A lending program that relies on business school alumni to fund loans for international students has been gaining traction at European MBA programs, and is expected to enter the U.S. business school market later this year, the company’s founders said.

Last week, the Cranfield School of Management became the sixth school in Europe and the second in the U.K. to sign on to the community-based loan program developed by Prodigy Finance, a London-based company started in 2007 by three INSEAD alumni who themselves had trouble securing loans when they were international MBAs.

Prodigy’s online lending platform is making inroads in the graduate business school market at an opportune time. In the last 18 months, a number of prominent loan programs that international students attending European business schools traditionally relied upon to help fund their MBAs—such as ones run by banks like HSBC (HBC), NatWest, and Barclays (BCS)—have dried up, and many European schools are looking for long-term sustainable lending options for their students, said Cameron Stevens, Prodigy’s chief executive officer and a co-founder of the company.

At the same time, many business schools in the U.S. have struggled to find providers of “no co-signer” loans for their international students since the CitiAssist loan program and others were pulled in 2008, said Kevin Moehn of Moehn Management, a company that works with banks to facilitate student loans. A number of schools have worked with local or regional credit unions to offer loans, but some programs have not worked out, he said. For example, the Digital Federal Credit Union, which financed the no co-signer loan programs for international MBAs at the University of Pennsylvania’s Wharton School, discontinued the program this February, though Wharton has since found a replacement.

“There definitely is a gap out there and the market has not come back,” said Moehn.

In the last four years, Prodigy Finance has raised about $25 million in funding for students attending European business schools, and hopes to raise $150 million by the end of the year. The company’s goal is to sign on more schools in Europe in the new few months and enter the U.S. market this June, Stevens said.

Schools now working with Prodigy include INSEAD, the University of Oxford’s Saïd Business School, and Russia’s Skolkovo School of Management. Two more U.K. business schools are expected to sign on shortly, Stevens said.

The company’s platform allows alumni, the university, and friends of a participating school to invest in students by placing their money in community education bonds. The loans carry an average 8.2 percent interest rate, making them competitive with other loan providers in the U.S. and Europe, and students are required to repay them within seven years. So far the program has not had a single default, Stevens said.

Unlike traditional banks, which lend money to students based on their previous income and work history, Prodigy’s model uses a “predictive scorecard” to assess a student’s future earning potential, using data provided to the company by the school’s career services office, said Stevens. Investors, who can expect a 6 percent return on their investment, are provided with the names of the students they invest in, along with a brief bio.

“It’s a very transparent investment and that concept really resonates with alumni,” Stevens said.

At INSEAD, the first school to sign on to the program in 2007, 452 students have applied for loans through the Prodigy platform. The company has distributed €16 million to students over the last four years, said Irina Schneider-Maunoury, INSEAD’s senior manager of MBA financing.

The U.K.’s Cranfield School is the latest graduate business program to work with Prodigy, and hopes to raise about £1 million for student loans through the platform in the first year, said David Simmons, director of Cranfield’s full-time MBA program.

“I think this is precisely the type of thing our alumni will warm to,” Simmons said. “They’re not making a gift, but they are making an investment. It is very much in the vanguard of a new way of looking at funding MBAs in the future.”

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Damast is a reporter for Businessweek.com.