Lana Oconnell
International students can access private loans and scholarships to fund their education in the US. Most international students require a US co-signer with a good credit score and steady income to qualify for a loan. However, some lenders, such as MPOWER Financing, offer loans that do not require a co-signer or collateral. Students can also apply for federal loans if they are eligible non-citizens. Private loans are available to international students to cover costs such as tuition, room and board, transportation, books, and health insurance. Various repayment options are available, including full deferral and interest-only plans.
| Characteristics | Values |
|---|---|
| Who can get international student loans? | Non-citizens with a co-signer who is a permanent US resident or citizen. In rare cases, international students with high career potential or those who will graduate soon might not need a co-signer. |
| Who can be a co-signer? | A co-signer must be a permanent US resident or citizen with a good credit score, proof of steady income, and a stable job. |
| What can international student loans be used for? | Education-related expenses such as tuition, books, fees, insurance, and room and board. |
| What are the repayment options? | Repayment plans vary depending on the loan option chosen. Students can defer payment until 6 months after graduation, or pay interest only while in school and defer the principal until 45 days after graduation. |
| What are the interest rates and fees? | Interest rates vary depending on the lender and the creditworthiness of the borrower or co-signer. It is recommended to compare interest rates and fees from multiple lenders before choosing a loan. |
| Are there alternatives to international student loans? | Yes, alternatives include scholarships, grants, work-study, and cash payment plans offered by schools. |
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What You'll Learn
Private student loans
International students in the US have fewer student loan options than US borrowers. Unless they are eligible non-citizens who can qualify for federal student loans, they may need to borrow from a private lender.
Some banks, credit unions, and online lenders offer private student loans for international students. However, international students usually need a co-signer who is a US citizen with a good credit score. A co-signer is someone who can legally sign loan papers or documentation to help the borrower obtain a loan. The co-signer will be responsible for paying back the amount borrowed plus interest if the borrower defaults.
The two most common indexes used for international student loans are the Prime Rate and the Secured Overnight Financing Rate (SOFR). SOFR is the new benchmark interest rate that has replaced LIBOR. It is based on transactions secured by US Treasury securities and is administered by the Federal Reserve Bank of New York.
When choosing a private student loan, it is important to compare loan options from different lenders. Factors to consider include interest rates, loan amounts, repayment options, and eligibility criteria. Websites like NerdWallet and Investopedia provide tools to compare different lenders and their offerings.
Other financial aid options
Before taking out a private student loan, international students should explore other financial aid options. They can start by researching funding opportunities from their country's embassy or government educational office to see if there are applicable scholarships. They can also use the US Department of Labor's scholarship search engine to identify scholarships, fellowships, grants, and financial aid awards. Additionally, they can check with their college to see if they offer financial aid for international students and seek advice from centres like Education USA to navigate the financial aid process.
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Scholarships and grants
There are also grants available for international students at the graduate and undergraduate levels. Your school's financial aid office is typically the best source of information on grant opportunities. Additionally, the Free Application for Federal Student Aid (FAFSA) may qualify international students for state or institutional aid in the form of grants.
To find scholarships, you can use free online scholarship search services such as FastWeb, International Education Financial Aid, and International Scholarships. These platforms allow you to search for scholarships specifically for international students.
While scholarships and grants can provide significant financial support, they may not always cover all your expenses. In such cases, you may need to consider taking out private student loans to cover the remaining costs. However, it is recommended to exhaust your scholarship and grant options before turning to student loans.
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Loan repayment plans
International students can obtain loans to fund their education in the US, although this can be challenging. The type of loan and repayment plan available will depend on the student's non-citizen status, and whether they have a co-signer.
Federal Student Loans
International students can obtain federal student loans if they are eligible non-citizens. This includes US permanent residents, refugees, or those with asylum status. Federal loans typically offer more flexible repayment options, lower interest rates, and income-driven repayment plans. The standard repayment term for federal loans is 10 years, but international students may be able to obtain a longer repayment term depending on the lender, ranging from 5 to 20 years.
Private Student Loans
Private student loans are offered by banks and financial institutions and are credit-based. The borrower's ability to repay the loan will be evaluated based on their credit score, income, and other factors. Private student loans typically do not offer the same benefits as federal loans, but they can still be a good option for international students who do not qualify for federal aid. Some private lenders offer tailored solutions for international students, such as MPOWER Financing, Brazos, and Prodigy Finance.
