Janice Lozano
International student loans are available for students who wish to study abroad. These loans can be used for education-related expenses such as tuition, books, fees, insurance, and room and board. Most international students are not eligible for federal student loans and must borrow from private lenders. Private lenders have varying eligibility criteria, interest rates, fees, and repayment terms. They often require a co-signer who is a US citizen or permanent resident with good credit. However, some lenders, such as Ascent and MPOWER Financing, offer loans without a co-signer. Students can use loan comparison tools to find the best option for their needs and circumstances.
| Characteristics | Values |
|---|---|
| Who can apply? | International students in the US, US students studying abroad, and non-US citizens attending college in the US for a specific period of time. |
| Loan type | Private student loans, federal student loans (rarely), variable-interest loans, and fixed-interest loans. |
| Lenders | Banks, credit unions, online lenders, and private student loan companies. |
| Loan cost | The total cost of attendance minus any other financial aid received. |
| Loan uses | Tuition, books, fees, insurance, room and board, travel, and living expenses. |
| Interest rates | Based on the Prime Rate or the Secured Overnight Financing Rate (SOFR). |
| Co-signer | Usually required, especially for non-US citizens. The co-signer must be a US citizen or permanent resident with good credit. |
| Repayment period | Typically 10–25 years, with options for deferral, interest-only payments, or immediate repayment. |
| Application process | Compare lenders, consider eligibility, interest rates, fees, and repayment terms. |
| Timeframe | Allow 2–3 months before the semester starts. |
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What You'll Learn
International student loans: what are they?
International student loans are private education loans available to international students studying in the US. They are designed to cover education-related expenses such as tuition, books, fees, insurance, room and board, and other living expenses. These loans can provide funding for up to the total cost of attendance, as determined by the school, minus any other financial aid received.
International student loans are typically available to non-US citizens enrolled at colleges or universities in the US. Most lenders require these students to have a US cosigner, who is legally obligated to repay the loan if the borrower defaults. The cosigner must usually be a US citizen or permanent resident with good credit and a stable income history, who has lived in the US for at least the past two years. However, a growing number of universities and colleges offer no-cosigner loans to international students who meet specific criteria, such as attending an eligible school and demonstrating high career potential.
The two most common indexes used for determining the interest rate on international student loans are the Prime Rate and the Secured Overnight Financing Rate (SOFR). The SOFR has replaced LIBOR as the benchmark interest rate and is based on transactions in the Treasury repurchase market. The interest rate for an international student loan is determined by the chosen benchmark (Prime Rate or SOFR) plus an extra percentage based on the creditworthiness of the borrower or their co-signer.
Repayment plans for international student loans can vary, with options such as full deferral, interest-only, and immediate repayment. The repayment period typically ranges from 10 to 25 years, with longer periods for larger loans. It is important for borrowers to carefully consider the monthly payments, the start of repayments, and the possibility of deferring payments until after graduation.
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How to find the right loan for you
International student loans are available to non-US citizens studying in the US or US citizens studying abroad. These loans can cover education-related expenses such as tuition, books, fees, insurance, and room and board.
When looking for the right loan, there are several factors to consider. Firstly, determine your maximum loan amount by contacting your school's financial aid office. This amount will be the total cost of attendance, as determined by your school, minus any other financial aid you receive.
Next, consider the monthly payments, when payments will begin, and the length of the repayment period. The repayment period typically ranges from 10 to 25 years, and there are various repayment plan options available, including full deferral, interest-only, and immediate repayment.
It is also important to compare different lenders and loan options. You can use loan comparison tools to find eligible loan options and choose the one that best suits your circumstances. Consider factors such as interest rates, repayment options, loan amounts, and customer experience.
Additionally, most loans for non-US citizens will require a US co-signer, which can improve your chances of approval and lower your interest rate. However, some lenders may not require a co-signer if you meet specific criteria, such as attending an eligible school and demonstrating high career potential.
Finally, remember to explore other options such as scholarships and grants, which can help cover some of your expenses.
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The application process
International student loans are available for those studying in the US, but only from private lenders. Federal student loans are not usually an option for non-US citizens.
International students can apply for a loan from a private lender, such as a bank, credit union, or online lender. Before applying, it is important to compare different lenders and their requirements, interest rates, fees, and repayment terms. Some lenders offer a smoother online application process and faster approval and funding times. It is also worth reading customer reviews to gauge other borrowers' experiences.
Most lenders require international students to have a US co-signer, who is legally responsible for the loan if the borrower fails to pay. The co-signer must be a US citizen or permanent resident with good credit and must have lived in the US for at least two years. However, some lenders, such as Ascent and MPOWER Financing, offer loans without a co-signer.
After selecting a lender, the borrower must complete the loan application, which may include information about their school and the cost of attendance. The lender will then review the application and confirm the cost of attendance with the school. This process can take anywhere from a few weeks to a few months, so it is important to start early.
