Savanna Hoffman
International student loans are a great way to fund your education in a foreign country. These loans are available to non-citizens pursuing higher education in the respective country. International students can apply for loans to help pay for their tuition, room and board, transportation, books, and other expenses. The loan application process typically requires a temporary address in the country, detailed proof of identity, income, and education, and in some cases, a co-signer who is a permanent resident or citizen of the country. It is important to carefully evaluate the costs, compare lenders, and understand the repayment terms and interest rates before taking out an international student loan.
| Characteristics | Values |
|---|---|
| Who can apply | Non-US citizens studying at a college or university in the US |
| Who cannot apply | US citizens or permanent residents |
| Requirements | Valid passport or visa to confirm student status, proof of identity, income, and education, Social Security number, proof of enrollment |
| Cosigner | Cosigner is usually required, unless the loan is a no-cosigner loan; cosigner must be a US citizen or permanent resident with a good credit score and consistent income |
| Borrowing limits | Up to the total cost of school minus any other financial aid received |
| Repayment terms | Immediate repayment, interest-only payments, full deferment, extended repayment |
| Interest rates | Variable or fixed, depending on the lender; the lower the interest rate, the better |
| Lenders | Private lenders, Earnest (a fee-friendly fintech company) |
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What You'll Learn
International student loan lenders and comparison tools
International students often have fewer loan options than citizens and may need to borrow from private lenders. Many international students will need a co-signer to apply for a loan. This co-signer must be a US citizen or permanent resident with good credit. If you do not have a co-signer, you can see if you are eligible for a no-co-signer loan.
International student loan lenders include:
- MPOWER Financing: Offers private student loans for US and international students, with no co-signer or collateral required. MPOWER Financing has a quick application process and provides loans worldwide.
- College Ave Student Loans: Offers undergraduate and graduate student loans, parent loans, and student loan refinancing with various repayment options and competitive interest rates. College Ave also offers a 0.25-percentage-point interest rate discount for setting up autopay.
- Ascent Funding: An online lender that offers flexible repayment options, several loan terms, and no fees.
- Citizens Bank: Offers student loans for international graduate students with a co-signer.
International student loan comparison tools can help you find a loan that's right for you. When using a comparison tool, you will typically need to select your citizenship and school from a drop-down menu. The comparison tool will then match you with available lenders that work with international students at your college or university. You can then apply online for your chosen loan. The loan application process will vary depending on the lender, and you may need to provide additional paperwork, such as your social security number, driver's license, and employment information.
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$116.52 $120
Cosigners and their requirements
A cosigner is someone who agrees to share legal responsibility for your student loan. If you miss a payment or can't repay the loan, the cosigner becomes responsible for the remaining balance. Cosigners can improve the chance of getting approved and reduce the interest rate you have to pay.
When it comes to students, their financial history can be quite limited or non-existent. The lack of credit history makes it difficult for lenders to evaluate the borrower's ability to pay. To resolve this issue, almost all international students and most US students interested in applying for a loan need a cosigner to be accepted.
If you are an international student, finding a creditworthy cosigner can be challenging since they must be a US citizen or permanent resident. Most students first look to their family members to act as their cosigners, but in some cases, they may not meet these requirements. Borrowers can also find an extended family member or friend to cosign their international student loan or study abroad loan. A cosigner can be anyone who meets the general requirements and is willing to cosign your loan. Your cosigner should have a social security number, current address and phone number, references, and employment information.
It's important to note that having a cosigner doesn't guarantee approval or a specific interest rate. However, applying with a strong cosigner can improve your chances of approval and may help you qualify for more favourable loan terms. The cosigner's credit history and income history help the lender assess whether the loan can be repaid. The cosigner will go through a credit check as part of the application process, and both the borrower and cosigner will need to submit documentation during the review.
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Borrowing limits and repayment terms
Borrowing limits for international student loans vary depending on the lender. Students can typically borrow up to their school's total cost of attendance, minus any other financial aid received. The "total cost of attendance" includes tuition, room and board, books and supplies, personal expenses, and transportation. International education lenders offer higher maximum loan amounts to qualified borrowers, but there may be a cap on the amount you can borrow. Therefore, it is important to ensure that the prospective lender can cover the amount you need to take out.
Repayment terms for international student loans also vary depending on the lender. The repayment term refers to how long the borrower has to pay back the loan and determines the amount of the monthly payment. The longer the repayment term, the smaller the monthly student loan payment and the more interest paid over time. Private lenders usually offer three types of repayment terms: interest-only payments, immediate repayment, and full deferment.
