Lana Oconnell
International students looking to study in the USA have several options for financing their education. While federal student loans are not available to international students, there are other financial aid options to explore, such as scholarships, grants, and private loans. To apply for a private loan, international students typically need a US cosigner with good credit and a steady source of income. However, some lenders, such as MPower Financing, offer international student loans that don't require a cosigner or collateral. It is important for international students to carefully evaluate their financing options and compare different lenders to find the best loan for their situation.
| Characteristics | Values |
|---|---|
| Loan type | Private education loans |
| Who can apply | International students studying in the US |
| Cosigner | Usually required, must be a US citizen or permanent resident with good credit and income history |
| Loan amount | Up to the total cost of attendance as determined by the school |
| Interest rate | Variable, depending on the lender and the borrower's or cosigner's creditworthiness |
| Repayment terms | Dependent on the lender and loan option chosen |
| Additional financial aid options | Scholarships, grants, fellowships, financial aid from schools |
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What You'll Learn
International student loan lenders and eligibility
International students seeking to study in the USA can explore various loan options offered by private lenders. While federal student loans are not available to international students, specialised private education loans are designed to cater to their needs. These loans are flexible and can cover the entire cost of education, with extended repayment terms and reasonable interest rates.
International Student Loan Lenders
International students can consider the following lenders for their loan options:
- Earnest: Earnest, a service of Earnest Operations LLC, offers competitive APRs, low interest rates, and support for both undergraduate and graduate borrowers. They do not charge origination or other fees. The maximum aggregate loan amount is $400,000.
- Ascent: Ascent Funding is a suitable option for those seeking low minimum credit score requirements and no fees. They offer flexible repayment options and cater to noncitizens.
- Citizens Bank: Citizens Bank provides the highest loan maximums among the lenders mentioned. They also offer interest-only repayment plans, forbearance, and an annual payment skip option.
- SoFi: SoFi offers low APRs for fixed and variable rate refinance loans and a maximum repayment term of 240 months. They do not charge origination or late payment fees.
- RISLA: RISLA provides loan forgiveness of $2,000 for borrowers who complete an eligible internship. Nurses in Rhode Island may also qualify for zero interest on their loans for up to four years.
- MPower Financing: MPower Financing caters to students pursuing one- or two-year education programs or those in the latter part of their degree program.
Eligibility
To be eligible for international student loans, individuals must meet specific criteria. Here are the general requirements:
- Enrolled at least half-time in a degree-granting program at an eligible institution.
- No prior student loan defaults.
- A creditworthy co-signer who is a U.S. citizen or permanent resident with good credit and an annual income of at least $35,000.
- The co-signer must have lived in the U.S. for at least the past two years.
- The school must be a Title IV-qualified, not-for-profit, four-year institution.
It is important to note that loan eligibility may vary slightly among lenders, and it is always advisable to review the terms and conditions before choosing a loan. Additionally, international students should explore other financial aid options, such as scholarships and grants, before opting for loans.
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Loan amounts and interest rates
International students in the United States are not eligible for federal student loans from the U.S. government. However, they can apply for international student loans, which are private education loans. These loans are very flexible and can cover the entire cost of education, with extended repayment terms and reasonable interest rates.
The interest rate on these loans is computed using a benchmark rate (usually the Prime Rate or the SOFR) plus a margin that depends on the creditworthiness of the borrower or their co-signer. The SOFR (Secured Overnight Financing Rate) is based on transactions in the Treasury repurchase market, where banks and investors borrow or loan Treasuries overnight. It is considered more reliable and accurate than the LIBOR rate.
The repayment period for these loans typically ranges from 10 to 25 years, with larger loans having longer repayment periods. Students can choose from various repayment plan options, such as full deferral, where they can defer payment until six months after graduation, or interest-only, where they pay only the interest while in school.
The amount and interest rate of the loan also depend on the lender and the loan option chosen. For example, Citizens Bank offers multi-year loans of up to $225,000 for undergraduates and graduate students, with an average APR. On the other hand, Earnest offers loans with low-interest rates and no fees, with a maximum aggregate of $400,000.
It is important for international students to carefully evaluate their financial needs and explore all funding options, including scholarships and financial aid, before applying for private student loans.
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Cosigners and their requirements
International students applying for loans in the USA usually require a cosigner. A cosigner is someone who agrees to share legal responsibility for the loan and guarantees its repayment if the borrower defaults. They are taking on a huge responsibility, as they are legally bound to pay back the loan amount plus interest.
Most international students do not have a long credit history or income in the USA, which makes it difficult to secure loans without a cosigner. The cosigner's credit history and income help the lender evaluate the borrower's ability to pay and determine whether the loan can be repaid. The cosigner must be a US citizen or permanent resident with good credit and income history. They must also have lived in the US for at least two years.
While it is common for family members to act as cosigners, they may not always meet the requirements. In such cases, international students can explore alternative options, such as no-cosigner loans. These loans focus on factors like the student's graduation timeline, career potential, and the eligibility of the educational institution. However, it is important to carefully evaluate the interest rates and repayment terms offered by different lenders before committing to a loan.
