International Student Loan Guide: Steps, Requirements & Terms
International student loans are a financing option for U.S. citizens who plan to study abroad or foreigners interested in coming to the U.S. for school. Private institutions typically offer these loans and have reasonable terms and rates that borrowers can repay during or after their education.
Funding your education can be complex if you plan to study in a foreign country. Whether you’re a U.S. citizen planning to study abroad or a non-U.S citizen planning to study in the U.S., adjusting to the cost of living while financing your studies can be challenging.
Private lenders and credit unions offer international student loans to aid those who plan to study abroad. These are flexible financing methods with reasonable interest rates and terms that students can repay during or after their education.
Access to international student loans grants myriad opportunities, especially for foreigners who plan to study in the U.S. A study from the Education Data Initiative found that public institutions in the U.S. charge international students twice as much as students from the U.S. Conversely, U.S. citizens who plan to study abroad may be looking at annual tuition fees of less than $2,000.
Explore international student loans, how they work and where an interested student can get one.
International student loans are offered by private financial institutions and let students finance their education abroad.
U.S. citizens and noncitizens can qualify for an international student loan, but the latter may require a co-signer.
Students can get an international student loan from private banks and institutions.
Who Is an International Student?
An international student is a noncitizen or permanent resident who travels to a different country for higher education. In the eyes of various governments, international students are nonimmigrant visitors who need to apply for a visa to study in or enter the country.
A typical example of this would be a non-U.S. citizen or permanent resident who applied to a college or university in the U.S., got accepted and applied for a student visa. U.S. citizens can also be classified as international students if they attend higher education institutions in a different country, like Australia or France, and must get a student visa to stay for the duration of their education.
How Do International Student Loans Work?
An international student loan is a financing method usually offered by private lenders. This type of loan can help students cover the cost of education, including tuition, room and board, books and living expenses.
The requirements for an international student loan vary from lender to lender, but understanding the typical requirements can help students find a loan and lender that works for them. The following are a few common and major factors you may encounter when applying for international student loans:
A co-signer is an individual who takes equal liability and responsibility for your student loan. If you fail to pay your loan, your co-signer is legally obligated to take over or repay it for you.
A co-signer is a typical requirement for non-U.S. citizens who plan to study in the U.S. — but not just anyone can be a co-signer. Lenders require that co-signers for foreign nationals be U.S. citizens or eligible permanent residents.
The interest rate for a student loan is the amount, expressed in a percentage, that a lender charges on top of your borrowed principal. Interest may be determined by a co-signer’s creditworthiness and the lender’s index of choice. If a borrower does not have a co-signer, they will likely get a higher rate.
Typically, interest rates are disclosed after a borrower submits their application. However, some lenders allow you to prequalify, which lets you get a quick estimate of your possible interest rate based on your initial information.
Repayment terms involve when you pay back the loan, how much your monthly payments will be and the length of your payment term. Your options will depend on your situation, your borrowed amount and your lender. You will likely need more time to repay the loan if you borrow a higher amount.
There are three repayment options for international student loans: full deferral, interest-only and immediate repayment. Full deferral involves deferring payments until six months after graduation. In contrast, interest-only payments mean you will only pay the interest while in school and begin paying the principal after graduation. Immediate repayment means just that: paying as soon as your loan kicks in and you receive funds.
Student loans for international students have strict requirements, which means you cannot use them for expenses not directly related to studying. For instance, lenders will allow you to use your funds for tuition, books, insurance and living expenses. Conversely, you may not be allowed to use your student loan for vacations to another state or to purchase a car.
Eligibility Requirements for International Student Loans
Whether you’re a U.S. citizen who wants to study abroad or an international student who is interested in coming to the U.S., an international student loan can help ensure that your education is well-funded if you lack the finances. However, not everyone will qualify, which is why understanding the usual eligibility requirements is crucial for incoming students.
Federal Student Loans for Non-U.S. Citizens
A federal student loan is financial aid offered by the U.S. government. It is often the first option for U.S. citizens and eligible noncitizens who plan to study within the country, as it comes with low interest rates and loan forgiveness options.
