Lana Oconnell
Mexican students looking to study in the US or Canada may be eligible for international student loans or scholarships, but these can be difficult to secure. The only option for Mexican students to obtain an education loan to study abroad is through private lenders, such as MPOWER Financing, which does not require a cosigner or collateral. However, moving abroad does not erase student loan debt, and borrowers are still responsible for making their monthly payments. There are options to make debt easier to manage, such as signing up for an income-driven repayment plan, maintaining a US bank account, and utilizing the foreign earned income exclusion (FEIE).
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What You'll Learn
- International student loans for Mexican students in the US and Canada
- Scholarships for international students from Mexico
- The consequences of not paying federal or private student loans
- The National Programme for Financing Higher Education in Mexico
- How to manage student loan payments while living abroad?
International student loans for Mexican students in the US and Canada
Mexican students planning to study in the US or Canada may be eligible for international student loans to help fund their education. The cost of studying in the US can be a significant issue for international students, with private colleges charging up to US$75,000 per year and public schools around US$50,000 annually. As federal loans are only available to US citizens and eligible non-citizens, international students from Mexico can apply for private international student loans.
The maximum loan amount Mexican students can apply for is their total cost of attendance, including tuition fees, books, health insurance, and other necessary expenses. The monthly repayment amount will depend on the specifics of the repayment plan agreed upon between the student and the lender. There may be a period during the studies when no payments are required, or a grace period after graduation with reduced monthly payments.
Students from Mexico can apply for loans from private lenders such as MPOWER Financing, which specializes in offering loans to international students worldwide. MPOWER loans do not require a co-signer or collateral, and eligible students can borrow between US$2,001 and US$100,000. They also offer scholarships and additional benefits like visa support and career guidance.
When applying for a private international student loan, Mexican students will need to submit the necessary documents and paperwork to the loan company, which will decide whether to approve the loan. Once conditionally approved, students will be informed of the interest rates and repayment terms. It is crucial to carefully review the terms and conditions before agreeing to them.
It is important to note that moving abroad does not cancel student loan debt. Federal loans remain under the Department of Education's jurisdiction, and private loans are subject to the agreed-upon terms. Proper planning is essential to manage loan repayments while living overseas, considering factors such as foreign bank transfers, exchange rates, and tax implications.
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Scholarships for international students from Mexico
Moving abroad does not cancel out your student loans. Federal loans remain under the Department of Education's jurisdiction, and private loans still fall under the terms of your agreement. However, there are ways to manage your debt while living overseas. For instance, if you plan to live abroad, you should sign up for an income-driven repayment plan and keep up with your US taxes and IDR recertifications.
If you are an international student from Mexico looking to study in the US or Canada, you may be eligible to apply for an international student loan. However, if you are looking for scholarships to fund your studies, there are a few options available. Here are some scholarships for international students from Mexico:
Mexican Government Excellence Scholarships for International Students
The Mexican government offers scholarships for international students wishing to study in Mexico. The scholarships cover international air transport in economy class and national transportation from Mexico City to the host city of the receiving academic institution. To apply for this scholarship, all applications must be submitted electronically in Spanish through the Academic Management System (SIGCA). Applicants must provide a copy of their passport, a declaration letter, a curriculum vitae, and a medical certificate.
PBII Scholarship
The PBII Scholarship offers grants to high-potential students to cover their tuition fees at the National Autonomous University of Mexico.
Tecnológico de Monterrey University Scholarships
The Tecnológico de Monterrey University, ranked in the top 5% of world rankings, offers various scholarship programs for international students.
Gallagher Foundation Scholarships
The Gallagher Foundation offers scholarships to all international students pursuing undergraduate, graduate, and Ph.D. programs in Engineering, Technology, Sciences, and Management. The scholarship covers 100% of tuition for Mexican students and provides additional support for maintenance, books, laptops, transportation, and lodging for international students.
Fulbright Scholarships
Fulbright Scholarships are awarded to students engaged in specialized projects abroad, including projects focused on science, technology, and innovation, sustainability, or entrepreneurship in Mexico.
GAIN Scholarships
The Council on International Educational Exchange (CIEE) offers GAIN Scholarships for study in Mexico, ranging from $1,000 to $5,000.
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The consequences of not paying federal or private student loans
Defaulting on student loans can have serious consequences, including damaging your credit score and limiting your access to future credit and loans. Federal student loans enter default after 270 days of missed payments, while private student loans typically enter default after three missed monthly payments.
If you have federal student loans, the government can act as a debt collector and may seize your tax refund and garnish your paycheck. Private student loan lenders may also attempt to collect the debt directly or hire a collection agency. In either case, you may be able to avoid default by enrolling in an income-driven repayment plan or applying for a deferment or forbearance.
