MBA

Masters

Admissions

GMAT

Business Schools

    Rankings

    Jobs

    Watch

      Resources

      Insights

        Wall Street Wants To Buy Your Business School Debt

        Investors are eager to buy business school graduates’ debt, helping to pay off rising MBA tuition fees – but only at elite institutions.

        Investors are eager to buy business school graduates’ debt to help pay off their increasingly expensive MBA tuition fees, and increase yield in the bond market.

        Niche crowdfunding platforms are using increasingly popular peer-to-peer lending to refinance student debt, and pair people who want income with graduates looking for credit.

        US-based Social Finance, a marketplace lender, announced this month that it had closed a $151 million securitization of refinanced student loans for graduate borrowers.

        Social Finance (SoFi) mainly lends to business school students, as well as students from law and medical schools.

        Their most popular business schools are elite US institutions including Harvard, NYU Stern and the Kellogg School of Management. The average US MBA leaves business school with around $40,000 of debt, according to a report from the New America Foundation with data from the U.S Department of Education. However at elite schools debt rates are much higher – Harvard’s 2013 MBA class averaged nearly $74,000.

        Average debt is up at many of the top-ranked American business schools. Others do not disclosure average debt figures.  

        But with high average Harvard MBA salaries of about $176,000, the graduates have high FICO credit scores, averaging 776.

        Access to debt refinancing may be limited to a select group of MBAs. SoFi and hedge fund Eaglewood Capital are the only two US companies which package these kinds of loans into bonds.

        The big ratings agencies have steered clear of the bonds, further limiting their reach, but there are signs that they are warming to the idea.

        Standard & Poor’s rated the senior notes "A", the first such rating for a marketplace lender, while Canadian firm DBRS has an investment-grade rating on bonds which SoFi put together last year.

        Analysts expect this to increase the amount of student debt bonds available to investors.

        For business school students, it provides a way to pay for increasingly costly tuition fees, which are higher in the US because of longer courses.

        Six of the top-ten ranked business schools are hiking tuition fees for the class of 2016, building on a 37% rise in the degree’s sticker price over the past six years, according to Bloomberg data. The average increase announced this year was 4%.

        Nearly 14% of this year’s business school applicants intend to take out a student loan to fund their degrees, according to a recent survey by QS, while only 4% intend to use family savings.  

        In June, SoFi funded over $100 million in student loan refinancing – a monthly record, but it is a smaller slice of the $730 million it has dished out in total loans, including mortgages, to its 8,000 borrowers. However this is increasing.

        SoFi has been issuing more bonds for more money each year. Its first securitization in the category with $151 million in senior notes was backed by $168 million in collateral. The $251 million July 2014 transaction is backed by $278 million in collateral, with over 30 top-tier institutional investors participating, the company said.

        “This securitization allows us to significantly lower the cost of borrowing for our members,” said Nino Fanlo, SoFi’s chief financial officer. “Because the rating was based on the calibre of SoFi’s customers and approach to consumer underwriting, it allows us to expand our school footprint.”

        However the company is expected to strengthen its personal loans and mortgages, rather than seek out non-elite schools whose MBA students may have more difficulty paying off tuition fees.

        Comments.

        Monday 15th June 2020, 16.41 (UTC)

        By
        raymond-weber

        A very awesome blog post. We are really grateful for your blog post. You will find a lot of approaches after visiting your post. I was exactly searching for. Thanks for such post and please keep it up. Great work cheap hytale server hosting

        Wednesday 17th June 2020, 08.21 (UTC)

        By
        gatek18351-gatek18351

        This is a great inspiring article.I am pretty much pleased with your good work.You put really very helpful information. Keep it up. Keep blogging. Looking to reading your next post. Latest VCE exams

        Thursday 18th June 2020, 15.23 (UTC)

        By
        Anonymous

        Excellent .. Amazing .. I’ll bookmark your blog and take the feeds also…I’m happy to find so many useful info here in the post, we need work out more techniques in this regard, thanks for sharing.  stone garden bench

        Monday 22nd June 2020, 17.28 (UTC)

        By
        Anonymous

        Your article is extremely helpful exceptionally fascinating subject i am looking that sort of post thank for imparting to us keep it up. health supplements

        Monday 22nd June 2020, 19.10 (UTC)

        By
        Anonymous

        I found so many interesting stuff in your blog especially its discussion. Really its great article. Keep it up. Google nest mini

        Tuesday 23rd June 2020, 17.46 (UTC)

        By
        Anonymous

        I want to say thanks for beautiful blog sharing with us. Your blog really great resource to update my knowledge. 카지노사이트

        Wednesday 24th June 2020, 18.17 (UTC)

        By
        Anonymous

        I truly welcome this superb post that you have accommodated us. I guarantee this would be valuable for the vast majority of the general population. in youtube downloader

        Thursday 25th June 2020, 20.13 (UTC)

        By
        Anonymous

        I definitely enjoying every little bit of it. It is a great website and nice share. I want to thank you. Good job! You guys do a great blog, and have some great contents. Keep up the good work PU leather

        Friday 26th June 2020, 08.58 (UTC)

        By
        Anonymous

        Wow, this is really interesting reading. I am glad I found this and got to read it. Great job on this content. I like it. Personnel management kiosk

        Saturday 27th June 2020, 16.14 (UTC)

        By
        Anonymous

        I was very impressed by this post, this site has always been pleasant news Thank you very much for such an interesting post, and I meet them more often then I visited this site. pegasus uçak bileti

        Wednesday 1st July 2020, 13.20 (UTC)

        By
        gatek18351-gatek18351

        Awesome and interesting article. Great things you've always shared with us. Thanks. Just continue composing this kind of post. exterior painting