Some non-U.S. citizens are eligible for federal student aid. They include:
- Permanent residents with a Form-I551, I-151, or I-551C
- Individuals with an Arrival/Departure Record (I-94) showing:
— Cuban-Haitian Entrant
— Conditional Entrant (valid only if it was issued before April 1, 1980)
- Individuals who hold or have parents who hold a T nonimmigrant status
- Individuals who are a battered immigrant-qualified alien
- Citizens of the Federated States of Micronesia, the Republic of the Marshall Islands, or the Republic of Palau
Certain eligible noncitizens also have to provide evidence to the U.S. Citizen and Immigration Services (USCIS) that they are in the country for other non-temporary reasons.
Conversely, the following individuals are not eligible for federal student aid:
- Deferred Action for Childhood Arrivals (DACA) recipients
- Individuals with I-171 or I-464
- Individuals who are in the U.S. with a student visa (F-1 or F-2)
- Individuals with a G series visa
Individuals who are not eligible for federal financial aid may still have other financing options. These include financial aid programs from your country of citizenship’s embassy or consulate, your chosen college’s financial aid department or your chosen college’s state government.
Private International Student Loans
International student loans from private lenders are the next option for non-U.S. citizens ineligible for federal aid and U.S. citizens planning to study abroad. Banks, credit unions and other private financial institutions offer these loans, and each lender will have its own requirements and qualifications. Generally, however, the common requirements can vary based on your citizenship.
For U.S. citizens who plan to study abroad:
- Proof of acceptance to a university outside of the U.S.
- Enrollment or transcripts from any U.S. university attended
- Credit check for applicant or co-signer
For non-U.S. students who plan to study within America:
- Proof of acceptance to a university, college, or non-degree vocational program within the U.S.
- Student visa
- Transcripts or enrollment documents from any other university attended
- Eligible co-signers
While it can be challenging to qualify when you have no credit built or no co-signer, choosing the right student loan lender can help you save in the long run. It’s smart to:
- Compare interest rates and terms offered by different lenders.
- Look for a term that most suits your long-term plans — consider whether you want to defer the loan, pay interest only or start paying immediately.
- Look at the lender’s reviews to understand their typical terms and how they handle customer service.
International Student Loan Lenders
U.S. citizens and international students who plan to study away from their home country may have fewer financing options than others. However, private lenders and non-bank institutions still offer international student loans.
Private lenders are the most common source for international student loans, but they may come with stringent requirements. For instance, most private banks will require that you have an eligible co-signer to guarantee that the loan will be repaid even when you’re out of the country. Some lenders may let you borrow without a co-signer, but you will have to pay higher interest.
Non-bank lenders are financial institutions like insurance firms or consumer credit companies without banking licenses. They often operate online and have straightforward application processes but come with higher interest rates and lower borrowing amounts than banks.
How to Apply for an International Student Loan
If you plan to apply for an international student loan, knowing the steps can help you prepare ahead of time. While the steps can change depending on the lender, most private banks or financial institutions have similar processes.
Check your eligibility
Not all students will be eligible for an international student loan, so it’s important to check your eligibility beforehand. This can help you avoid lenders with strict requirements you may not be able to meet.
Collect necessary documentation
Prepare your documents beforehand. Typical requirements include your school transcripts, letter of acceptance and proof of ID.
Discover potential lenders
You can research lenders online or near your school of choice to make the repayment process easier. You will want to look for lenders who offer rates and terms that are ideal for your financial situation.
Proceed with the application
Once you’ve narrowed down your choices, fill out an application form and submit it.
Get approved and receive funds
If you receive approval from your lender, take the time to read the terms and conditions. Find out your rate, loan period and your approved borrowed amount. Some lenders will send the funds directly to your school, with any leftover after tuition sent to you. When the funds have been sent, plan out how to pay your student loan debt.
Frequently Asked Questions About International Student Loans
When it comes to studying abroad, managing your finances as a student can be challenging. Read the most commonly asked questions below about international student loans.
- Education Data. "Average Cost of College by Country." Accessed July 11, 2022.
- Federal Student Aid. "Many Non-U.S. Citizens Qualify For Federal Student Aid." Accessed July 12, 2022.
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