Janice Lozano
International students can take out bank loans from private lenders in the US, but they are not eligible for federal student loans. These private loans are specifically designed for international students and can cover the full cost of their education. However, international students typically cannot work while studying in the US, so it is crucial to carefully consider the loan's repayment terms, such as monthly payments, the start of repayment, and the possibility of deferment. Most private loans require a co-signer who is a US citizen or permanent resident with a good credit rating and income history.
| Characteristics | Values |
|---|---|
| Loan options | International students have fewer loan options than US borrowers |
| Federal student loans | Not available to international students |
| Private student loans | Available to international students |
| Cosigner | Usually required; must be a US citizen or permanent resident with good credit |
| Interest rate | Based on the Prime Rate or SOFR (Secured Overnight Financing Rate) plus an additional percentage depending on the creditworthiness of the borrower or cosigner |
| Eligibility | Varies by lender; some require a minimum credit score and income |
| Repayment | Varies by lender; some offer forbearance options and co-signer release policies |
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What You'll Learn
International student loan eligibility requirements
International students studying in the United States have access to international student loans to help cover costs. These loans are offered by private lenders, such as banks, credit unions, or online lenders, and are not federal loans. International students are not eligible for federal financial aid from the US Department of Education.
- Most international students applying for loans must have a US co-signer or co-borrower. The co-signer is legally responsible for repaying the loan if the borrower fails to make payments. They must be a US permanent resident or citizen with a good credit score and income history and have lived in the US for at least the past two years.
- Students enrolled less than half-time are typically not eligible for international student loans.
- The loan amount is usually up to the total cost of attendance, minus any other financial aid received. This includes tuition, room and board, books, fees, insurance, and other education-related expenses.
- To determine the interest rate for an international student loan, lenders consider benchmarks such as the Prime Rate or SOFR (Secured Overnight Financing Rate) and add an extra percentage based on the creditworthiness of the borrower and co-signer.
- Some lenders may not require a co-signer if the student attends an eligible school, demonstrates high career potential, and plans to graduate within the next two years.
- International students may also need to meet specific visa requirements and demonstrate their ability to repay the loan.
It is important for international students to carefully evaluate their financial needs and explore all options, including scholarships and financial aid, before applying for loans. Additionally, comparing different lenders and their eligibility requirements can help students find the best loan option for their situation.
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How to get a student loan as an international student
International students applying for loans in the US have fewer options than US borrowers. Unless you are an eligible non-citizen who can qualify for federal student loans, you will need to borrow from a private lender.
International student loans are available year-round and can cover up to the total cost of school, minus any other financial aid received. The first step is to carefully evaluate how much money you will need for your studies. You should then research and apply for scholarships, financial aid from your school, and find money from any other sources, such as family funds. After these options have been exhausted, you can consider an international student loan.
Most international students must have a US co-signer in order to apply for a loan. The co-signer must be a permanent US resident with good credit, who has lived in the US for at least the past two years. The co-signer is legally obligated to repay the loan if the borrower fails to pay. If you are unable to find a co-signer, you can look for a loan that does not require one.
You can use a loan comparison tool to see if you are eligible to apply for a loan without a co-signer. These tools can help you find the best option for your circumstances. When comparing lenders, it is also worth reading customer reviews on sites such as TrustPilot or the Better Business Bureau.
When taking out a loan, you will be responsible for paying back the amount you borrowed, plus an additional amount charged by the lender (interest). The interest rate is calculated using an "index" plus a margin that will add an additional percentage depending on your co-signer's creditworthiness or other factors decided by the lender. The two most common indexes used for international student loans are the Prime Rate and the Secured Overnight Financing Rate (SOFR).
Repayment terms will depend on the lender and loan option chosen. The repayment period typically ranges from 10-25 years. Students are often able to defer payment of interest and principal until 6 months after graduation, as long as full-time status is maintained.
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Interest rates and fees for international students
As an international student, you can take out a loan from a private lender, such as a bank, credit union, or online lender. However, federal student loans are not available to international students. Private lenders have their own criteria for interest rates and fees, so it is important to shop around and compare your options.
When determining the interest rate for an international student loan, lenders consider the chosen benchmark (Prime Rate or SOFR) and add an extra percentage based on the creditworthiness of the borrower or their co-signer. The co-signer must be a permanent US resident with good credit who has lived in the US for the past two years.
