Savanna Hoffman
International students can obtain loans in the US to help with their college expenses, but they are different from the loans offered to Americans. International students in the US do not qualify for federal student loans or work-study, and they often need a co-signer with an excellent credit score to get approved for a loan. The co-signer is legally obligated to repay the loan if the borrower fails to pay. International students can apply for private student loans, which can cover up to the total cost of school minus any other financial aid received. There are also scholarships, grants, and cash payment plans offered by schools to help international students finance their education.
Can an international student get a loan?
| Characteristics | Values |
|---|---|
| Loan availability | International students can get private student loans in the US. |
| Federal loans | International students cannot get federal loans from the US government. |
| Co-signer | A co-signer with an excellent credit score and proof of income can help with approval chances. |
| Repayment period | Generally ranges from 10-25 years, with some lenders offering terms as short as 5 years or as long as 20 years. |
| Deferral | Students can defer payment until 6 months after graduation, for a maximum of 4 years. |
| Interest-only | Students can pay interest while in school and defer the principal until 45 days after graduation. |
| Scholarships | Scholarships are available to international students from nonprofits and corporations. |
| Grants | Grants are available to international students, such as the Fulbright Foreign Student Program. |
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What You'll Learn
Private student loans
The majority of students will require a co-signer, who is a permanent resident or a US citizen with a good income history, a good credit rating, and has lived in the US for at least two years. The co-signer is legally obligated to repay the loan if the borrower defaults. In rare cases, an international student may be able to qualify for a loan without a co-signer if they have high career potential or are due to graduate within the next year or two.
There are a number of private student loan providers that offer loans to international students, including Mpower Financing, Prodigy Finance Student Loan, Citizens Bank, and Sallie Mae.
It is important to do your research and compare lenders before committing to a loan. You should pay attention to fixed vs. variable interest rates, borrowing limits, and repayment terms.
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Scholarships
International students can qualify for scholarships to US colleges and universities, and there are also scholarships specific to international students. These scholarships can help cover the cost of tuition, room and board, transportation, books, course materials, and fees. While scholarships are available for both undergraduate and graduate programs, they are more widely available for undergraduates. Graduate students, however, may have access to more funding through assistantships, fellowships, and grants.
The amount of scholarship money you receive can depend on your academic background, area of study, and the college or university you attend. Some scholarships are merit-based, while others are based on financial need. It is recommended to apply for multiple scholarships to increase your chances of receiving funding. You can search for scholarships by location, subject of study, student origin, or award name.
There are also specific scholarship programs for certain regions, such as the MPOWER/InternationalStudent.com Central America Scholarship Program, which offers up to $3,000 towards international education for students from Central America. Additionally, some universities, like MIT, offer funding opportunities to ensure that talented students can receive an education regardless of their financial situation.
Some other examples of scholarships for international students include the Fulbright Scholarship, Rotary Scholarships, Postdoctoral Fellowships, and Merit Scholarships.
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Repayment plans
International students can access private student loans to help cover costs while studying at college in the US. However, international students are generally unable to work while studying in the US, so repayment plans are an extremely important feature to consider when taking out a loan.
The repayment period typically ranges from 10 to 25 years, with the larger the loan, the longer the repayment period. There are several standard repayment plan options:
- Full Deferral: Students can defer payment until 6 months after graduation, as long as full-time status is maintained. Students can defer payments for a maximum of 4 years, which is the typical length of a degree.
- Interest Only: Students pay only the interest while still in school, for up to 4 consecutive years of full-time study, and can defer the principal until 45 days after graduation. If the student drops their course load to part-time, they may have to start repaying the principal immediately.
- Immediate Repayment: Payments on both interest and principal are due immediately once the loan has been disbursed.
The interest rate for international student loans is determined by the lender, who considers a chosen benchmark (Prime Rate or SOFR) and adds an extra percentage based on the creditworthiness of the borrower or their co-signer.
Some lenders offer a range of repayment options, including full, deferred, interest-only, fixed monthly, or a combination of these. For example, Citizens Bank offers borrowers the option to make full payment while enrolled, pay interest-only while enrolled, or defer payment until up to 6 months after graduation.
