one of the university’s top priorities.

The university has also unveiled several expanded financial aid programs, including those for Harvard Law School and Harvard Medical School, as part of its renewed commitment to meeting student need.

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Citibank Suspends Student Loan Program for International Students

Student Loan Girl — Thu, 16 Oct 2008 01:04:00 GMT

Citibank announced it is canceling its private student loan program for international students in an effort to minimize its financial risk during the global financial crisis, Bloomberg reports (“Citigroup Curbs Foreign-Student Loans at Harvard, MIT, Michigan,” Oct. 15, 2008).

The lender’s CitiAssist private student loan program allowed international students at certain schools to borrow as much as $150,000 in private student loans without a cosigner; similar programs required that international borrowers have a U.S. citizen or permanent resident cosign on the loans.

Citibank informed MIT and the University of Michigan this month that it will stop making CitiAssist loans to the schools’ international students in November, just before students begin borrowing for the 2009–2010 academic year. Earlier this month, the bank also terminated its international lending program at Harvard University.

CitiAssist “did fill a very important role,” says Elizabeth Hicks, executive director of student financial services at MIT, where more than 200 of the school’s foreign students at the Sloan School of Management will have fewer borrowing options to help them meet their education costs, which total nearly $76,000.

International Student Loans Drying Up, More Banks Unwilling to Lend

In suspending its lending program to international students, Citibank joins Bank of America, one of the largest providers of student loans to foreign students, which terminated its foreign student lending program in April.

Other lenders are not likely to fill in the lending gap to international students, due, in part, to the fact that international students have a higher likelihood of default than U.S. students and because loans to “international students are not the most profitable loans,” says Mark Kantrowitz, publisher of Finaid.org, a financial aid website sponsored by Citibank’s parent company Citigroup.

Analyst Daniello Natoli, of New York-based financial firm Matrix USA, adds, “It makes sense for [Citibank] to move away from riskier products such as loans to international students, whose creditworthiness is more difficult to assess.”

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Student Loan Blog : Citibank, University of Michigan

Harvard Inks Custom Loan Deal to Help International Graduate Students

Citibank Suspends Student Loan Program for International Students