To find the best interest rates and fees for your loan, you should consider the following:
- Compare multiple lenders: Each private lender sets its own interest rates and fees, so it is important to compare options from different banks, credit unions, and online lenders.
- Evaluate the total cost of borrowing: Consider not only the interest rate but also any additional fees, such as origination fees, application fees, or prepayment penalties.
- Explore cosigner options: Having a qualified co-signer with good credit can help you obtain a lower interest rate.
- Check for international student-specific loans: Some lenders may offer specialized loan programs for international students, which could include competitive interest rates and fees.
- Build a good credit score: Demonstrating responsible financial behavior, such as timely payments and a healthy credit balance, can help boost your credit score and potentially qualify you for better interest rates.
Additionally, when choosing a bank account as an international student in the US, it is essential to consider the fees associated with the account. Some common fees to look out for include:
- Opening fees: Some banks may charge a fee just for opening a student account.
- Maintenance fees: These are monthly or annual fees charged for maintaining the account.
- Transaction fees: There may be charges for deposits, withdrawals, or transfers.
- ATM fees: Using an out-of-network ATM can result in withdrawal fees.
- Foreign transaction fees: If you plan on making transactions in multiple currencies, some banks may charge a foreign transaction fee.
- Overdraft fees: Fees may apply if you spend or withdraw more than your account balance.
By carefully considering the interest rates and fees associated with international student loans and bank accounts, you can make informed financial decisions that align with your budget and goals.
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Co-signing a loan for an international student
International students in the US are eligible for student loans, but only private ones. They are not eligible for federal financial aid from the US Department of Education, which includes subsidised and unsubsidised loans.
Most international students applying for loans must have a US co-signer. A co-signer is legally obligated to repay the loan if the borrower defaults. The co-signer must be a permanent US resident with good credit who has lived in the US for the past two years. The co-signer is often a close friend or relative who can assist in getting credit, since most international students cannot receive credit on their own.
If you're unable to find a co-signer, there are still a few options available to international students. Some lenders offer student loans without a co-signer. When approving an international student loan without a co-signer, instead of looking at the borrower's credit history, the lender will look at their academic success and career path. However, undergraduate student loans without a co-signer are more difficult to find than those for graduate students.
When considering international student loans, it's essential to understand the types of loans available and the eligibility criteria. Here are some options for international student loans in the USA:
- Bank loans: Many banks offer student loans specifically for international students.
- University loans: Some universities offer their own loans to students.
- Private/Global loan programs: These programs offer loans to students from many different countries.
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Repayment options for international students
International students in the US have access to international student loans, which are private education loans designed for those studying in the country. These loans are offered by private lenders, such as banks, credit unions, or online lenders.
International student loans usually require a US cosigner, who is legally obligated to repay the loan if the borrower defaults. The cosigner must be a US citizen or permanent resident with good credit, an income history, and proof of residence in the US for the past two years. The cosigner agrees to be jointly responsible for the repayment of the loan and makes a legal agreement to this effect.
The repayment period for international student loans generally ranges from 10 to 25 years, with larger loans having longer repayment periods. There are a few standard repayment plans that lenders offer:
- Full Deferral: Students can defer payment until six months after graduation, as long as they maintain full-time status. The maximum deferral period is four years, which is the typical length of an undergraduate degree.
- Interest-Only: Students pay only the interest while enrolled in school, up to four consecutive years. They can defer the principal amount until 45 days after graduation or when they drop their course load to part-time.
- Immediate Repayment: Payments on both interest and principal are due immediately after the loan is disbursed.
It is important to carefully evaluate the amount of money needed to study in the US and to consider other sources of funding, such as scholarships and financial aid from the school, before taking out an international student loan. Federal student loans are not available to international students, so private loans are the primary option. These loans have variable interest rates depending on the creditworthiness of the borrower and their cosigner, with the Prime Rate and Secured Overnight Financing Rate (SOFR) being the most common benchmarks.
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Frequently asked questions
International students can take out loans from private lenders, such as banks, credit unions or online lenders. However, they are not eligible for federal financial aid from the US Department of Education.
The majority of students will require a co-signer who is a US citizen or permanent resident with a good income history and credit rating. There are also no-cosigner loans available to students at a growing number of universities and colleges.
Every lender has its own criteria, interest rates and fees, so it is important to shop around and compare your options. It might also be worth reading customer reviews on sites such as TrustPilot or the Better Business Bureau.
