MPOWER Financing specializes in providing student loans to international and DACA (Deferred Action for Childhood Arrivals) students who are attending universities in the United States and Canada.
The unique aspect of MPOWER's model is that it does not require a cosigner or collateral for the loan. This approach is relatively novel in the student loan industry, where cosigners and collateral are often mandatory, especially for international students who may not have a credit history in the US or Canada.
MPOWER's methodology is designed to make higher education more accessible to students from around the world.
Here are a few reasons how and why MPOWER can afford to offer loans under these conditions:
1. Credit Decision Factors: Instead of relying on traditional credit scores, MPOWER assesses a student's future earning potential based on their career path, the school they will be attending, their academic success, and their future career prospects. This model allows MPOWER to evaluate the risk associated with the loan in a more holistic manner.
2. High Earning Potential Programs: MPOWER often focuses on students who are enrolled in graduate programs or in fields of study that have high earning potential. By targeting students who are expected to secure well-paying jobs after graduation, MPOWER mitigates its risk.
3. Global Market: By serving international and DACA students, MPOWER taps into a market that is often underserved by traditional lenders. This niche focus allows MPOWER to operate with a unique business model tailored to the needs of these students.
4. Interest Rates and Fees: MPOWER's loans typically come with higher interest rates compared to traditional student loans that require a cosigner or collateral. These higher rates compensate for the increased risk MPOWER assumes by not requiring a cosigner or collateral.
5. Support and Resources: MPOWER also provides a range of support services to their borrowers, including visa support letters, career strategy services, and financial education. These services help ensure that students are successful both academically and in their subsequent careers, further reducing the risk of loan default.
6. Strategic Partnerships: MPOWER partners with universities and investors who share their vision of empowering international students. These partnerships can provide additional support and funding sources for MPOWER's loan programs.