International students who have come to the United States to attend a college or university may need help with financing. Federal 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 and potentially receive.
Eligibility for International Student Loans
The eligibility standards are pretty straightforward and will be largely consistent from lender to lender. The following are the basic criteria to qualify 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 required for all international student loan programs.
- The cosigner must be a credit-worthy US citizen or permanent resident who has lived in the US for at least two years.
- Non-US citizens or non-US 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.
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.
- 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 are credit approved, your school must confirm that you are enrolled at least half-time and certify the amount of the loan you have requested.
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 regardless of the index tied to the loan. Each lender may offer either a fixed or a variable interest rate, or both. So, in addition to the creditworthiness of the applicants, 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 do your homework and loan comparisons in advance to understand the interest rate and repayment terms for your loan.
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 could save 0.25% off your interest rate. You could also save money by selecting a loan that has zero application or origination fees.
What If I Do Not Have a Cosigner?
A general concern for many international students is the lack of a robust personal network 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?” Here are some suggestions.
It is common to ask close friends or family members to serve in this role. Since cosigners are equally responsible for repaying the loan – especially if you are unable to do so – it is all the more important that you choose an individual with whom you have established 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 who will be in touch with you for years beyond your college or graduate school education.
Also, remember that the individual who serves as your cosigner will ultimately need to meet the eligibility criteria outlined above. 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.
Demonstrating Financial Ability as an International Student
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 now, list the school you plan to attend, get initially approved (based on the credit of your cosigner), then use that initial approval to complete your acceptance to the college or university.
Check with the financial aid office at the college your 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.