Once the loan is approved, the borrower will need to consider the repayment plan and monthly payments. The repayment period typically ranges from 10 to 25 years, with shorter terms resulting in higher monthly payments but less interest overall. Some lenders offer flexible repayment options, such as graduated repayment plans or the ability to pause payments in case of financial hardship.
It is important to note that the interest rate on the loan may vary depending on the borrower's creditworthiness and the chosen benchmark rate (Prime Rate or SOFR). Variable-interest loans are riskier, as the interest rate may increase, while fixed-interest loans offer stability but may result in higher overall costs if the initial rate is high.
Overall, while international student loans can be a useful tool, borrowers should carefully consider their options and only take on a manageable amount of debt.
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Repayment plans and interest rates
Federal Student Loan Repayment Plans
There are four main federal student loan repayment plans: standard or income-driven repayment. The standard repayment plan is the best option if you want to pay less interest over time. With this plan, you make equal monthly payments for 10 years. If you can afford the standard plan, you will also pay off your loans faster than with other federal repayment plans.
Income-driven repayment (IDR) options tie the amount you pay back to a portion of your income. This option extends the repayment period to 20 or 25 years, and you can get income-driven loan forgiveness for any remaining debt at the end of the term. There are four types of IDR plans: income-based repayment, income-contingent repayment, Pay As You Earn (PAYE), and Saving on a Valuable Education (SAVE). Graduated repayment and extended repayment are also types of IDR plans, with the former lowering your monthly payments and then increasing the amount you pay every two years for a total of 10 years, and the latter starting with low payments that increase every two years for a total repayment period of 25 years.
Private Student Loan Repayment Plans
Private student loans do not qualify for income-driven repayment. However, some lenders may offer temporary reductions in payments if you are struggling to meet your monthly payments. In this case, it is recommended that you call your lender and ask about your options. If you have a good credit score (or a cosigner who does), you may be able to refinance your private student loan at a lower interest rate.
Interest Rates
Interest is the additional amount charged by a lender on top of the principal amount borrowed. The interest rate is computed using a benchmark rate (such as the Prime Rate or SOFR) plus a margin, which is contingent on the creditworthiness of the borrower or their co-signer. The benchmark rate is determined by the federal funds rate, which is set by the U.S. Federal Reserve and is the rate at which banks lend to one another.
For variable-rate loans, the interest rate is calculated based on an "index" plus a margin that will add an additional percentage depending on your cosigner's creditworthiness or other factors decided by the lender.
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Alternatives to international student loans
International students looking to fund their education have a variety of options available to them, including scholarships, grants, and federal student loans. Here are some alternatives to international student loans:
Scholarships and Grants
Scholarships and grants are available for international students, but they are often competitive and may not cover all expenses. However, they can provide significant financial assistance and are worth applying for.
Private Student Loans
Private lenders such as Citizens, Ascent, and College Ave offer student loans specifically for international students. These loans may have competitive interest rates and flexible repayment options. Some lenders, like Juno, match borrowers with partner lenders and offer low APRs and no fees. It is important to compare the terms and conditions of different private lenders to find the best option.
Federal Student Loans
International students who are eligible non-citizens may qualify for federal student loans. These loans typically have more favourable terms and lower interest rates than private loans. However, eligibility criteria must be met to access these loans.
Co-signer Loans
Most international student loans require a co-signer who is a US citizen or permanent resident with good credit. A co-signer takes joint responsibility for the loan and improves the chances of approval and lower interest rates. Some lenders, such as MPower Financing, offer non-co-signed loans for international students, but these may have higher requirements.
On-Campus Employment
International students can consider on-campus employment to help fund their studies. This option provides an income during studies, but jobs may be competitive and may not cover all expenses.
It is important for international students to carefully consider their options and compare different financial alternatives to make an informed decision about funding their education.
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Frequently asked questions
International student loans are loans available for international students who are looking to fund their education. These loans can be used for education-related expenses such as tuition, books, fees, insurance, and room and board.
International students can apply for loans from private lenders, such as banks, credit unions, or online lenders. Students can use loan comparison tools to find eligible loan options and choose the one that suits their needs. After selecting the citizenship and school, the tool provides a list of lenders along with their terms and conditions.
Most lenders require international students to have a co-signer who is a US citizen or permanent resident. The co-signer must have good credit and has lived in the US for at least the past two years. However, some lenders like MPOWER Financing and Ascent offer loans without requiring a co-signer.
The interest rates for international student loans are determined by the chosen benchmark (Prime Rate or SOFR) plus an extra percentage based on the creditworthiness of the borrower and co-signer. Repayment periods typically range from 5 to 25 years, with the larger the loan, the longer the repayment period. Some lenders offer flexible repayment plans, allowing borrowers to pause or postpone payments during financial hardship.
