5 Ways Student Loans Can Help You
September 18th, 2014 by Jennifer Frankel
Unlike scholarships and grants, student loans have to be paid back with interest. Therefore, you should always seek other “free” sources of funding before resorting to student loans. However, most students will require at least a small loan to cover the cost of their education, especially international students, whose funding sources are even more limited. But did you know that there are actually several benefits to taking out student loans? In this article, we will discuss five surprising ways student loans can help you.
1. Cover the Cost of your Education
Whether you need to cover just a few thousand dollars left over after a generous scholarship, or you have no outside funding and you need a loan for the entire cost of attendance, an international student loan can help pay for your education in the United States. Loans are especially helpful in covering a gap leftover after all the other various sources have been exhausted, but you can also take out a loan for the entire cost of attendance if you’re approved. If an American education seems out of reach financially, student loans can put it within your grasp.
2. Show Proof of Funds to Get a Visa
In order to get a student visa to study in the United States, you need to provide proof of funds. You may be able to use your loan to show the U.S. government that you have enough money to pay your tuition as well your daily living costs. While loans are not always accepted as a proof of funds, if you work with your school’s financial aid office as well as its Designated School Official (who assists with visas), your loan may help you get a visa.
3. Have a little extra spending money
While you cannot borrow more than the cost of attendance as determined by your school, your school often includes a small allocation for living and incidental costs in its calculation of the total cost. If you don’t have a lot of personal savings or family to rely upon for extra spending money, you can use the part of your loan that is left over after paying tuition, fees, and other required costs for small expenses. Don’t expect to have a lot from your loan, which is why it is smart to save a little over the summer breaks, but when you’re in school every little bit helps.
4. Don’t Begin Repayment Until After You’ve Graduated
Every loan is different and the terms of your loan may require you to begin repayment immediately. However, if you have good credit or a cosigner with good credit, your lender may allow you to begin repayment upon graduation, or even several months after graduation. Since many other types of loans require repayment right away, waiting to enter repayment until after graduation is a great benefit that allows you to focus on your studies rather than worry about paying your loan every month. But be sure to read and understand your loan terms carefully. You may have to begin repayment right away, or at least pay your interest while in school. If you forget to pay your loan when it is due, it will go into default and this can have very serious consequences for your credit history and your ability to remain enrolled.
5. Build Good Credit
Taking out a loan and paying it down responsibly can open up other financial doors for you in the future. You can use your loan to prove that you’re a trust-worthy borrower to other lenders when applying for lines of credit such as credit cards and mortgages. Having a good credit history can also lower your interest rate on other loans, and you can get higher limits on loans in the future. Even if you return to your home country after graduating from an American university, your continued, timely payments to your lender in the United States may help you get a small business loan, for example, in your home country. Furthermore, having good credit makes you a desirable tenant, making it easier to rent an apartment or house, should you decide to stay in the US upon graduation.
Need more information about international student loans? Check out our loan information page designed just for international students.