So much of life is made up of the choices you make and loan repayment is no different. Making the right choice when you take out your loan makes a big difference when you have to make those repayments.
Knowledge is power and the more you know about these choices the better prepared you will be to fulfill you loan obligations.
Your lender’s specific terms will be determined by the type loan you select and your individual circumstances.
Note that lenders have put in place specific programs to assist students since the COVID-19 Pandemic. If you currently have a loan and are worried about repayment, or if you’d like further information on the measures in place, read more about that in this post.
Broadly speaking, repayment terms vary in response to three different factors:
- How much will the monthly payments be?
- When will payments begin?
- How long students may be able to defer paying back the loan?
And in general there are three main loan repayment types available to international students.
Although the differences between these three options can seem complicated, taking the time to understand and make an informed choice at the outset can save students from a lot of uncertainty and worry in the long term.
- immediate repayment loan
- full defferral loan
- interest only loan
Students with this arrangement are required to begin making payments on both the interest and the principal of the loan as soon as it is disbursed.
The prospect of such immediate repayment is doubtless intimidating to many international students because most cannot or do not want to work while they study in the United States. They therefore have little chance of being able to make the repayments.
Long-term the repayments compound meaning that in total a borrower may pay less back with this type of loan than with others, and may clear their debt quicker as a result.
A full deferral loan, by contrast, offers completely different loan repayment options. With loans like these full-time students are able to defer – that is, postpone until later – repayment of both the interest and the principal for up to four consecutive year or until after they graduate.
This means that in the short-term this loan would be most affordable as no repayments are due until a set date. In most cases the interest is accumulating during this time, and as a result it is likely that this type of loan will be more expensive and take longer to pay off.
A third option that splits the difference between these two ways also exists.
These so-called interest only loans require international students to make payments on the interest only (and not the principal) of their loans while in school and often allows them to defer the start of their principal repayment for up to 45 days after graduation.
Like the full deferral loan option students are only eligible to postpone repayment for up to four consecutive years and while enrolled full-time.
As you can see, the choices you make can have a huge impact on your bottom line!
Before applying for a loan, be sure to check with your lender the exact terms and conditions on repayment as this may change depending on the lender and the loan you apply for.
Find your loan using our loan comparison tool:
Are you looking for a study abroad loan? Or a foreign enrolled loan instead?
Read about how lenders are adapting when it comes to loan repayments during the COVID-19 pandemic.
You’ve researched the total cost of attendance, done all your calculations and budgeting, you’ve applied for as much financial aid as you can from your school, and you’ve even been awarded a scholarship – but what if you’re still not sure if you can cover all of your costs?
Well, the good news is that an international student loan can help – but don’t just take on a loan without first understanding what you’re getting into.
What is an International Student Loan and How Do They Work?
International students have fewer options than domestic borrowers. Unless you’re an eligible noncitizen who can qualify for federal student aid, you will have to borrow from a private lender, as federal student loans are reserved exclusively for US citizens.
International Student Loans are specialized private education loans that are available for international students who are studying in the USA or Canada. We recommend that you only apply for international student loans after exploring all other options like scholarships, personal funds and other options.
Undergraduate students and graduate students can apply.
A number of lenders offer student loans for international students, but most require the borrower to have a creditworthy co-signer who is a U.S. citizen or permanent resident to join the application. The co-signer will need good credit to be approved and to help you get the most competitive rates.
If you’re not able to find a co-signer, some lenders do offer loans without a co-signer, but only at select colleges and universities, and you’ll usually pay higher interest rates on these loans.
If you need to borrow money to help pay for university, it is important to understand how these loans work before you sign the paperwork.
Student loans typically have lower monthly payments and lower interest rates than other types of private loans, and repayment terms are also usually more relaxed. But remember that the total cost of the loan is greater than the amount borrowed due to the cost of borrowing. Most lenders don’t require full payments while you are still attending school, in fact many offer a period of time after graduation before repayments even start.
The funds of your student loan will normally be paid out (disbursed) directly to your school at specific times to pay for direct university-related expenses. Funds are not usually transferred directly to the student, however any surplus funds will be paid into your nominated bank account after you have covered all of your university costs.
