From Business Week (JAN 04, 2010): Six universities have joined a new program of “no co-signer” loans for international students at U.S. B-schools, and more are on the way.

By January 2009, Booth School of Business became the first school to sign onto the Affiliated Loan Program for Students (ALPS), a pilot program financed by Deutsche Bank (DB) which makes it easier for international students to come study in the U.S.

Nearly a year later, the loan program is starting to gain traction at schools across the country. A number of top schools signed on to ALPS in 2009, including Northwestern University’s Kellogg Graduate School of Management, the University of Rochester’s Simon Graduate School of Business, and UCLA’s Anderson Graduate School of Management, among others. Six universities and 15 graduate programs are now using the lending program, most of them business schools. The program holds appeal for international students because it doesn’t require them to have a U.S. co-signer to take out a loan, a crucial requirement for many students, schools say.

Over the past year, ALPS has so far issued about 3,500 loans to foreign and domestic students, and loan volume is upwards of $100 million, organizers say. Business schools are not the only ones taking an interest in the loan program; graduate law and medical programs are also taking note, and more schools are expected to join in 2010, says Kevin Moehn, president of Moehn & Associates, the loan program’s administrator, who’s in the midst of signing agreements with at least four other universities.

“As a result of the global financial crisis, we saw some of the country’s most prestigious schools struggling to replace student loan funding that had been restricted or discontinued by previous lenders,” says Brettschneider in a statement. “By utilizing our resources to create and invest in ALPS, Deutsche Bank is able to help students around the world further their education despite the challenges of the current lending environment.” says Fred Brettschneider, head of global markets for the Americas at Deutsche Bank.

The ALPS program is by far the largest of the business school international student loan programs currently available, and it replicates some of the popular features of the old loan programs, such as not requiring students to have a co-signer or established credit. Interest rates for the student loans are less than 10%, though rates vary depending on the school, and organizers hope rates will be even lower in 2010.

Some features of the program also make it especially appealing to graduate schools. For example, the program leverages a participating school’s credit rating, not its cash, to meet the level of student financing that the school determines. Schools also don’t incur any up-front expenses and don’t need to commit to any minimum or maximum level of loan volume, though they are required to act as co-signers on the notes for the loans, which students obtain from Liberty Bank, an Ohio-based lender. Deutsche Bank purchases the student loans from participating universities and bundles the loans into securities, which are then sold on the capital markets.