Co-signer Requirements
Many private lenders require international students to have a co-signer who is a US citizen or permanent resident. The co-signer is legally obligated to repay the loan if the borrower defaults. However, there are some lenders that offer loans to international students without a co-signer, such as MPOWER Financing and Prodigy Finance.
Repayment Plans
Repayment plans for international student loans can vary, and it is important to carefully consider the options available. The repayment period typically ranges from 10 to 25 years, and the monthly payment amount will depend on the loan balance, interest rate, and repayment plan chosen. Some common repayment plan options include:
- Full Deferral: Students can defer payments until 6 months after graduation, for a maximum of 4 years.
- Interest-Only: Students pay only the interest while in school, up to 4 years, and can defer the principal until 45 days after graduation.
- Immediate Repayment: Payments on interest and principal are due immediately once the loan is disbursed.
- Extended Repayment: Some lenders offer extended repayment terms to make the loan more affordable for borrowers.
It is important to note that international students may have to start repaying their loans immediately if they drop below full-time status, and they are still required to repay their loans if they move back to their home country after graduation.
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Finding a cosigner
International students often need a cosigner because they may not have any US credit history, which can make it difficult to get approved for a loan. A cosigner is someone who agrees to take responsibility for repaying a loan if the borrower is unable to. Cosigners must typically be US citizens or permanent residents with good credit who have been living in the US for at least two years.
If you are unable to find a cosigner, there are still a few options available to international students. Some lenders offer international student loans without a cosigner, and you can use a loan comparison tool to find one that meets your needs. When approving an international student loan without a cosigner, the lender will look at your academic success and career path. They will take into consideration factors such as your home country, graduation date, and the school you attend.
Some specific examples of lenders that provide international student loans without a cosigner include:
- Prodigy Finance: Offers variable-rate loans to students in business, engineering, law, public policy, and medical programs who attend school in a country that is not their home country. Provides loan and repayment terms based on its predictive credit model, which assesses more than 150 variables to determine how much each applicant can afford after graduating.
- MPOWER Financing: Offers loans to international students studying in the US or Canada based on their future income potential and without requiring a cosigner or collateral. Provides fixed-interest rates to students in any field of study as long as they are accepted or enrolled in one of the supported schools and are in their last two years of study.
- SoFi: Offers private loans with fixed interest rates and no collateral or cosigner requirement.
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Interest rates and fees
International students looking to study in the US often need to secure additional financial aid to cover expenses such as tuition, books, transportation, and living costs. While international students are not eligible for federal student loans from the US government, they can access private student loans.
Interest rates can be fixed or variable. A fixed interest rate remains the same throughout the life of the loan, providing certainty for borrowers. Variable rates, on the other hand, fluctuate over time based on market conditions and economic factors, potentially resulting in cheaper borrowing if rates decrease.
When applying for a private loan, international students usually require a cosigner who is a US citizen or permanent resident with a good credit score and steady income. A cosigner is jointly responsible for repaying the loan if the borrower defaults. Having a cosigner with an excellent credit score can help qualify for a lower interest rate.
Some lenders, such as Earnest, Ascent, and Juno, offer competitive APRs and lack origination or other fees. For example, Earnest provides loans with no fees and supports both undergraduate and graduate borrowers. Juno has the lowest average APRs among the lenders considered and does not charge origination, late, or other fees.
It is important for borrowers to understand the associated terms of their loans, including interest rates and fees, to make informed decisions about the type of loan that best suits their needs.
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Frequently asked questions
International students can get federal loans if they are eligible non-citizens, or they can apply for private student loans. Private student loans are available to international students to help cover costs while studying in the US.
International students should take time to compare their options. Every lender sets its own borrowing requirements, interest rates, and fees. It is important to consider how much the monthly payments will be, when payments will begin, and how long you may be able to defer paying back the loan.
A cosigner is legally obligated to repay the loan if the borrower fails to pay. The cosigner must be a permanent US resident with a good credit history who has lived in the US for at least the past two years. Most international students need a cosigner, but there are also no-cosigner loans available at a growing number of universities and colleges.
Many schools offer cash payment plans that allow students to pay tuition and fees directly, reducing or eliminating the need for loans. Students can also look at savings, scholarships, grants, and other forms of "free money" to help cover costs.
