Planning on Getting a Student Loan in the US?
Jul, 14, 2008
Well, the article “Credit crunch takes toll on student loans” in the FT makes for depressing reading:
Just when overseas MBA students thought it was practical to consider returning to US business schools, the credit crunch has begun to hit them hard. Aspiring overseas MBAs who plan to enrol on US programmes later this year are now facing real difficulties in securing the loans they need to study in the country.
Since the article does not provide any data on students who are unable to secure loans, it is hard to know exactly how serious the problem is. That said, it does state that 50 lenders nationwide have suspended their loan schemes. The article is largely based on an interview with Rose Martinelli at Chicago GSB, so to that extent I would consider it highly reliable.
Actually, given the high rate of interest that overseas students have to pay, it appears that international students would in many cases be much better off securing loans in their own country:
International students can expect to pay interest of about 7 per cent on their loans compared with about 4.5 per cent for domestic students in the US. MBA students need to budget for costs of about $150,000 to complete their programmes.
On the bright side, if you are coming from overseas, the cost of studying in the US is probably going down for you because of a weak US Dollar. This appears to be one reason for an increase in oversears applications to US schools. According to Rose Martinelli, this time quoted by CNBC:
“If your currency goes further because of the weak dollar, then it’s a bargain to come to the United States. So we are seeing a lot of students coming to the United States because it’s a good value, and” she joked, “MBA students are always value oriented.”
The CNBC article suggests that while it might be cheaper to study at top schools, it is harder to get in because of an increased number of applications. But, of course, I think my readers know that latter fact.
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-Adam Markus
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