Education Loans for International Students in the U.S.
If you are an international student planning to get your education in the U.S., you are likely looking at some significant expenses. It costs a lot to go to university or college as an international student in the U.S., so unless you are independently wealthy or have a lot of savings, you will have to find the funding you need to finance your studies and living expenses.
In some cases, you may be able to get grants and scholarships to cover at least some of the costs. Fortunately, there are also education loans for international students in the U.S. The key is knowing what these loans are, whether you qualify, and how to get one.
How to Get an Education Loan to Study in the U.S.
There is one main type of student loan for international students: private student loans. The loans you are eligible for will depend on a number of factors, but in most cases, you will need to apply for a loan with a private lender. With this in mind, here are the two types of private loans for international students in the U.S.
Cosigner private student loans
One common type of loan from a private lender is a cosigner loan. As an international student, chances are you have no credit history within the U.S., which makes it difficult for a potential lender to assess how likely you are to pay a loan back. A credit history is a history of borrowing money and paying it back on time. Even if you have a good credit history in your home country, it wont be recognized in the U.S.
A cosigner is a U.S. citizen or permanent resident who has an established credit history. They sign the credit agreement with you and are obligated to pay off the loan if you cannot. This provides extra security for the lender, and you will receive an interest rate that is influenced by the credit history of the cosigner. Co-signing a loan represents a significant risk for the cosigner, so you may not be able to find a cosigner.
No-cosigner private student loans
The reality is that many international students who come to the U.S. to study dont know anyone who can act as a co-signer on a loan. This leaves them with fewer choices when it comes to getting loans for international students in the U.S.
Fortunately, there are lenders who have no-cosigner student loans available for international students. In this situation, the lender will look at criteria other than a students credit. These criteria include your academic standing, the school you are going to, your program of study, your career goals, when you will be graduating, and your earning potential after graduation.
The thing to remember with a no-cosigner loan for international students in the U.S. is that you will end up paying a higher interest rate. The good news is that you can still fund your higher education aspirations, and with a higher salary after graduation you can pay back the loan and establish yourself at the next level professionally.
Educational Loan Terms for International Students in the U.S.
You already know what a cosigner on a student loan is. However, when applying for education loans for international students in the U.S., it is important that you have a full understanding of all the terms associated with international student loans. After all, there are plenty of terms that go along with these loans, including the following:
Student loan interest rate
The interest rate is a percentage of the principal balance of your loan that you have to pay in addition to the amount borrowed. This interest rate might be fixed, meaning it will be the same throughout the life of the loan, or variable, which means it can change over the life of the loan.
International students who get an education loan in the U.S. and opt for a variable rate will generally be given an interest rate based on one of the following two indexes:
- Prime interest rate This is an index that is determined by the federal fund rate set by the U.S. Federal Reserve.
- Secured Overnight Financing Rate (SOFR) This is an index administered by the Federal Reserve Bank of New York that reflects the cost of borrowing cash overnight, collateralized by Treasury securities.
Your lender will let you know which index they are using to determine your interest rate, which will be a combination of the index used and an additional margin that is determined by the lender. The margin is sometimes influenced by the lenders evaluation of your ability to repay the loan timely..
Student loan annual percentage rate (APR)
This is the total cost of the loan annualized over the life of the loan, and this figure includes interest and fees assessed for originating the loan. As a result, the APR is an easy number to use to compare different loan options and determine which is the better choice.
Student loan fees
Fees are all the charges you may have to pay when you get a student loan in addition to the principal loan amount and the interest rate. These fees must be disclosed to an applicant and be noted in the lenders credit agreement. These fees may or may not be included, depending on your lender:
- Origination fee This is generally calculated as a percentage of the requested loan amount and is a fee you pay to have the loan processed and executed.
- Application fee This is a fee you may pay when you submit your loan application, and it is non-refundable.
- Late payment penalty This is a fee you will pay if you are late making a student loan payment, and may be charged as early as one day after your payment due date. Typically, lenders give you a grace period of 10 to 15 days to pay the amount due without incurring a penalty.
- Prepayment penalty This is a fee you may be charged if you pay off a large chunk of the principal at once or make a lot of extra payments on the principal, which results in you paying off your loan early. This prepayment penalty compensates the lender for their loss money earned through interest over the life of the loan.
Student loan repayment period
This is how long you have to repay the loan, including the principal amount and the interest rate. You might have a 10-year repayment period that will be broken down into a repayment schedule. This schedule includes how much of each monthly payment goes toward the principal and how much goes toward interest, how the principal balance will decrease over the repayment period, and how much interest will be paid over the life of the loan.
In-School and post graduation payments
If youre considering taking out a loan to pay for school, its important to understand how in-school and post-graduation payments work. While some lenders may require you to start making full repayments right away, many offer low or no-payment periods. This means you might not have to make any repayments while youre still in school, or your lender may only require interest-only payments during that time. This can give you some financial breathing room while you focus on your studies, and allow you to start making full repayments once youve graduated and found a job. Be sure to check with your lender to find out what options are available to you.
Student loan defaults
When you default on your loan, it means you have gone too long without paying the principal and interest that is currently owed on your loan. In most cases, this is 270 days for federal student loans and 120 days for private student loans. When you default on your student loan, your account will end up in collections. Contact your lender if you are having trouble repaying your student loan. It is important to note that defaulting on a student loan may severely impact your credit rating.
Finding a Lender for an Education Loan in the U.S.
When looking for an education loan for international students in the U.S., you need to do your homework. The best place to start is with the school you plan to attend. They may be able to provide you with the names of lenders that give student loans with and without a cosigner. It will then be up to you to thoroughly check out each lenders terms and conditions, including:
- The maximum amount of money you can borrow
- The interest rate you will pay
- Whether that interest rate is fixed or variable
- How long you will have to repay the loan
- When and how you will get the funds
You will need to apply for the loan directly through the lender. This will involve submitting your loan application and submitting all required supporting documentation. Once your loan is approved, the funds are most often disbursed through your school. This entire process takes roughly six weeks, so make sure you leave enough time to get your money before you need it.
Top Private Lenders for International Student Loans in the U.S.
Here are some of the best private lenders for international student loans in the U.S.:
- MPOWER Financing Offers fixed-rate no-cosigner, no-collateral loans to students enrolled in one of the 400 schools the lender supports, based on future income potential.
- Ascent Student Loans No-cosigner loans with flexible repayment plans and affordable interest rates.
- Discover Student Loans A cosigner is required for students enrolled in a qualifying school, but there are no additional fees and there is a grace period while the student is in school.
- Prodigy Finance Variable rate loans are available to students studying medicine, law, engineering, business, and public policy.
- Sallie Mae A cosigner is required for students enrolled in a qualifying school, 3 repayment plan options mean students could lower the total cost of their borrowing by making payments while studying.
- Wells Fargo This loan requires a cosigner for undergraduate and graduate students enrolled at eligible schools, has a grace period that lasts for six months after graduation, and does not charge application or origination fees. Students can start to repay their loan during the grace period without penalty.
For more information on finding education loans for international students in the U.S. or to find out how we can help you,. Its time to get the financing you need for the future you have been dreaming of.