How do I apply for a private student loan?
One option is to research all the private student loan lenders and fill out all their applications. This can be time consuming and frustrating, because you may find out after all that work that you aren’t eligible for a loan with that lender.
Another option is to first find out if you are eligible and compare lenders using the loan comparison tool at internationalstudentloan.com/apply – it takes less than 10 seconds to find out if a lender is available for you based on your school and circumstances.
You can then apply online directly with the lender, knowing that they should have a plan that works for you.
After that, approval of your loan can happen in just a few weeks.
Who is eligible to apply for these loans?
To apply you should not be a U.S. citizens or permanent resident, and you must be attending an eligible U.S. or Canadian college or university. In most cases you must be attending full time – part time students may not be eligible. Undergraduate students as well as those taking graduate degrees may apply in most cases.
Also, borrowers are required to have a creditworthy co-signer who is a U.S. citizen or a non-citizen permanent resident for most lenders. You and your co-signer will undergo a credit check.
Loans that do not require a co-signer are available at a number of schools, and these will be shown in the loan comparison tool. If you do not have a creditworthy co-signer and you are an undergraduate student you may find it harder to secure a loan until you are within 2 years of your expected graduation date.
Your field of study usually doesn’t affect your loan application, although there are special categories of loans for medicine.
Use the loan comparison tool to see which loans you are eligible for.
What can the funds be used for?
Like all private education loans, loan funds can be used for education-related costs including tuition fees, books and supplies, other school fees, insurance, transportation, room and board (living expenses) and other school-related expenses.
Speak to your school’s Financial Aid Office to check their published Total Cost of Attendance which will give you an official estimate of the total amount of funding and financial aid you will need to cover all of your costs.
Begin by using the loan comparison tool. This will show you the options available to you and allow you to choose the lender best suited for your situation and needs.
You will then apply directly with the lender. You and your co-signer (if required) will need to complete the entire online application thoroughly and supply any documents requested by the lender.
Interest Rates Explained
When you take out a loan through a lender, you will be responsible for paying back the amount of money you borrowed (called the principal) plus an additional amount charged by the lender for the loan known as the cost of borrowing.
This interest rate is calculated based on an “index” plus a margin that will add an additional percentage interest rate depending on your or your co-signer’s creditworthiness. Every lender’s range of rates varies so it is important to do the loan comparison and review the interest rate and repayment terms.
The two most common indexes used for international student loans are the Prime Rate and LIBOR Rate.
When your application is approved, the lender will provide information on your specific interest rate and you can then decide whether to accept the loan or not.
Interest begins to accrue (build up) as soon as the funds are disbursed to your school. Interest will accrue on your loan while you are in school, even if you are allowed to defer repayments until after you graduate.
After you select the loan that works best for you, you will need to review the terms or contact the lender directly with any questions.
Repayment terms will depend on the lender and details of the loan you choose. It is important to consider how much your monthly payments will be, when these payments will start, and how long you may be able to defer (delay) beginning to pay back the loan (known as periods of forbearance). The repayment period typically ranges from 10-25 years, however the larger the loan the longer the repayment period.
You may be offered the following repayment types by your lender:
You may be able to defer payment of both the interest and principal until up to 6 months after graduation as long as you continue to be enrolled full-time. Payments can be deferred for a maximum of 4 years – the typical length of a degree.
Lenders may refer to deferral as periods of forbearance.
Interest Only Repayments
You start making repayments while you are at school, but only pay the interest for up to 4 consecutive years of full-time study. You can then defer repayment of the principal until 45 days after graduation. With an interest only repayment type you may have to start repaying the principal immediately if you drop your course load to part-time.
You immediately start making payments on both interest and the principal once the loan has been issued and disbursed.
What about Federal Student Loans?
Federal loans and federal student aid are not normally available for international students.
What is the FAFSA I always hear about?
FAFSA is the Free Application for Federal Student Aid. Even though international students are usually not eligible for this type of aid, your school may require you to complete the application in order to help them determine your eligibility for other funding.
What if I have specific questions about my loan?
