International Student Loans: The Complete Guide
Attending a university in the United States is a tremendous and exciting opportunity that gets many international students really excited. The benefits can be great, but what about the cost? Unfortunately, a college education in the US is very expensive — for citizens and internationals alike.
Most students utilize student loans to help cover their expenses while they take courses toward their degree. For US citizens, many federal loans make this process very straightforward. Student loans for international students are often not an option: you will not be eligible for federal loans, and the process is a little more complicated.
In this article, we will discuss everything you need to know about getting a loan, figuring out what type of loan is right for you, and smart ways to go about doing it.
Financing Options for International Students
You probably came here because you wanted to know specifically about loans. Before we dive into them, it’s important to know that there are other financing options available for international students. Here we will discuss the differences between the three main financing options.
1. University Scholarships
College scholarships provide funding for any number of areas of your program education. Scholarships are usually provided by private organizations, companies, universities, or individuals and can be for any amount. Scholarships are usually based on merit, meaning academic, social, athletic, or any other exceptional quality that someone wants to award.
Scholarships may be applied directly towards tuition and expenses, or simply be a check written to you to spend however you see fit during your studies. Merit-based scholarships may require that you continue to show excellence in the area in which you earned it, i.e., a scholarship for a 3.5 GPA may require that you maintain a 3.5 GPA each year.
Scholarships can be challenging to earn, and there is no guarantee, but the good news is that there are thousands to apply for. You can find scholarships specifically for single moms, chess players, race, location, and even most creative sandwich maker. Another big positive is that scholarships do not have to be paid back — just earned.
There are tons of places online where you can find scholarships. Here’s a list of just a few sites where you can search for scholarships that you may qualify for:
- CollegeBoard’s scholarship search of almost 2,200 programs
- Peterson’s list of over 1.5 million scholarships
- Scholly’s search engine that has helped students earn over 50 million dollars in scholarship money
- ScholarshipMoney’s scholarship search by keywords
2. University Grants
Student grants are very similar to scholarships and people often use the terms interchangeably. Although they are alike in that neither must be paid back, they differ in that most grants are need-based rather than merit-based.
The Federal Pell grant is just one example of a need-based grant — and is one of the most popular grants for US students. However, to qualify for the Federal Pell Grant, you must be a permanent resident. Unfortunately, this means that most international students will not qualify for the Pell Grant.
Grants can still come from public and private organizations but are generally awarded through the federal and state governments or the university itself. Grants are usually based on economic status and income, designed to provide additional relief for lower-income students. They typically do not have tough academic requirements but may have minimum standards that students must maintain.
There are some merit-based grants, and these are usually more typical for grants that apply to international students. One of the most popular merit-based grants for international students is the Fulbright Education Exchange Program. Students who receive this grant are given funding by the US Department of State for transportation and full or partial tuition. You can check the Fulbright Scholars website for a list of countries from where international students can apply for this grant.
Many other grants are available such as state grants, military grants, and private grants. Here are just a few other grant opportunities:
- CollegeScholarship’s list of 101 college grants
- Scholarships.com’s list of federal grants
- US Department of Education’s list of grants
3. Student Loans
Of these three financing options, a student loan is the one that stands out the most from the other two. Loans are often the last option that students resort to for one big reason: the money has to be paid back eventually. And not just the amount that you borrow, but interest as well.
Obviously, most students would prefer scholarships or grants over loans. It is true that these options are more desirable, but in reality, even the students who are awarded them often need additional financial assistance. Scholarships and grants can be awarded in a variety of amounts and could be lost or reduced over the course of your time in college.
Loans do come at a price, but they are a more widely available and reliable source of funding. This is especially true for international students, as you are ineligible for most US federal scholarships and grants.
Student Loans for International Students: How to Get Started
The process of getting a student loan can be intimidating, especially if you are new to the United States. Throughout the rest of this article, we hope to alleviate any fears and help you find the perfect student loan for you.
Student loans have a number of variables, some that may be better or more necessary for you, depending on your situation. There are several things that apply to almost every student loan, which we will explain here.
