“
Right now, a lot of students are
worrying how to apply for a work visa
in this crazy environment PHOTO: JOEY LU / PEXELS
MULTIPLYING ACCESS
Prospective international students are considering deferring or changing
their study destination due to the coronavirus outbreak
ISSUE #26 | THE PIE REVIEW | 59
“Many lenders let students choose and even change
their repayment term. Of course the longer you take to pay
it back, the more interest you pay,” she says.
“Student loan lenders hate defaults, and generally will
work with borrowers on forbearances, deferrals and re-payment
terms. Each lender has its own experience with
defaults, which generally are very low, and somewhere in
the one to two per cent range.”
Covid-19
Schools are divided over the best approach to have towards
setting dates and deadlines for the next academic year due
to Covid-19. Many embassies are closed, making obtaining
a visa impossible, travel bans are in place and there’s still
uncertainty about whether campuses around the world will
even be able to reopen for the new academic year.
For student loan providers, a potential drop in applications
is likely as more and more students say they plan to defer
studying or seek alternative programs in their own country.
A British Council survey noted that 39 per cent of Chinese
students looking at the UK as a place to study, for example,
were undecided about cancelling their plans, while another
22 per cent thought cancelling was likely or very likely.
“These are unprecedented times, and like many industries,
we’re dealing with uncertainty,” says Sarah Harvey.
“A positive view is that due to the lower cost of attendan-ce
and reduced competition in school admissions, this could
well be a very good time to study abroad and graduate into a
growing economy. But equally, mobility is greatly reduced in
the short term, which will likely impact attendance.”
For loan companies the impact is twofold as they juggle
issuing new loans and repayments, working across countries
where the impact of and response to Covid-19 varies greatly.
“We’ve seen a lot of resilience from international students
on our end. We haven’t seen a huge jump in delinquencies
from students,” says MPOWER’s Smadja.
“We have had a few that have asked to do partial pay-ments
during coronavirus. Right now, a lot of students are
afraid of overstaying their visas or worrying how to apply for
a work visa in this crazy environment and then getting a job.
“The advantage international students have is they are a
lot more geographically flexible. So if they can’t find a job in
the US, they’ll go to Canada. If they can’t find a job in North
America, they might go to Australia or Europe or Hong
Kong or Singapore.”
For others though things in the international student loan
industry are less certain. They look back and remember
particularly those student lenders that went out of business
when their underlying loans started defaulting at a higher
rate back in the last economic crisis over a decade ago.
“As the economic pain of the coronavirus spreads, it’s
natural to expect more students than normal will be unable
to repay,” concludes International Student’s Davis.
“We wouldn’t be surprised to see international student
lenders quietly tighten up their underwriting criteria for a
while, making it more difficult for students to get a loan –
while they keep a close eye on repayment.”