Once your loan has been approved, if you have any questions you should contact the lender directly for support.
We really hope this helps you with understanding your international student loan!
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Most students hear the myths about student loans before even attending college. Others simply don’t understand whether a student loan is right for them. This article will debunk some of the major myths surrounding student loans and help students choose the path that’s right for them.
If you don’t have the family finances, you can’t attend college.
Although universities in the US can be very expensive, they are not only for the rich. There are several scholarships you can apply for at every college and university. You can also apply for a student loan to support your study finances. The most important thing to focus on is grades and personal development. Think about getting excellent test scores and building your extra-curricular or voluntary experience to make your application stand out.
Student loans negatively affect your credit score.
Okay, if you don’t make your loan repayments then this is true. But managing a student loan well can be a great way to boost your credit score. By making regular repayments, you’re positively impacting your credit. This means it can make it easier to take out a credit card or another loan in the future.
You will forever be in debt.
You will be repaying a lot of money, probably over a long time. However, graduates are earning an average of $17,500 a year more than non-graduates, making the cost of college worth-while. No one wants to think about paying back a debt, but following this system could help you become more employable and increase your income in the long-run.
Interest on student loan repayment never changes.
Despite signing a contract when you took out a student loan, the amount of interest charged can still vary throughout the repayment. Be careful when applying for a loan that you understand all the small print. This includes how and when to repay the loan, as well as the interest due. The amount of interest owed can vary year to year, so check in the initial terms what you’re agreeing to. Make sure you have an idea of how much you’ll be repaying once you graduate to prepare for this.
Forget your loan until you graduate.
Your loan shouldn’t be the first thing you’re thinking about when you wake up. However, it’s important to acknowledge how you’re getting your money and use it wisely. Interest is mounting from the minute you take out your loan. So, unfortunately, you’re building up debt the whole time you’re studying. If you have the ability, you can start repaying your loan while still studying. If you don’t have enough to do this, consider starting a savings account to put aside whatever money you do have for when you gradate. This will help alleviate the pressure of repayment.
November and December are usually the months when most people´s grace periods on their student loans are coming to an end. As you begin to organize your finances once more, it is important to determine the best way to pay back your loans and how to do it making on-time monthly payments. Most loan providers offer the following options to make payments: automatic debit, pay online, pay by phone, and pay by check or money order.
It is important to remember that the loan is under your name and is now part of your financial history. This mean that your loan payments should be taken into consideration when creating a budget for your new monthly expenses, and should be just as important as your rent and grocery expenses. Most lenders have some sort of late fee policy in place and late payments will only reflect negatively on your credit score and increase the amount of your debt with the loan provider. Read the rest of this entry »
Have you already checked out our International Student Loan Comparison Tool, but realized that you weren’t exactly sure how to compare the results given? Deciding which loan is the right one for you can feel a little overwhelming, but here is a cheat sheet on how to compare your different loan options and choose the best one!
Now, before jumping into the loan jargon here are some basic questions you should ask yourself in order to compare loans efficiently:
⦁ Do I plan to work and study at the same time?
⦁ Do I want to get a Master’s?
⦁ Do I want to make loan payments while I am studying or begin repayment once I have graduated?
You may not have a clear answer for these question at the moment, but if you do these questions will you give you some extra insight on which loan conditions are right for you.
- Interest Rates: Variable or Fixed?
Interest rates are the part of taking out a loan that everyone hates, so if you can get the best deal you’ll feel very satisfied. When you apply for a loan, you are asked if you want a variable or fixed interest rate and the distinction is very important.
- Variable: A variable rate means exactly that, the interest rate on your loan varies and changes over time. This is considered somewhat of a gamble because if the economy changes, your interest rate can either decrease or increase.⦁
- Fixed: Most people automatically go with a fixed interest rate because its stable and, therefore, stays the same as long as your loan exists. A fixed rate makes it easier for you to calculate your monthly payments, which in turn allows you to organize your finances. In essence, it gives you more control from day 1.