1. How big of a loan should I get?
At first glance, a loan might seem like an awesome way to get a huge sum of money to spend however you want. But don’t forget — you will have to pay this money back eventually. The interest on a large loan will add up very quickly as well.
When on the hunt for the perfect international student loan — a good place to start is determining how much you really need, and how much you can afford. You will not want to waste time applying for loans that you don’t really need.
This is not meant to discourage but simply make you aware. Don’t forget, the education you are seeking will make paying these loans off both possible and well worth it in the long run!
2. What are the interest rates like on student loans?
As with all types of loans, the interest rate that you get on a student loan will depend on a few different factors. The first and often biggest variable is whether it is a federal or private loan. Federal student loans usually offer lower interest rates but are not available for non-citizens.
Other things that come into play are credit history, credit score, a cosigner, and the level of study the loan is for. Credit does not usually come into play for international students, as they have no credit upon coming to the US. As for the level of study, undergraduate loans tend to charge higher interest rates than those for graduate study. Cosigners are discussed in-depth later on.
Taking all of these things into consideration, the average student loan interest rate falls somewhere between 2 and 14%.
3. What are the terms and conditions of student loans?
Student loans can sometimes be complicated, but the basics are the same across the board and are relatively simple to understand. In this section, we will address the repayment options, while interest rates and qualifications are discussed in other areas of this article.
Each loan will have its own repayment plan options; these are some general types that will be helpful to know in conducting your search.
Standard and Extended Repayment
Standard repayments are just a fixed amount that you will pay each month, typically over 10 years or less. An extended repayment plan works the same way, just over a longer time span.
On a graduated repayment plan, your monthly payment will slowly increase over time. The hope being that you are able to afford higher and higher payments as you graduate and advance in your career.
This repayment plan is similar to a graduated plan but can go up or down depending on your income at a given point in time. There is a little more security this way, as your payments will not jump if you lose your source income at a later time.
As you can see, there are a number of factors to consider when looking for the perfect student loan. Thankfully, with the help of the internet, you can look through hundreds of different loans without ever leaving your home.
Getting an International Student Loan — The Process
Applying for loans of any kind can seem like a long and confusing process that will leave many wondering where to begin. Never fear! There are several steps involved, but lenders make it easier and easier every day, and we are here to walk with you the whole way.
Timeline — When Should I Apply for a Student Loan?
When it comes to the application, the sooner, the better. Of course, you wouldn’t want to apply a year in advance, but once accepted you would have some say in when you would like to begin your loan. Simply being accepted isn’t in and of itself a binding agreement, so you are always free to back out if you decide to go another route.
Once you have been accepted and provided all the necessary documentation (discussed below), the loan funds are usually dispersed within a week to 2 months. You will want to have your funds in plenty of time, but if something does happen, don’t panic. Most colleges have some leeway when it comes to paying tuition.
What Documentation Do I Need for an International Loan?
As with most of the topics discussed, you would guess that the necessary documentation is going to depend on the lender and the loan. This part of the process should be relatively easy as they will usually not require anything you haven’t already provided to your school.
- College acceptance: Most lenders will require that you be accepted and enrolled at an institution and be seeking a degree.
- Visa: Your student visa, (F-1 visa) will need to be valid at the time of application
- United States Address: You are not expected to have a permanent residence, but you will have to provide the address of the location you plan on staying in the US.
- Other supporting documents: in lieu of a social security card, international students can usually supply one of the following visas: F-1, H1-B, L-1; OR Forms DS-2019, I-20, I-766, or I-797
Should I Refinance My Student Loan?
Refinancing is a common term that you have probably seen numerous times throughout your research. At this stage, this probably isn’t something you really need to worry about, but we will discuss it briefly so you know all of your options.
Simply put, refinancing a loan is the process by which you consolidate all of your loans to get one, lower interest rate. For students pursuing extended degrees (law, medicine, etc.), the savings can be in the hundreds of thousands of dollars. To qualify for refinancing, you will have to show good credit history, income, and a strong debt to equity ratio.
What is a Cosigner, Do I Need One for My Loan?
A loan cosigner is someone who is agreeing to accept liability for your loan if you default. They are usually required to have strong credit and credit history and be a US citizen. Obviously, finding a cosigner that meets all of these requirements can be next to impossible for someone who is coming to the US for the first time.
