If you are a US student planning to directly enroll in a foreign university, one of the most important things to stay on top of are the deadlines. Having a solid timeline outlined for applications (university, financial aid, loans) will help ensure that you take advantage of all financial assistance at your disposal. If you have made the decision to take out a private student loan, make sure that you have exhausted all your other options: scholarships and savings (and FAFSA if you are a US student). The college application process can be overwhelming, but here are some key loan tips to help ease the stress.
1. Ask and You Shall Receive
Knowledge is power; the more informed you are the easier your decisions will be. Foreign universities may have a different system than what you are familiar with, so it is a good idea to get in contact with the financial aid department. Opening a line of communication with the school´s financial aid advisors can help you create a solid financial plan. You can normally find the financial advisors’ contact information published on the school website. Here are some ideas of what may be worth asking:
- Financial aid provided by the school
Universities normally have a lot of their financial aid information published on their website; however, it never hurts to introduce yourself as a potential international student interested in what the university can offer you financially. Sometimes, this can lead you to programs or scholarships you otherwise would have looked over.
- Private lenders they have worked with
If you are interested in taking out a private student loan it is important to note that not all lenders work with foreign universities and vice versa. Asking the school what lenders they already have a relationship with can help focus your loan search and avoid any problems with the loan application process. Not sure? You can use our Student Loan Comparison Tool to see what lenders work with your university.
2. Beware of Direct-to-Consumer Loans
Once you have determined your school´s cost of attendance and have calculated how much you´ll need to take out as a loan, it is good to know how it can be used to cover your university costs and how it may work against you.
When student loans are disbursed they are normally sent directly to the university, which then subtracts the outstanding amount that is owed on your account. Once the amount in your account is settled you may be eligible to receive a refund check, which means that you are the last person to touch the loan money.
In contrast however, there exists what are called direct-to-consumer loans. These types of loans cut out the middleman, in this case the university, thus the loan check goes from the lender straight to you. This may sound appealing because you won´t have to wait to receive your loan money, but some universities may require you to report this loan amount to the financial aid office. The possibility exists, depending on the loan amount, that the school may reduce or make changes to your financial aid package.
3. Understanding the Disbursement Process
There are two questions most students probably ask themselves regarding the disbursement process: How much am I actually getting, and when will I get my money? The answers to these questions can have a hand in how you organize your finances.
If you are enrolling directly in a foreign university, then it is more than likely that you will be managing a different currency (not US dollars) on a day-to-day basis. This is important to keep in mind; when your loan is disbursed, the actual amount that you receive is dependent on the exchange rate between the two currencies. For example, if you have chosen to study in London and the current exchange rate is 1.00 US dollar to 0.65 British pound, your $5,000 loan will have an actual amount of about 3,728 British pounds.
1 USD = 0.65 GBP
5,000 USD = 3,728 GBP
When you’re reviewing your cost of attendance and looking into taking out the private loan, don’t hesitate to ask your lender how the exchange rate has been taken into account.
As previously mentioned, foreign universities may have a different system than US universities. One of these categories is how they organize their academic year, whether it’s by a quarter, semester system, etc. When schools provide you with a cost of attendance amount, it is usually based on an academic year. It is a good idea to find out if you will receive the whole amount of your student loan at the beginning of the year, or if it will be disbursed by quarters or semesters, for example.
Be sure to check out How to Budget for School to get ideas on how to save money for your time abroad.