Financing an education in the United States is difficult, even for a US student. For international students, paying for college in the US is even harder. Almost two-thirds of all students enrolled at private four-year US schools receive loans of some type. US students can receive loans guaranteed by the government (Stafford loans, among others), but these valuable loans are not available to international students. Luckily, private student loans are available to international students on the same terms received by US students.
Before applying for a loan, you should exhaust the following potential funding sources:
1. Apply for international student financial aid from your school. Here's a searchable list of schools awarding financial aid to international students.
2. Research and apply for international student scholarships on your own.
3. Carefully evaluate how much money you or your family can provide towards your education. Every dollar you can pay directly is one less dollar you have to borrow.
Some international students can fund their US education simply using the sources above. However, like US students, most international students will need to fund at least a portion of their US education, if not the entire amount, with loans.
US Co-Signer Required. International student loans require a US citizen or permanent resident (Green card holder) as a co-signer. The loans are credit-based, meaning the co-signer must have good credit history, good employment history (or other income history if the co-signer does not work), and must have lived in the US for the past two years. Although not everyone can find a family member, friend or other US citizen or permanent resident to co-sign for them, for those that do, they can access private student loans on the same basis as US students.
Funds Paid Directly to Your School. Private international student loans disperse funds directly to the school so that they can “certify” the loan. This means that the school’s financial aid off signs of on the amount distributed, ensuring that the student is given up to the total cost of their education minus any other financial aid received. Once this has been certified, the school will then disperse the funds directly to student. Pay your tuition, room and board, health insurance and books first - anything extra is a luxury!
Repayment. Repayment of an international student loan will vary depending on the loan you select. The repayment period typically ranges from 10-25 years; the standard rule of thumb is the larger the loan, the longer the repayment period. Some loans allow you to defer payments until 6 months after graduation, others allow students to only pay interest while in school (and defer the principal), and other loans begin repayment of both the interest and principal immediately once the loan has been paid out. It is important to consider the options and your ability to pay back student loans when reviewing the lender terms and conditions. You are also eligible for hardship extensions if you run into unexpected circumstances that prevent you from being able to repay the loan for a short period of time.
Proof of Finances. One nice feature of international student loans is that you may be able to use the loan approval in order to satisfy the school and visa requirement of showing one year's financial resources. While it’s not easy and it’s up to the school and consular officer if they'll accept a loan approval as proper funds, this may be a helpful way to show proof of funds if you need additional financial assistance. You can apply for the loan without the proof of enrollment from your school, and receive conditional approval. Then you can provide your school with the pre-approval from the lender, and the school will see that you will have the necessary funds. Typically, a financial aid officer or international student advisor at a US school is quite familiar with this process and will help you.
Interest Rates. Interest rates are variable, based on the LIBOR or Prime - depending on your loan - plus a margin. Depending on the loan, the lender will clarify which index the loan uses and there will be an additional margin based on the borrower’s criteria, including the credit history of your co-signer and the repayment plan you select. The better your co-signer, the better your rate! LIBOR and Prime Rates are constantly fluctuating, up or down, so the interest rate will changed based on this index.
Online Application. You can apply right online, and receive initial approval in just a few short works. Then, you will need to sign the promissory note, and provide proof of enrollment and immigration status to receive your funds.
No Application Fees. There are no application fees to apply for an international student loan. There is an origination fee if you actually receive the loan, but that amount is rolled into the loan amount and does not have to be paid out of pocket.