How to Get an International Student Loan: Top 6 Lenders
Lenders who approve international students loans can be tough to come across, so we’ve put together this list of the top 6 lenders who provide loans to students.
Doesn’t Require a Cosigner
While the options for loans without a cosigner are much more limited, some private lenders look to help international students specifically. Check them at below!
Stilt is designed specifically for international students and others who may have difficulty obtaining a private or federal loan in the US. Unlike most other online lenders, citizenship in the US is not a requirement to get low rates, making Stilt the perfect option for international students.
Stilt doesn’t require a cosigner and has a competitive interest rate of 7.99%. Stilt is the top pick as they have the fewest qualification requirements while still providing low-cost loans.
MPOWER is another lender that is designed for international students. They don’t require a cosigner or any US credit history and instead consider the applicant’s academic success and career path to determine loan eligibility.
The only downside to MPOWER is that they tend to favor students who they determine will likely have a high earning potential. Since many students may not be able to show high earning potential at the moment, MPOWER may not be the easiest lender for them to qualify for.
Another international student loan company is Prodigy Finance. They have seen great success and hope to grow tremendously in the future. The downside, though, is that they have tough qualification guidelines. They only offer loans to students at the highest ranked universities and even restrict the areas of study that they will cover.
Does Require a Cosigner
The options for private lenders with a good cosigner are numerous. Among these, you will want to consider the other factors mentioned above. Once you find one that meets your needs, simply pick the most competitive interest rate. Below you will find some of the highest ranked loans of 2018.
These loans contain the most competitive rates, least amount of fees, and options for interest rate reductions for those who qualify.
Suntrust student loans offer variable and fixed rates for money to spend on tuition, housing, and other school expenses. With their loans, they also offer special rewards such as a Graduation Reward or On-Time Payment Rewards which can reduce your interest rates. Although some of their loans are only available to US Citizens, their Union Federal Private Student Loan provides loans to international students as well.
Discover offers student loans with no fees, rewards for good grades, and easy processing. They also will cover up to 100% of all of your school-certified college costs. This makes Discover great for those who are self-supporting themselves through college and will need as much money as they can get to help them financially through their college journey.
College Ave’s private student loans are available for undergraduate students, graduate students, and even parents of undergraduate or graduate students. They require a cosigner for students with a limited credit history which, unfortunately, is not great for international students who have no US credit history.
However, if you do qualify, or have a cosigner available, they offer great payment options ranging from full principal payments to deferred payments, and flexible terms to pay back your loans.
Other Financing Options for International Students — Getting a Personal Loan
Maybe you’ve found that a student loan isn’t the right option for you. Or, maybe you are in the process of getting a student loan but aren’t sure how you will cover all of your other expenses. When moving to the US, you might be leaving behind family support or your job to pursue a college education.
To help subsidize the costs of living in the US, especially in the more expensive areas, many students choose to take out personal loans so that they can put all of their time and energy into their studies. After all, you will want to enjoy your time studying abroad without the stress of worrying about financing or holding a good job.
Below we have provided some more options for personal loans, created for international students who may have limited options.
Stilt is not only a top option for student loans, but they are also a great lending option for personal loans. Stilt is one of the few private lenders that has really centered their business on helping international students get competitive rates without all of the strict qualifications. Because Stilt’s business plan revolves around serving people in your shoes, the process of applying and the customer service throughout the life of your loan will save you a lot of headaches.
2. Nomad Credit
This option is not a lender itself, but a search engine that helps connect international students to find a loan that meets their needs. If you really want to compare and see all of the options out there, resources like this one can definitely help to do that.
Westbon is another lender that has tried to appeal to international students. They do require less paperwork and documentation than typical personal lenders, but more than some. For instance, you have to meet a minimum GPA requirement to qualify for one of their loans.
Get Your Student Loan!
After reading this article, you should possess all of the necessary information that you need to make a good, informed decision about student loans and other funding. Since there are a limited number of lenders that are specifically designed to help international students, it will probably not take you long to find the right choice for you. Good luck in the United States, and good luck studying!