International students who have come to the United States to attend a college or university may need help with financing. Federal student loans are only an option for U.S. citizens, permanent residents, or U.S. nationals (such as individuals born in American Samoa or Swains Island). This leaves personal savings, scholarships and grants (if any), and private student loans to help pay for college. For purposes of this article, when we refer to international student loans we are talking about private student loans that allow international students to apply, typically with a U.S.-based cosigner.
If you are a U.S. student looking for information on paying for studies overseas, skip ahead to this section, Financial Aid for Study Abroad.
Types of Expenses Covered
International student loans, like all private education loans, can be used for tuition, fees, books, supplies, room and board, insurance, transportation, and other education-related expenses.
Loan Minimums and Maximums
Most lenders have a minimum loan amount of $1,000.
The maximum you can borrow is your total cost of education, minus other aid, as determined by your college. To determine your maximum loan amount, or what can be included in your loan, you will need to contact your school's financial aid office.
After you and your cosigner complete the loan application and have been approved, your school must confirm that you are enrolled at least half-time and certify the amount of the loan you have requested. If you have questions about this process, contact the financial aid office at your school.
International Student Loan Interest Rates
The interest rate and repayment of an international student loan will depend on the loan option and lender you select. After you select the loan that works best for you, you will need to review the terms or contact the lender directly with your specific questions. The Annual Percentage Rate (APR) is based on a base index (such as Prime or the 1-month LIBOR or 3-month LIBOR) plus a markup that will be lower or higher depending on your cosigner’s credit history. The stronger the credit history, the lower the APR you may be able to attain. Each lender may offer a fixed interest rate, a variable interest rate, or both (which then means you get to choose).
So, in addition to the creditworthiness of the applicants (and your co-signer if you have one), the type of index and whether or not the rate is fixed or variable will determine your actual APR. This makes it especially important to research your options and compare lenders in advance to understand the interest rates and repayment terms available to you.
Also, keep in mind that many lenders offer interest rate reductions and other ways to save money on your loan. For example, if you or your cosigner enroll in automatic payment deductions from a checking or savings account, you may be able to save 0.25% off your interest rate. You could also save money by selecting a loan that has zero application or origination fees.
International Student Loans Without a Cosigner
A general concern for many international students is a lack of personal connections in the United States. You may be asking yourself, “What if I do not know anyone who is willing to cosign my loan?” Or, “How can I find a cosigner?”
First, it is very rare to find lenders who offer a non-cosigned international student loan (such as MPower Financial and Prodigy Finance). If you do find such a lender, the programs may be very restrictive, for example, only being offered to graduate students, or offering loans with a much higher interest rate than loans offered to students with a cosigner.
Tips for Finding a Cosigner as an International Student
A creditworthy cosigner can be a great asset for obtaining a student loan. If a qualified individual does not come to mind, here are some tips on locating a cosigner for your student loans.
You can ask close friends or family members to serve in this role; especially if your network is small. Cosigners are equally responsible for repaying the loan – including if you are unable to do so. This makes it extremely important to choose an individual where there is mutual trust. In addition to personal friends and family members, you may want to consider asking an advisor or even a family friend to act as your cosigner. For example, have you built relationships within your community, such as volunteer organizations or your local faith-based or religious community? Think about individuals you will be in touch with for years beyond your college or graduate school education; someone with an interest in your success.
Remember, the individual who serves as your cosigner will ultimately need to meet the citizenship and credit criteria outlined below. You may find someone who is willing to act as a cosigner but his/her credit is not strong enough to help you secure the loan. In this case, you may need to be prepared to ask more than one person to serve as a cosigner. The good news is if your loan is denied based on the credit history of your primary cosigner, your lender will allow you to resubmit the loan application with a new cosigner.
Eligibility and Documentation for International Student Loans
The eligibility standards for private loans are pretty straightforward and will be fairly consistent from lender to lender. The following are the basic criteria to qualify for an international student loan:
- You will need a valid student visa (F-1) in order to finalize the loan.
- International students must be enrolled at least half-time in a degree-granting program at an eligible institution.
- While you can begin the loan application prior to being accepted to your desired college, you will need to be accepted with your student visa to finalize the loan.
- A cosigner is typically required for all international student loan programs, with few exceptions.
- The cosigner must be a creditworthy U.S. citizen or permanent resident who has lived in the U.S. for at least two years.
- Non-U.S. citizens or non-U.S. permanent residents cannot act as a cosigner. U.S. permanent residents acting as a cosigner may be asked for proof of residency such as a current U.S. Citizenship & Immigration Services (USCIS Form I-551) (Permanent Resident Card, a.k.a. Green Card).
- A temporary, in-school U.S. address is usually required on the application – as opposed to a permanent, international home address.
- A Social Security Number is not required for international students, but one or more of the following documents may be required:
- Copy of your passport, F-1 Visa, H1-B Visa, J-1 Visa, L-1 (L1A or L1B) Visa, Form DS-2019, Form I-20, Form I-766, Form I-797. Check with your lender to understand which documents are necessary to complete your loan application.
Proof of Financial Support for International Students
Typically, you need to be admitted and enrolled, and have your visa, in order to apply for an international student loan. The Form I-20 (Certificate of Eligibility for Nonimmigrant F-1 Student Status) will outline the total cost of tuition, fees and other living expenses international students would be expected to pay. But, before the school can issue this form, you must demonstrate your ability to finance or pay for your education. Some students are able to use loan approval as proof of funds, but it's not easy and it's up to the school and consular officer if they'll accept a loan approval as proper funds before you can obtain a visa. You would need to apply for the loan, list the school you plan to attend, get initially approved, and then use that initial approval to complete your acceptance to the college or university.
Check with the financial aid office at the college you plan to attend to determine if there are any application deadlines you should be aware of and to help you explore all your college financing options.
Student Loans for International Schools (a.k.a. Financial Aid for Study Abroad)
If you are a U.S. student and your study abroad program is tied to a US-based college or university, then you may qualify for financial aid to cover your study abroad program. In fact, under the federal program you are entitled to the same opportunities for grants, loans or work assistance as you would be if you attended a campus in the states. If federal financial aid is not enough, you may want to consider private student loans, to help bridge the funding gaps.
Whether studying stateside, or abroad, the same rules for obtaining private student loans apply.
Study Abroad Scholarships
Whether you study stateside or abroad, searching for scholarships to help reduce your loan debt is a good move. Check out this international scholarships page to get started.
Studying Abroad Tip
Know before you go. Here’s an extra word of caution. There may be additional expenses tied to your overseas study that you had not thought of or calculated before. Things like phone rates and international cell phone plans. And what about those extra tours and sight-seeing trips you want to squeeze in that may not be part of the academic program? You may be awfully tempted to hop on a quick flight to a neighboring country while you’re already halfway around the globe. But those incredible, life-enriching trips would be on your dime. Expenses not related to your educational program may not be covered with student loans.