Stanford: Loan forgiveness program

New Loan Forgiveness Program Gives International MBA Students More Options

STANFORD GRADUATE SCHOOL OF BUSINESS — In Moscow one Stanford MBA graduate now can set aside his personal financial concerns and focus on career choices that will allow him to contribute to his country’s prosperity. For the next three years a good chunk of Maxim Melnikov’s educational debt will be forgiven.

As the first awardee of the new Graduate School of Business International Loan Forgiveness Program, Melnikov, MBA ’06, has been able to switch from an investment career to an operational role managing newspaper and magazine distribution enterprises, the first step toward his goal of helping stimulate the Russian economy by creating his own companies.

The GSB International Loan Forgiveness Program (ILFP) was launched in fall 2006 and is already having the kind of impact it was designed for: helping international students who graduate from the Business School with staggering debt. “The program is part of the School’s increased interest in having a greater positive influence abroad,” explains Colleen MacDonald, director of financial aid and a key player in the creation of the new program.

For many international students, particularly for those in developing nations, financing their education becomes a huge obstacle. Securing a loan in their home countries can be challenging, and loans from the United States are tied to American currency. The average indebtedness for an international student in the MBA Class of 2006, for example, was more than $80,000. That spells tough choices upon graduation. Going back home where one’s expertise could make a real difference can mean not earning enough to keep up with loan payments. Working in wealthy nations has often been seen as the only option.

MacDonald, along with Sharon Marine, director of campaign giving for the School, and a committed team of other GSB administrators have worked with donor Peter Seldin, MBA ’80, to create the new international program modeled after the School’s successful Nonprofit/Public Service Loan Forgiveness Program. During the pilot phase, non-U.S. graduates from the classes of 2006, 2007, 2008, and 2009 who have loan debt can apply—as long as they have chosen to work in what the World Bank classifies as low-, lower-middle-, or upper-middle-income countries. These nations include Kenya, Pakistan, China, Bolivia, Morocco, Indonesia, Mexico, Malaysia, and the Russian Federation, among others.

“We want to enable students to go back to their home countries or other countries where they can really put their skills to work assisting developing economies,” MacDonald says. Eligible graduates may be awarded up to $7,500 each year, according to their level of indebtedness. Currently, recipients can receive funds for a total of three years after graduation.

“Our hope is to expand the program beyond the pilot so that it can function much like our nonprofit loan forgiveness program, which has been serving about 30 students a year since 1988,” Marine says. Some of those students are happily receiving grants for the life of their loans. The ILFP is just beginning to be known, accepting its first applications in fall 2006. Until it takes hold, special loan forgiveness awards have also been extended to several international students in classes not covered by the new program: Mizmun Kusairi, MBA ’05, in Malyasia; and Bryan Droznes, MBA ’05, and Juan Meryn, MBA ’04, both in Argentina.

Meanwhile in Russia, Melnikov has moved out of structuring deals for PromSvyazCapital Group, thanks to having a significant portion of his loans paid off. He now oversees and manages several companies that store and transport newspapers and magazines and manage their own press retail chains, such as kiosks and press mini-stores.

It’s a slightly lower paying job but more stimulating, Melnikov says. “The lack of good business education hinders Russia from becoming a developed country. I’m now in an even better position to teach the people I work with the concepts I learned at Stanford,” he says. “I’m delighted how quickly they’re absorbing those lessons.”

For more information on ILFP or to extend support, visit www.gsb.stanford.edu/finaid/forgiveness/international.html.

–– Marguerite Rigoglioso