Interest-only payments allow borrowers to make payments only on the interest while enrolled in school at least half-time and for six months after leaving school. After this period, full principal and interest payments begin. Immediate repayment means that full principal and interest payments are due approximately 60 days after the funds are disbursed. With full deferment, no payments are made while the student is enrolled in school at least half-time and for a grace period of six months after their graduation date.
It is worth noting that most international students applying for loans in the US must have a US cosigner. A cosigner is legally obligated to repay the loan if the borrower defaults. They should be a US citizen or permanent resident with a good credit score and an income history, who has lived in the US for at least two years. If you cannot find a cosigner, there are also no-cosigner loans available at a growing number of universities and colleges.
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Interest rates and fees
There are two types of interest rates: fixed and variable. A fixed interest rate remains the same throughout the loan contract, providing certainty about monthly payments. Variable rates, on the other hand, fluctuate over time based on market conditions and other economic factors. If interest rates rise, so does the amount repaid monthly; if rates fall, borrowing costs decrease.
Some lenders offer a 0.25% interest rate reduction with auto-pay, where monthly payments are automatically deducted from the borrower's bank account. This feature may be temporarily discontinued if the borrower elects to stop automatic payments or during periods when no payments are due. Additionally, the auto-pay discount may be permanently discontinued if the financial institution returns three automatic deductions for any reason.
When considering interest rates, it is essential to understand the difference between interest rates and monthly payments. A longer repayment term results in smaller monthly payments but higher overall interest costs. Interest-only repayment plans, where only interest is paid during school and for a period after graduation, can help manage expenses.
International students should also be aware of fees associated with loans, such as origination fees, late fees, and prepayment penalties. Some lenders, like Earnest, offer competitive APRs and lack origination or other fees. Ascent has competitive rates and does not charge an origination fee, but there is a late payment fee of up to $25. Juno has the lowest average APRs and does not charge origination, late, or any other fees.
In summary, international students should carefully consider interest rates and fees when taking out loans. Fixed and variable rates have different advantages and risks. Auto-pay can reduce rates, but it is not always suitable for everyone. Understanding repayment terms and associated fees is crucial to making informed decisions about loan options.
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Alternative financing options
International students can explore various alternative financing options to support their educational journey. Here are some of the key alternatives to consider:
- Scholarships and grants: Scholarships are a common form of funding for international students, often awarded based on academic merit, potential, or talent in areas like sports or music. Grants, on the other hand, are typically based on personal circumstances, addressing financial or other disadvantages. Both options can provide significant financial support without the burden of repayment, making them an attractive alternative to loans.
- Private grants and loans: Private grants and loans from companies or non-governmental organisations are another option for international students. These opportunities may be contingent on post-graduation employment with the funding entity. It is crucial to carefully review the terms and conditions of such loans, as they often come with repayment time limits and interest.
- Part-time work: International students may opt to work part-time to finance their studies. This option can provide a steady income stream but may require careful time management to balance work and academic commitments.
- University-specific loan schemes: Some universities create their own loan schemes or financial aid packages for students from low-income backgrounds, including international students. These schemes can offer favourable terms and conditions tailored to the specific needs of their student body.
- Country-specific options: Financing options can vary depending on the country of study. For instance, in the UK, the Chevening Scholarship and Commonwealth Scholarships financially support international students. In the US, lenders like Earnest, Ascent, Citizens Bank, and Sallie Mae provide loans tailored to international students.
When considering alternative financing options, it is essential to conduct thorough research and carefully evaluate the terms and conditions of each opportunity. Interest rates, repayment options, loan limits, and eligibility criteria can vary significantly between different financing alternatives. By making informed decisions, international students can minimise financial stress and focus on their academic pursuits.
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Frequently asked questions
To qualify for an international student loan in the U.S., you must be enrolled in a U.S. college or university and have a valid visa (e.g., F-1 or J-1 visa). You will also need a U.S. citizen or permanent resident co-signer with a good credit history.
First, research and compare different lenders and loan options to find the best fit for your needs. Gather the required documents, including proof of identity, income, and education. Then, complete and submit the application form, providing all necessary documentation. Finally, wait for the lender's approval and carefully review the loan agreement before signing.
Yes, international students can explore scholarships, financial aid from their school, grants, and private student loans. Additionally, some schools offer tuition reductions or discounts for international students, so it's worth reaching out to the financial aid department to explore these options.
Loan amounts can vary, typically ranging from $1,000 to $50,000 or more per academic year. Repayment terms also vary, with common terms being 10 to 25 years. Private lenders usually offer three types of repayment terms: interest-only payments, immediate repayment, and full deferment.
Consider your full cost of attendance, including tuition, fees, room and board, books, and general living expenses. Borrow only what you need and try to stay within a budget. Some recommend borrowing no more than your expected first-year salary after graduating.
