Can International Students Refinance a Loan?
Paying back student loans can be overwhelming, especially if you’re an international student having to send payments to a lender overseas. Along with your student loan payments, you may be dealing with international banking fees, fluctuating exchange rates and variable interest rates that keep going up.
One option you might consider to lessen the burden is student loan refinancing. By refinancing your student loans with a U.S. lender, you can pay back your loan in the U.S. and potentially choose new repayment terms that are a better fit for your budget and debt payoff goals.
While international students can refinance student loans in the U.S., they first may have to jump through some hoops to qualify. Here’s a closer look at refinancing student loans as an international student.
Are international students allowed to refinance a student loan?
International students can refinance their student loans in the U.S., but they may have to meet more stringent requirements than domestic students. Many U.S. lenders, for example, require international students to apply with a cosigner who’s a U.S. citizen or permanent resident. That cosigner also needs to have a credit score of 670 or higher.
Adding a cosigner to your application can help you qualify for student loan refinancing, but this approach might not be ideal. For one thing, not every international student knows someone willing to cosign debt in the U.S. For another, asking someone to cosign a student loan is a pretty big request, since that person becomes equally responsible for your debt.
If you fall behind on payments, their credit will be impacted and the lender will expect them to start paying. If you’re living and working in the U.S., you may feel ready to manage your student loans on your own without having to burden anyone else with your education debt.
Can you refinance a student loan without a cosigner?
If you don’t have a cosigner (or don’t want to refinance student loans with a cosigner), don’t worry – you have options. Some lenders offer no-cosigner loans to international students to help them reap the benefits of refinancing on their own.
MPOWER Financing, for example, designed a refinance student loan program specifically for international students, with no cosigner or collateral required. By refinancing with MPOWER, you can secure a fixed interest rate and predictable monthly payments.
MPOWER will also report your payments to the credit bureaus, so making on-time payments can help build your credit history and score in the U.S. Establishing and building your credit can make it easier to obtain a credit card, qualify for a loan or access other financial products in the future.
Plus, you’ll no longer have to send payments internationally to a lender in your home country. And if your employer offers any student loan repayment assistance, your new U.S.-based student loan should be eligible for that benefit.
How to refinance your international student loans: 3 approaches
If you’re looking to refinance your international student loans, there are three approaches you can take:
1. Apply with a lender that specializes in student loan refinancing for international students
One approach you can take is finding a lender that specializes in refinancing student loans for international students. As mentioned, MPOWER Financing offers loans for international students without requiring a cosigner or collateral.
To qualify, you’ll need to:
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- Be a university graduate living in the U.S., with at least three months of full-time work history.
- Have a valid visa (including optional practical training (OPT), H1-B, PGWP and more) or be a DACA recipient, U.S. citizen, refugee or asylum seeker.
You can check your eligibility and apply directly on MPOWER’s website.
2. Apply for student loan refinancing with a cosigner
Another option is applying for student loan refinancing with a cosigner. You can shop around with lenders that will refinance international student loans with a cosigner and check their individual requirements.
You can typically apply online by filling out an application form and submitting any required documentation, such as pay stubs, bank statements or proof of graduation.
3. Build your U.S. credit history
Finally, you can work on building your U.S. credit history so you can meet a lender’s credit requirements on your own. One way to start building credit is to open a secured credit card and pay your bills on time each month. You could also sign up for a service that will report your rent or utility payments to the credit bureaus.
Making on-time payments on your loans and rent, as well as keeping your credit utilization below 30%, can help improve your credit score over time and make it easier to qualify for a loan.
Is student loan refinancing right for you?
If you’re looking to reduce the interest rate on your student loans – or wish to switch from a variable interest rate to a fixed rate – student loan refinancing may be a smart move. Shop around with lenders to see if you can snag a better interest rate and lower your long-term loan costs.
For more benefits, check out these five reasons to refinance international student loans.