- Repayment Schedule
When choosing the details of your repayment, is when the previous questions could come in handy. It is important to know if you have the option to defer (postpone) payments until after you have finished your studies or if you have to begin repayment as soon as you sign your name. Here are 3 of the most common repayment schedules and what they mean:
- Standard Repayment: Standard repayment usually gives you a 10-year limit to pay off your loan. During those 10 years you have a fixed monthly amount, and the lender usually requires a minimum monthly payment.
- Extended Repayment: Extended repayment is similar to standard repayment, in that you have fixed monthly payments. However, you have the option to pay back your loan between 12-30 years. This of course lowers your monthly payments, but it is important to remember that the lender will be charging you interest during this time. Although you may have lower monthly payments, more payments means more interest which means more money paid over time.
- Graduated Repayment: With a graduated repayment schedule, the idea is that you start off paying a specific monthly payment and that this amount is readjusted (increases) every 2 years. The repayment timeline given is usually 12-30 years.
- Special Conditions and Additional Fees
You may have heard the term deferment thrown around when talking about loans and you may know that it means postponing your loan payments. When taking out a private student loan you must be careful with the fine print. Although deferment exists, with private student loans it might be a little bit trickier. Many times, in the fine print is where you will find a multitude of hidden fees that can come back to haunt you later. Here are a few fees to keep an eye out for:
- Paying off your loan early
- Penalties for late payments
For more information on what to take into consideration when choosing a loan check out our post ¨What International Student Loan is Right for Me?¨.
Now that you have chosen what university will be your home for the next 4 years, you can start the student loan application process. It may seem intimidating, but here’s a guide to help you get an idea of what you have to do and how to do it.
- Financial Aid & Cost of Attendance
This is the first step once you have decided what university you will be attending. If you have received any scholarships or financial aid, make sure to get in contact with the financial aid office to get an updated version of your personal cost of attendance. When applying for a student loan, the maximum amount you are eligible for is equal to your cost of attendance. This will help you calculate the amount you are going to be asking for in loans. In addition, make sure that if you are going to need a co-signer you have that person informed about when you will be submitting the application, being that they will be filling out the application form as well.
- Choosing a Loan
Finding a loan can seem like the hardest part, but that’s where we come in. With our International Student Loan Comparison Tool, you can save time trying to find the right loan. There are some important factors to consider when choosing a loan such as the repayment period or interest rate. It may sound complicated, but we have some tips to help you navigate this process.
- Filling out the Application
Nowadays, loan applications can be submitted via the internet making the process a lot easier. You will need to complete the online application with your co-signer or they may be required to submit a separate online application. If this is the case, be sure to provide them with a correct reference number or application number to avoid any mistakes with the paperwork. In order to make the application process as easy as possible, collect all the following documents and information beforehand:
- School information, including school name, major, grade, and school term for which you need the loan
- Social Security number (as an international student, this may not be applicable)
- Telephone numbers
- Current addresses (home and school)
- Personal reference information and phone number
- Gross income information
- Residence information, including whether you own or rent, and the monthly housing payment
- Requested loan amount
- Contact from Lender
During the application process, you will receive paperwork that may be completely foreign to you. The most important piece of paper is the Promissory Note, which is just a special name for the contract. The Promissory Note is the contract you sign stating to the lender that you will pay back the loan in full and under what specific conditions, in other words the fine print. Want to be up to speed on loan jargon? Check out this great video explaining the loan terms you’ll be coming across!
After all the research, paperwork, and possible headaches this is the moment you have been waiting for. Disbursement is what lenders call the process of giving you the loan money. Student loans are typically sent directly to your school which then uses the money to pay for what is charged to your student account for that semester. Although the process should be automatic, you should keep on top of the dates because your school will have a final payment date and if your loan is not received by that date, it could cause you problems.
Just like with the college application process, dates are important! Check out our financial aid timeline for some helpful tips.
If this is the first time you are applying for a loan, the process may be intimidating. However, beginning the process with some background knowledge will not only help you feel more comfortable, but potentially speed up the process. Whether you are applying for a study abroad loan or international student loan, here are 3 important tips to make applying for a loan a piece of cake.