To apply for a private international student loan without a cosigner, students typically need to be enrolled in a postgraduate course or in the final two years of an undergraduate degree at an eligible institution. Additionally, federal student loans, such as Federal Direct subsidized and unsubsidized loans, do not require a credit check or cosigner and offer protections for borrowers who struggle with payments.
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Scholarships and other financial aid options
Your first step when searching for scholarships should be your school's financial aid office. Most colleges offer scholarship programs specifically for international students attending the institution. Check your school's financial aid website, or call or email the office if you can't find what you're looking for. Many universities offer their own scholarships, but private scholarships also exist.
There are private, institutional, and government-funded scholarships available. While they are highly competitive, your chances of getting one are good if you have impressive achievements and know how to make a good application. Merit-based scholarships are granted on the basis of special skills, talents, or abilities. Your university may have scholarships based on TOEFL scores, academic record, artistic ability, musical ability, or athletic ability. Need-based scholarships are also awarded based on financial need.
There are many resources available to students to search for scholarships, and there are also many services that charge students for access to their scholarship database. If you have the time and available resources, most scholarship searches can be found online for free. InternationalScholarships.com is one that offers a free scholarship search, and with a little research, you can find many more.
- The Aga Khan Foundation International Scholarship provides scholarships to students from select developing countries with no other source of financial help for graduate studies.
- The American Association of University Women offers fellowships for non-American women who want to earn a Master's or doctorate in the USA.
- The Civil Society Leadership Awards offer full scholarships for Master's students from specific countries who are dedicated to fostering social change.
- The Fulbright Program for Foreign Students offers around 4000 scholarships every year to international students who want to study in the US.
- MPOWER Financing offers scholarships for international and DACA students. Its Global Citizen Scholarship Program has broad eligibility criteria and is offered throughout the year.
Other financial aid options include federal loans, private loans, or work-study programs. Federal loans, or FAFSA (the Free Application for Federal Student Aid), is the most common form of financial aid for domestic US students. However, FAFSA is restricted to specific categories of students from other countries, such as students with green cards or former victims of human trafficking. To apply for this aid, you need a Social Security Number or an Alien Registration Number.
International student loans are available to non-US citizens studying in the US, but they typically require a cosigner. A cosigner is someone who guarantees and is responsible for payment to the loaning institution if you are unable to pay back the loan. There are also private lenders that provide loans to international students, such as MPOWER Financing, which offers fixed-rate loans from US$2,001 to US$100,000 at competitive interest rates.
It is important to carefully consider your financial situation and how you will manage the costs of studying in the US. Before applying, you should research how much money you will need and whether you can cover those costs. You should also consider looking into cheaper universities in the US.
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Loan repayment terms
Repaying a loan as an international student in the US can be a complex process, and there are several factors to consider. Firstly, it is important to note that international students are ineligible for federal loans and must rely on private lenders to finance their education in the USA. This means navigating a landscape of varying loan options and understanding the key differences is crucial. Private loans often come with higher interest rates, which can significantly impact the total amount repaid over time.
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. This ensures that the final interest rate reflects the risk associated with lending to a particular individual and takes into account the prevailing economic conditions.
Repayment terms will depend on the lender and the specific loan option chosen. As most international students cannot work while studying in the US, repayment terms become a critical consideration. Students should carefully assess their anticipated expenses and understand the terms and conditions before committing to a loan. It is important to consider how much the monthly payments will be, when payments will begin, and how long one can defer paying back the loan. The repayment period typically ranges from 10 to 25 years, and there are a few common repayment plan options:
- Full Deferral: Students can defer payments until 6 months after graduation, as long as they maintain full-time status. The maximum deferral period is four years, which is the standard duration of a degree.
- Interest Only: Students pay only the interest while in school, up to four consecutive years, and can defer the principal amount until 45 days after graduation or when they switch to part-time studies.
- Immediate Repayment: Payments on both interest and principal are due immediately once the loan is disbursed.
Some plans offer a grace period after graduation, while others may require immediate repayment. It is important to understand the conditions under which one can temporarily suspend payments without affecting one's credit score. Additionally, most international students must have a US co-signer to apply for a loan. The co-signer is legally responsible for repaying the loan if the borrower defaults and must be a US citizen or permanent resident with good credit history.
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Frequently asked questions
International students can borrow money from private lenders, which will either be a predefined, fixed amount or the school-certified cost of attendance. Most lenders require a cosigner who is a US citizen or permanent resident with good credit. However, some lenders, such as MPower Financing, offer loans without a cosigner.
Most lenders require that you are enrolled in a qualifying college or university at least half-time. They will also ask for documentation that shows proof of enrollment, an active visa, and your recent high school or undergraduate degree transcript.
There are a variety of options for international student loans in the USA. MPower Financing offers private student loans for US and international students, with no cosigner or collateral required. EdvestinU student loans have no application or origination fees and are available from $2,001. Ascent Funding offers flexible repayment options, but most students will need a cosigner to qualify.
