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Student loan types: What international students should know

Student loans are an important tool to help you cover the cost of your education. They’re essential for many students, particularly international students, who might face high tuition fees and living expenses. Student loans can bridge the gap between the cost of your education and your available financial resources, such as savings, scholarships and grants. There are various categories of student loans, including U.S. government loans, private international student loans, institutional loans and home country loans.

Categories of student loans

U.S. government loans

U.S. government loans are typically not available to you as an international student. These loans are funded by the U.S. government and usually offer favorable terms, but eligibility is restricted to U.S. citizens and permanent residents.

Private international student loans

Private loans are a great option to consider as an international student. Private international student loans are provided by banks, credit unions and other financial institutions. However, it’s important to research the interest rates and additional requirements to ensure the terms will meet your needs.

Institutional loans

Institutional loans are offered directly by universities and are usually available at larger universities with significant endowments. These loans can be restrictive in terms of who’s eligible (for example, institution students only) but often come with favorable terms. You should check with your university’s financial aid office to see if such loans are available.

Home country loans

Home country loans are provided by financial institutions in your home country and can be used to finance education abroad. You should compare currency exchange rates, transaction fees and repayment plans when considering these loans.

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Private student loans for international students

As an international student, you face several challenges when seeking private loans:

  • Lack of credit history: You may not have a U.S. credit history, making it difficult to qualify for loans.
  • Need for a cosigner: Finding a qualified U.S. cosigner can be challenging. A cosigner is often required to guarantee the loan repayment.

However, there are options available for those who can’t secure a cosigner or have no or little credit history in the U.S. One solution is no-cosigner loans. Some lenders offer no-cosigner student loans specifically for international students. These loans are based on your future earning potential rather than your current financial status.

Key considerations for choosing educational loans

Student loan interest rates

There are two main types of interest rates:

  • Fixed rates: Fixed interest rates remain constant throughout the life of the loan. This provides stability and predictability in your monthly payments, making it easier to budget for your repayment. Fixed rates are often higher than initial variable rates but do not fluctuate with market conditions over the life of the loan.
  • Variable rates: Variable interest rates adjust over time based on market conditions. While the initial rates offered are often lower than fixed-rate loans, they can increase significantly, affecting your monthly payments and the total amount you repay. It’s important to understand how often and how much a variable interest rate can change.

When considering student loan interest rates, calculate the potential long-term costs under different scenarios to determine which option best suits your financial situation.

Repayment terms

Repayment terms define how and when you will repay your loan. Each lender will have varying repayment terms, key aspects to consider include:

  • Deferment: Some loans offer deferment options, allowing you to postpone payments while you are in school and for a grace period after graduation. Interest ofter still accrues during the deferment period.
  • Immediate repayment: Immediate repayment plans require you to start making payments as soon as the loan is disbursed. This can reduce the overall cost of the loan since you start paying down interest and principal immediately.
  • Income-driven repayment: Some lenders offer income-driven repayment plans where your monthly payments are based on your income after graduation. This can make repayments more manageable but may extend the repayment period and increase the total amount paid.

Credit requirements

Credit history and the need for a cosigner can be significant factors in considering a student loan:

  • Credit history: A good credit history can help you qualify for loans with lower interest rates. If you lack a U.S. credit history, look for lenders that consider your future earning potential instead.
  • Cosigner: A cosigner with a strong credit history can help you secure a loan with better terms. However, finding a willing and eligible cosigner can be challenging. No-cosigner loans are available from some lenders, such as MPOWER Financing, which doesn’t require a cosigner.

Legal and visa considerations

Ensure your international student loan complies with visa requirements and other legal constraints:

  • Visa requirements: Verify the loan doesn’t violate any terms of your student visa. Some visas have restrictions on the types and amounts of loans you can take.
  • Legal constraints: Make sure the loan agreement adheres to the legal regulations of your host country. This includes understanding any tax implications and reporting requirements.

Consult with your university’s financial aid office or legal advisors to ensure compliance with all relevant regulations.

Total cost

Calculating the total cost of the loan, including interest and fees, is a requirement for understanding the full financial commitment:

  • Interest: Calculate the total interest you will pay over the life of the loan. Use an amortization calculator to see how different interest rates and repayment terms affect the total cost.
  • Fees: Be aware of any origination fees, late payment fees or prepayment penalties. These can add significantly to the cost of the loan.
  • Currency exchange rates: If taking a loan from your home country, consider the impact of currency exchange rates on your repayments.
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Why consider MPOWER Financing?

MPOWER Financing provides student loans to international students studying overseas in the U.S. or Canada. Founded by former international students, MPOWER gives students the best options for student loans and offers additional benefits beyond funding with exclusive career, immigration and financial services to support students before, during and after graduation.

Here’s how MPOWER Financing can help:

  • Flexible financial solutions: MPOWER offers international student loans starting from US$2,001 up to US$100,000 total. Students can earn additional interest rate reductions with automatic payment.
  • No need for cosigners or collateral: MPOWER firmly believes in the future potential of students and offers independent student loans without cosigners or collateral.
  • Effortless and expedient process: The MPOWER student loan process is fully digital, ensuring accessibility from anywhere in the world. From quick approvals to seamless disbursement, MPOWER provides comprehensive support throughout the process. Applicants can check their MPOWER student loan eligibility in as little as one minute.
  • International scholarships and additional services: MPOWER extends support to students through various international scholarships and a range of services tailored to the unique needs of international graduate students.

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FAQs

What are the main types of student loans?

The main options for student loans are private loans, institutional loans and home country loans. Private loans are offered by financial institutions, institutional loans from universities and home country loans from banks in your home country.

How can international students access loans?

You can access loans through lenders offering no-cosigner options, such as MPOWER Financing, and through home country loans. It’s essential to research and compare different loan options to find the best fit.

What should I consider when choosing a student loan?

Key factors to consider include interest rates, repayment terms, total cost, credit and collateral requirements. Make sure to understand all terms and conditions of your loan before committing to it.

Are there loans that cover living expenses?

Yes, many student loans cover both tuition and living expenses in the U.S. Private loans and some institutional loans can provide funds for housing, food, transportation and other costs. Always verify with the lender or institution about what the loan covers.

*Rates as low as 9.99% (10.89% APR) available only for the fall 2025 semester and you must submit your application by December 31, 2024. This interest rate and APR includes a 0.25% discount for automatic recurring payments and a 0.75% discount from our limited-time early planner promotion.

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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