Student loans and access to education can be a huge issue for anyone living in the United States, but for some living outside of the country, it can be even more difficult to access American universities, especially without significant financial backing. One of the people trying to solve this problem for international students everywhere is Manu Smadja, co-founder and CEO of MPOWER Financing.
SMADJA: MPOWER, in a nutshell, makes loans to international students, and DACA students, who come here to top universities in the U.S.. For me, and for the thirty people that work at MPOWER in D.C., this resonates very personally. So, twenty years ago, I was myself an international student, at UVA, so not too far from here, and frankly, I struggled financially through school. I did well academically, but I had to take a bunch of odd jobs. I was a grader, a tutor for math, physics, computer science, French. I was even an indoor soccer referee, which I joked was like refereeing cage fighting. Ultimately, I pulled through, with the help of my family. But it sort of shocked me, like, why weren’t banks lending to international students?
And after seeing, over decades, too many students, or too many friends of friends, drop out of school, or not be able to come here in the first place, in 2014 I decided to launch a company that would solve this social issue. And today, MPOWER is able to help hundreds of students. We do so in 250 universities across the U.S., and we’re excited, every day we get hundreds of applications for loans from students who don’t have a cosign, or don’t have collateral, but are high potential, high energy, and got admitted a really top university in the U.S..
SMADJA: I hear tons of stories, and you’re right, these students are extremely credit-worthy, it’s just, credit-worthiness is this absolute measure that’s, over time, been confounded with the FICO score
ABERMAN: I always find it interesting, because many universities really want to have international students, they actively solicit them for a lot of reasons, but yet, they don’t seem to create much infrastructure to help the students pay for it, do they?
SMADJA: The universities try their best, but even the banks fail at it. The banks don’t have the right marketing and sales channel to reach out to these students. For instance, MPOWER has an office in northern India to be able to be on the ground, where a good chunk of international students come to the U.S.. MPOWER has a very different credit algorithm, to make credit decisions. MPOWER has a global servicing and payment infrastructure, so that students can have a seamless experience repaying their loan whether they’re based in New York after graduation, or whether they go back to Mumbai or Shanghai or Paris for instance. I pick on Paris because I’m originally French.
ABERMAN: Give me an example of somebody who was able to get a loan through you, that otherwise wouldn’t have been able to get an education
I think there’s a big burden already on universities to provide a great educational experience. Providing the financial part is not really part of their purview, and that’s why we partner with them, and we cover the part of it. And we’re able to bring more international students, and then retain them as well.
The FICO score works great if you’re a middle aged person, and you’ve gotten a bunch payday loans in Walters of credit cards, a car loan, et cetera. But when you’re young and starting off in life, it doesn’t work for you. You don’t have an established credit history, but it doesn’t mean you’re a bad credit risk. So, let me give you an example. There is this young woman who was working in Venezuela, she was working as a top notch corporate lawyer, in a big bank, in BBVA. A few years ago, she received death threats in Venezuela. So, she was opposed to the Chavez political party.