Additionally, some schools offer cash payment plans that allow students to pay tuition and fees directly, reducing or eliminating the need for loans.
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Interest rates
International students can take out loans from private lenders to finance their education in the US. These loans often come with higher interest rates than those offered to domestic students, and the rates can vary depending on several factors.
The interest rate on a loan is the additional amount charged by the lender on top of the principal amount borrowed. Interest rates can be fixed or variable. A fixed interest rate remains the same throughout the life of the loan, while a variable interest rate can change over time based on market conditions and other economic factors.
When determining the interest rate for an international student loan, lenders typically consider the chosen benchmark rate (such as the Prime Rate or SOFR) and add an extra percentage based on the creditworthiness of the borrower or their co-signer. A co-signer is a creditworthy individual, usually a US citizen or permanent resident, who agrees to repay the loan if the borrower fails to make payments. Having a co-signer can help international students obtain more favourable interest rates.
Some lenders offer discounts on interest rates for automatic payments or other incentives. For example, MPOWER Financing offers a 0.25% rate discount for automatic loan payments, resulting in a rate of 12.74% (13.72% APR) for graduate students and 13.74% (14.75% APR) for undergraduate students. Citizens Bank also offers a 0.25% discount for customers with accounts at the bank and an additional 0.25% discount for autopay.
It is important for international students to carefully consider their loan options and understand the associated interest rates and fees. They should also explore other forms of financial aid, such as scholarships and grants, before taking out loans. Additionally, international students should be aware that their repayment options may be limited due to their inability to work while studying in the US.
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Eligibility requirements
International students can obtain student loans in the form of private student loans, which are offered by private lenders. These loans are specifically designed to help international students finance their education in the United States. However, it's important to note that federal student loans are typically not available to international students.
When it comes to eligibility requirements, there are several factors that lenders may consider:
Academic Record and Enrollment Status
Most lenders require that international students are enrolled at least half-time in a qualifying college or university. They will ask for documentation, such as proof of enrollment and recent transcripts. Some lenders may also consider the student's academic record and chosen course of study as part of their eligibility criteria.
Co-signer Requirements
Many lenders require international students to have a co-signer who is a U.S. citizen or permanent resident with a solid credit history. The co-signer is legally responsible for repaying the loan if the borrower fails to make payments. The co-signer must meet certain requirements, such as having a good income history and credit rating and having lived in the U.S. for at least two years. However, some lenders, such as MPOWER Financing, offer no-co-signer loans specifically designed for international students.
Financial Health and Resources
Lenders may also consider the financial health and resources of the borrower and/or co-signer. This includes factors such as bank statements, scholarships, grants, and other sources of income. Additionally, having a credit card and bank account in the U.S. or Canada can help establish a local credit history and boost your credit score.
Repayment Terms and Interest Rates
International students should carefully consider the repayment terms and interest rates offered by different lenders. Private loans often have higher interest rates, and it's important to understand the total amount that will need to be repaid over time. Lenders may also offer different repayment options, such as interest-only payments during school followed by principal repayment after graduation.
Institution Eligibility
International students should also ensure that their chosen institution is eligible for the loan. Lenders may have specific requirements or restrictions regarding the schools they work with. Additionally, the loan amount may be determined by the school's financial aid office, and students should contact them to determine their maximum loan amount.
It is important to note that eligibility requirements may vary across lenders, and international students should carefully review the specific criteria set by each lender before applying for a loan.
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Frequently asked questions
Yes, international students can obtain loans in the US to assist with their college expenses.
International students must have a US F-1 student visa and be enrolled at a US college or university. Most lenders will also require a US co-signer with a good credit score.
A co-signer is someone who agrees to be jointly responsible for repaying the loan. The co-signer is usually a US citizen or permanent resident with a good credit history and a steady income.
International student loans can be used for education-related expenses, including tuition, books, fees, insurance, and room and board.
Repayment terms vary by lender, but generally, the repayment period ranges from 10 to 25 years. Students may be able to defer payment until 6 months after graduation or only pay interest while still in school.
