Prodigy Finance makes students’ future tradable
Lending platform Prodigy Finance helps university students relieve the burden of tuition fees by providing loans on the basis of their predicted future salary.
University fees have grown dramatically in the last decennia, especially in the UK. This strongly affects international students who often don’t have access to a governmental loan or grant. The lending platform Prodigy Finance was built to respond to the financial needs of these international students.
Nonetheless, quite a strict selection is made on the students able to use the platform. For instance, only the students registered in specific masters and in one of the best 100 universities in the world can request a loan. Prodigy Finance then comes up with an estimate of the student’s future salary by using a predictive scorecard.
The loans are placed as assets in bonds, associated to a university or a group of universities, on the Irish stock exchange. These assets can be then traded and investors receive a tax-free coupon when the loan is reimbursed. The ranking of the university and the academic background of the student determine the risk and interest rate of the asset. Obviously a loan from a Harvard student represents a less risky investment and has therefore a lower interest rate. It’s interesting to note that bondholders are often alumni which creates a community feel around these transactions.
Ricardo Fernandez, head of business development, claimed that students represent a lending opportunity which should not be missed and that Prodigy Finance could fill in this hole in the financial industry.