It's important to note that student loans, whether federal or private, generally cannot be included or dismissed in bankruptcy unless you can prove permanent hardship. As such, it's essential to understand the terms and conditions of your loan and make every effort to avoid missing payments.
While there are options to mitigate the consequences of non-payment, such as the Saving on a Valuable Education (SAVE) plan, it's always best to consult with a financial expert or loan negotiator to explore your specific options and make informed decisions.
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The National Programme for Financing Higher Education in Mexico
In 2012, Mexico's then-president, Felipe Calderón, announced the National Programme for Financing Higher Education (Programa Nacional de Financiamiento a la Educación Superior). The programme is a government-funded student loan scheme aimed at facilitating access to higher education for students who might not otherwise have the financial means. In its first year, the programme was forecast to provide credits to a total of 23,000 students enrolled in 21 private universities across Mexico, with the support of five banks. Undergraduate students could borrow up to MXN 215,000 (EUR 12,800), while graduate students were eligible for credits of up to MXN 280,000 (EUR 16,700).
The introduction of the programme sparked some criticism and concerns. One key concern was the potential diversion of resources away from Mexico's already overburdened public higher education sector, which serves 70% of the country's students. There were also worries about the high unemployment rate among young people in the country and the potential challenges of repaying student debt. The interest rate for loan repayment was set at 10%, which was considered relatively high. Some commentators also pointed out the possibility of repeating negative outcomes seen in longstanding student loan programmes in other countries, such as the United States and Chile.
Despite these concerns, the National Programme for Financing Higher Education in Mexico represents an effort to increase accessibility to higher education for Mexican students. It is important to note that the programme is not intended to replace or alleviate the financial burden on the public higher education sector but rather to provide additional options for students wishing to pursue their studies at private institutions.
It is worth noting that the information provided focuses specifically on the National Programme for Financing Higher Education in Mexico and may not address all aspects of student loans in the country. Additionally, the information provided is based on the details available from the programme's announcement in 2012, and there may have been subsequent changes or updates to the programme since then.
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How to manage student loan payments while living abroad
Moving abroad doesn't cancel your student loans, and federal loans remain under the Department of Education's jurisdiction. However, living overseas can introduce challenges that require strategic planning. Here are some ways to manage your student loan payments while living abroad:
Understand the implications of not paying your loans
Defaulting on student loans, even when living abroad, can have serious consequences. It can severely damage your US credit score, lead to increased debt due to accumulating fees and interest, and have potential tax implications. Private lenders may also still pursue collection, depending on your situation, and the government will use every legal tool to collect the money owed.
Keep a US-based bank account
You will likely need to maintain a US checking account while living abroad, as this is how loan servicers will collect your monthly payments. Once you have opened a bank account in your new country, inquire about sending international transfers to your US account. Alternatively, you can use services like Wise to move funds internationally.
Explore income-driven repayment plans
Income-driven repayment plans can be beneficial as they allow your payments to be adjusted based on your financial situation. These plans lower your federal loan's monthly payments based on your family size and income, with forgiveness granted after 20 or 25 years. You can apply for an income-driven repayment plan at any time, especially if your financial situation changes while living abroad.
Understand tax implications
The Foreign Earned Income Exclusion could allow borrowers living abroad to deduct up to $120,000 of worldwide income on their tax return. This could lower your income and, subsequently, your IDR payment. However, it's important to note that while lowering your monthly payments can help prioritise your travel adventures, it might not be the best solution for managing your student loan debt. You may end up with a hefty balance due to accrued interest, and you might owe tax on the forgiven amount.
Consider loan consolidation
Federal student loan consolidation can lower your payment by extending your repayment term. It simplifies your monthly payment by streamlining multiple loans into one or two easy-to-manage loans. However, federal loan consolidation does not lower your interest rate, and for refinancing, you should usually only proceed if you can secure a lower interest rate.
By following these steps and staying informed about your loan obligations, you can effectively manage your student loan payments while living abroad.
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Frequently asked questions
The Mexican government has introduced a new National Programme for Financing Higher Education, which includes a 10% interest rate for loan repayment. If you fail to pay your student loans, you will face consequences such as negative impacts on your credit score and the government coming after your assets.
As an international student, you may be eligible for private loans from lenders such as MPOWER Financing, which specialises in providing loans to international students without requiring a cosigner or collateral. Additionally, explore scholarship opportunities based on academic achievements, program of study, and country of origin.
Moving to Mexico does not erase your obligation to repay your student loans as a US citizen. Federal loans remain under the jurisdiction of the Department of Education, and private loans fall under the terms of your agreement. You may be able to pause federal loans through deferment or forbearance or enroll in an income-driven repayment plan.
