What is an international student loan?

by Jennifer Calonia | In All blogs, Student Loans, Financial Tips | 26 December 2023 | Updated on: September 3rd, 2024

An international student loan is a private loan for students studying in a country other than their own. These loans cover tuition and fees and can also be used toward living expenses, like housing, if you’re studying in the United States. 

If you need financial assistance for studying abroad, here’s what to know about an international student loan.

How does an international student loan work?

Since international students aren’t U.S. citizens and, therefore, aren’t eligible for federal financial aid from the U.S. Department of Education, the next option might be to apply for a private international student loan. You can find this type of loan through private lenders. 

MPOWER Financing and Sallie Mae are lenders that offer international student loans. Your school might also offer institution-sponsored student loans for international students and is a good place to start your search. 

How do I qualify for an international student loan?

Different lenders have different loan requirements. Some lenders require a cosigner who’s a U.S. citizen, or they require a guarantee of payment, like collateral, to get a loan. A cosigner is a person who agrees to take legal and financial responsibility for repaying your loan if you can’t. 

Due to this major responsibility, a cosigner is usually someone you’re close to and with whom you have a trusted relationship, such as a parent or other close relative. Additionally, your cosigner must meet income and credit criteria, which differs between lenders.

Not all lenders require that international students have a cosigner or collateral. For example, MPOWER Financing doesn’t require its applicants to secure a cosigner or provide collateral for its student loans. 

Receiving and using the funds

International student loans are closed-end installment loans. This means you’ll get a fixed lump sum disbursement of the funds upfront. Interest charges accrue on the loan periodically, which is your cost for borrowing the money. 

The loan funds can be used for tuition and fees, textbooks and school supplies. In addition, funds can also be applied toward living expenses, like housing, utilities and food, while you’re studying in the U.S.

Repaying an international student loan

Generally, you must start making payments each month immediately upon disbursement. Some lenders allow you to hold off on making payments while you’re in school. Additionally, lenders might provide a limited grace period after leaving school when payments aren’t due.

Although you’re not required to make a loan payment during these periods, loan interest still accrues. Some lenders, like MPOWER Financing, require you to make interest-only payments while in school and for the first six months after graduation so that interest doesn’t accrue.

How to apply for an international student loan

Each lender has its own application process. Generally, when applying, you’ll fill out the lender’s application form. You will need to provide documents related to your immigration status, enrollment status and income or asset information. For example, you’ll need your student visa, financial documents (e.g., job acceptance letter or bank statements) and school transcripts or acceptance letter.

If you’re applying with a cosigner, they must provide their own income details and current debts they’re repaying. Some lenders require a hard credit check, which can lower your credit score. Lenders perform a credit check to learn about the cosigner’s past borrowing and repayment habits.

The lender might ask for copies of supporting documents confirming the details of your formal application. This might occur before the lender makes its loan decision or shortly afterward, if you’re approved. Submit any requests for these documents as soon as possible to avoid delays. 

If you’re approved, the funds might be disbursed to your school’s financial aid office or sent directly to you.

Alternative financing for international students

International students have other financial aid sources to explore aside from private education loans. Taking advantage of financial opportunities through your institution, third-party entities and employment can help you pay for school.

    • School-sponsored financial aid. Scholarships are financial awards that don’t need to be repaid. Some schools offer scholarships and grants specifically for international students. For example, the University of Alabama offers the International UA Competitive Admissions Scholarship worth US$6,000 up to the cost of tuition. Visit your school’s financial aid office to learn about its scholarship programs.
    • Third-party scholarships and grants. You can also find a variety of scholarships and grants through external organizations. These programs can be need or merit based, and they’re available for students with certain academic pursuits, interests and backgrounds. You can also explore MPOWER Financing scholarship opportunities.
    • On-campus employment. You might qualify for on-campus, part-time employment, which would help you cover some of your school and living expenses. You can work up to 20 hours per week during the school session and work full time (40 hours/week) during vacation months. Speak to your designated school official to learn more about guidelines and limitations.

Financing your education with an international student loan

Although you likely don’t qualify for federal loans as an international student, private international student loans can help make studying in the U.S. possible. Some lenders require a qualified cosigner who’s a U.S. citizen, but some, like MPOWER Financing, do not require cosigners at all. Compare international student lenders to find an offer that suits your needs.

Conversely, if an international student loan isn’t right for you, consider the alternatives, including a combination of scholarships, grants and part-time empoyment. Extra funds – no matter how small in amount – go a long way to paying for school fees, books, supplies and day-to-day living costs.

FAQs: International student loans

How do international students pay for college?

International students can pay for college through private student loans, scholarships and grants. Certain students who are approved to work on campus can also use their earnings toward education costs.

Who gives loans to international students?

Private financial institutions, like banks, credit unions and online lenders, offer loans to qualified international students. Students can also ask their school about available institution loans that are available to international students.

Why can’t international students get federal financial aid?

Federal financial aid through the U.S. Department of Education is available only to U.S. citizens and eligible noncitizens. Generally, international students studying in the U.S. don’t qualify for federal aid. However, they might have access to international student loans through private lenders. 

Author: View all post by Jennifer Calonia

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