Can international students get a loan without a cosigner?
If you’re one of the million international students studying in the U.S., you might be worried about how to finance your education. Schools in the USA can be expensive, and international students don’t have access to the same kind of U.S. federal financial aid as their American counterparts.
Although student loans are an option, most lenders require international students to have a USA-based cosigner to qualify for a loan. Don’t be discouraged! Some lenders offer international students loans without a cosigner.
What is a cosigner?
Education loans in the U.S. are typically no-collateral loans, meaning you don’t have to provide anything of value – such as a house or car – to the lender to secure the loan. Instead, lenders rely on your income and creditworthiness to decide whether you’re eligible for a loan. However, loans from around the world will vary on this requirement, meaning they could require a cosigner or collateral.
Meeting lenders’ eligibility requirements can be tough for college students, especially for international students. You’re unlikely to have an established credit history or a substantial source of income in the USA. Based on these factors, it can be difficult to qualify for a student loan on your own.
Lenders understand that college students find it difficult to meet their criteria, so many offer a workaround: you can qualify for a student loan if you add a cosigner – someone with good credit and a reliable source of income who applies for the loan with you.
A cosigner essentially agrees to take on responsibility for repaying the loan if you can’t (or don’t) make your payments. That way, the lender is more likely to approve your loan application because they have a safety net in place.
Why would an international student need a cosigner?
Most students will need a cosigner to qualify for a private student loan, and that’s especially true for international students. Most lenders require students to be USA citizens or permanent residents to qualify for a loan, and the applicant also has to meet their credit and income requirements.
As an international student, finding a lender willing to lend to you can be difficult, and most lenders offering international student loans require the student to have a cosigner who is a citizen or permanent resident of the U.S.
5 considerations when adding a cosigner to a loan application
Adding a cosigner to your international student loan application can improve your chances of loan approval, but there are some major drawbacks:
1. Not everyone can find a cosigner
Finding a creditworthy cosigner in the USA can be difficult for international students. If you don’t have family members or close friends in the United States, there may not be anyone you can ask to cosign a loan with you. Without a cosigner, you won’t qualify for international student loans from lenders that require students to have one.
2. Being a cosigner is a lot to ask of someone
Asking someone to cosign a loan is a big favor, and not everyone will be willing to do it. That’s because cosigners take on a lot of risk when cosigning a loan. If you don’t make the payments, the cosigner is responsible for making them instead, potentially putting a strain on their finances.
3. Being a cosigner can affect the cosigner’s credit
When someone cosigns a loan, the loan appears on their credit report as well as yours. Because the loan shows up as an active account on their credit report, it can affect their eligibility for other forms of credit, such as a mortgage to buy a home or an auto loan to purchase a new car. And if you’re late with your payments, those late payments can cause significant damage to the cosigner’s credit score.
4. Asking someone to cosign your loan can hurt your relationship
You may have the best intentions of making all your loan payments on time, but life can get in the way. If you lose your job or experience another financial hardship, you may have trouble making your loan payments. And if that happens, the cosigner is legally responsible for making the payments instead. This could put a serious strain on your relationship, with long-lasting consequences.
5. Not all lenders offer cosigner releases
Some cosigners agree to cosign a loan because they assume they can be removed from the loan at a later date. Unfortunately, that’s not always the case. Some lenders will allow a cosigner to be released from the loan if the borrower meets certain criteria, such as making a certain number of on-time payments or refinancing the loan into their name. But other lenders refuse to release cosigners from the loan, no matter what; the cosigner is responsible for the loan until you pay it off in full.
Final thoughts: How to get an international student loan without a cosigner
If you’re an international student and don’t have access to a cosigner — or don’t want to burden relatives with that responsibility — you may be wondering how to get a loan on your own. While private student loan lenders typically require international students to apply with a cosigner, there are some exceptions, and it is possible, depending on your circumstances, to get an international student loan without a cosigner.
MPOWER is a leader in no-cosigner international student loans. To qualify for a loan without a cosigner through MPOWER, you must be an undergraduate or graduate student within two years of graduating or about to begin a one-year or two-year program at a qualifying school. You can borrow money to cover your education expenses, up to a lifetime limit of US$100,000, and have ten years after your graduation to repay the loan in full.
You can begin the application process with MPOWER online.
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