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Education loan financing for international students

For international students like you, the dream of studying in the U.S. or Canada comes with navigating the complexities of education loan financing. This journey is filled with terms like interest rates, cosigners and currency conversion. Understanding the basics of loan financing will help you make informed decisions. So, let’s dive in to what you need to know when it comes to educational loans.

Exploring the landscape of international education loan financing

Let’s first look at different types of student loans and interest rates.

  • Federal versus private student loans: While federal loans offer benefits like fixed interest rates and income-driven repayment plans, they’re generally reserved for citizens of the U.S. and eligible non-citizens. For the vast majority of international students studying overseas, federal loans in the country of their study are not valid options for student loans.

    As an international student, you’re more likely to explore private student loans offered by banks, credit unions and other financial institutions. These loans can vary greatly in terms of interest rates, repayment options and eligibility requirements.

  • Secured versus unsecured loans: Some private lenders might offer secured loans, requiring collateral such as property or investments. Unsecured loans, on the other hand, do not require collateral but may have additional eligibility criteria.

Understanding the type of interest rate on your loan is pivotal as it directly impacts your repayment plan.

  • Fixed-rate student loans: These loans are characterized by an interest rate that remains constant over the life of the loan. This predictability means your monthly payments won’t change, making budgeting for repayments straightforward.
  • Variable-rate loans: The interest rates on these loans can fluctuate based on the market, which might lower your initial payments but risk higher rates in the future. While variable rates can be appealing for their lower initial rates, they require careful consideration of market trends and potential future financial scenarios.
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How do you apply for education loan financing?

Applying for international education loan financing moves you one step closer to your goal of studying abroad. Getting a student loan is not just about proving your eligibility but also about strategically presenting your case to potential lenders. Here’s what you’ll need to do:

  • Gather documentation: Before you can fill out a student loan application, you need to gather documentation lenders might require – from your admission letter, which proves your acceptance into a program, to financial statements showing your economic background and personal identification verifying your identity. For those loans requiring a cosigner, their financial details are just as crucial as your own.
  • Choose the right lender for you: The landscape of lenders offering education loans is vast and varied. Each lender has its own set of terms, interest rates and benefits. Therefore, you should do your homework to find a student loan provider whose offerings align with your needs and financial situation. This step is about comparing to find the best fit for you.
  • Fill out the application: With your documentation in hand and a lender in mind, the next step is to tackle the application itself. This is where accuracy and thoroughness are paramount. Any mistake can delay the process or even result in a denial. It’s about more than just filling in a checklist; it’s about presenting a comprehensive and accurate financial profile.

Why currency conversion matters for education loan financing

Currency conversion is often one aspect of educational loans that international students overlook. It’s a factor that can influence not just the amount you receive or repay but also your overall financial planning for your time abroad. Here’s what you need to keep in mind:

Currency conversion rates: The interplay between different currencies can significantly affect the financial dynamics of your international education loan, resulting in 2-3% additional cost. As you borrow in one currency and repay in another, the fluctuating exchange rates can either work in your favor or against it. For example, if your student loan is in U.S. dollars and you’re converting from another currency that’s losing value against the U.S. dollar, it will be harder to repay the loan. Fluctuations impact not just the loan amount but also your repayment strategy, making it essential to stay informed about current and projected exchange rates.

Strategies for managing currency risk: Given the unpredictable nature of currency markets, you might look for financial products designed to protect against unfavorable shifts in exchange rates, like funding in the currency where you intend to study, i.e. the U.S. dollar when studying in the U.S.

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MPOWER for education loan financing

MPOWER Financing is dedicated to easing the financial burden for international students planning to study abroad.

  • Easy access to loans: MPOWER evaluates students based on future prospects rather than just past financial history, eliminating the need for a cosigner or collateral. This approach not only simplifies the loan acquisition process but also aids in credit history development without any penalties for early repayment.
  • Diverse financing options: MPOWER Financing offers a range of fixed-rate education loan financing from US$2,001 to US$100,000 at competitive rates. Students also enjoy a discount of 0.25% on interest rates with auto pay, and eligibility for MPOWER Financing isn’t affected by loans from other financial institutions.
  • Streamlined digital application: The online process for education loan financing with MPOWER is designed for global accessibility, promising swift loan approval and direct-to-school fund disbursement. A preliminary eligibility assessment can be completed in just 30 seconds, potentially followed by an early conditional loan offer.
  • Ongoing, comprehensive support and guidance: Everyone receiving an MPOWER Financing loan is automatically qualified for the Path2Success program, which includes a range of services – from free visa support and career guidance to financial discounts and offers. As a part of visa support, Path2Success provides a free visa support letter and visa preparation course to prepare you for your visa application and interview. Career services include internship and job search guidance for OPT and H-1B visa sponsored roles, a resume builder and a directory of F-1 eligible job roles for STEM and non-STEM degrees. Students are prequalified for a U.S. credit card and U.S. bank account, as well as have access to financial perks, such as discounts on textbooks, air travel and SIM cards.
  • Additional resources: Beyond financial aid for international students, MPOWER provides financial aid scholarships and guidance on support services like student health insurance.

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FAQs

What documents do I need to prepare for my education loan application?

You’ll need to gather a comprehensive set of documents, including your admission letter, financial statements, proof of identity and your cosigner’s financial information if needed. Check with your specific lender for a detailed list of required documentation.

How do I choose between fixed and variable interest rates for my loan?

Choosing between fixed and variable interest rates depends on your financial stability and risk tolerance. Fixed rates provide predictability in your monthly payments, making budgeting easier. Variable rates may start lower but can fluctuate, potentially increasing your payments over time. Consider your long-term financial plan and market trends before deciding.

Why is understanding currency conversion rates important for my education loan?

Currency conversion rates can significantly impact the amount you borrow and repay, especially if you’re earning in a different currency post-graduation. Fluctuations in these rates can affect your loan’s cost and your repayment amount, making it essential to factor in potential changes and manage currency risk.

Can education loans cover expenses beyond tuition, like housing and books?

Yes, many education loans for international students are designed to cover a range of expenses, including tuition, housing, books and other living costs. It’s important to review the terms of your specific loan to understand what expenses are eligible for coverage. If you’re interested in what an MPOWER loan can cover, make sure to check out our support page.

What should I do if I can’t find a cosigner for my loan?

If finding a cosigner is challenging, look for lenders, like MPOWER Financing, that offer loans without a cosigner requirement. These loans may have different terms and can provide a valuable option for financing your studies abroad.

DISCLAIMER – Subject to credit approval, loans are made by Bank of Lake Mills or MPOWER Financing, PBC. Bank of Lake Mills does not have an ownership interest in MPOWER Financing. Neither MPOWER Financing nor Bank of Lake Mills is affiliated with the school you attended or are attending. Bank of Lake Mills is Member FDIC. None of the information contained in this website constitutes a recommendation, solicitation or offer by MPOWER Financing or its affiliates to buy or sell any securities or other financial instruments or other assets or provide any investment advice or service.

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