- Calculate Your School’s Cost of Attendance – If you are taking out a private student loan, you will be asked to provide information about the school you will be attending. Make sure you have all the contact information for your chosen university such as: the name, address, school term, major, etc. For a private student loan, the lender will cross check to make sure that your requested amount does not exceed your school’s cost of attendance (COA). Although your school’s COA is the maximum amount you will be eligible for, remember that you will be paying it all back so if you can take out less, it’s better to take out only what you need.
- Have Your Co-Signer Ready – A co-signer is essential for all international students applying for an international student loan. However, a co-signer can be useful for US citizens applying for a study abroad loan as well. When you decide to study abroad you may not have enough of a credit history established, which shows lenders that they can’t trust you to pay them back. This is why a co-signer is so important. This person, in essence, fills out the application with you and gives the lender a guarantee that if you are unable to make your loan payments he/she will take the responsibility. Choosing a co-signer with good credit can also work in your favor, allowing you to receive better interest rates from the lender.
- Collect All of Your Financial Documents – When applying for a loan you are asking for money and before a lender decides to approve your application they need to have a good idea of your financial standings. As mentioned above, you will probably need a co-signer so it is important to have all of you financial documents and that of your co-signer available. If you or your co-signer have filed taxes, having that information on hand will make the application process easier. The breakdown of financial information that you normally will be asked to provide includes: gross income, do you rent or own, monthly housing payments, etc.
Ready to start your loan search? Let us make it easier for you with our International Student Loan Comparison Tool.
As an international student applying for a study abroad loan, one of the key things you will need to have is a cosigner. Don’t really know what a cosigner is? Not to worry, here is a breakdown of what a cosigner is, their role, and the best way to get one.
What is a Cosigner?
When applying for an international student loan, lenders need to evaluate your financial background and stability before approving your application. This means that they need to make sure that you will pay them back. However, because you are an international student you do not have a financial record in the US for lenders to look up. This is where a cosigner becomes an important part of the international student loan process.
A cosigner is someone who signs your loan application with you and by doing so says, ¨If Maria cannot make her loan payments, for whatever reason, I will take over the responsibility and make the payments on her behalf.¨ A cosigner signs this legal document which states that they will take on the responsibility of your debt if you cannot. Read the rest of this entry »
Summer is now in full swing and most of you probably have already made your final decision on what university you will be attending for the 2016-2017 academic year. For those of you who haven’t officially accepted enrollment, be sure to do that as soon as possible! Although you have now finished with all your college applications, the next step is starting your loan application. Do not fret! It may sound daunting, but here´s a break down of what information you’ll need to make your loan application a breeze.
- How Much Money You Want to Take Out
Before you can even dive in to begin figuring out which loan is the right fit for you, you´ll need to know how much you are going to take out. Although it does require some planning and number crunching, having this amount ready to go before you start looking at different lenders will make your decision process a lot easier and could save you money. Now you may be asking yourself, ¨how much should I borrow?¨ The key is to try and borrow the amount that you will realistically need and not an excessive amount. When receiving your student loan it may seem like it´s free money, but you must remember that it is not! If you borrow more money than you need your monthly payments will be higher, any financial aid you were given may be reduced, and you may be in debt longer than you would like. When calculating how much to take out as a loan, take into consideration the following: your university´s cost of attendance, funds in the case of an emergency, unexpected expenses, possible income, and how much money you have saved up.
- Your Personal Information
Now a days most lenders have made filling out your loan applications simpler, by allowing you to fill it out and submit it online. However, to speed up the process it is best to sit in front of your computer with all the information you’ll need right off the bat. This will prevent you from having to pause filling out the application to go in search of missing information. Below is a list of what personal information you should have prepared.
- University name, address, and telephone number
- Your major, year (freshman, sophomore, etc.), school term
- Your current home address and telephone numbers
- Housing information: rent or own, monthly payment amount
- Gross income
- Personal References: name, occupation, relationship, contact information
Having a cosigner on a student loan application is usually reserved for and required for non-US citizens, however US citizens or permanent residents can also benefit from adding a cosigner to their application. A cosigner is a person who joins your loan application and legally agrees to take responsibility for your loan payments in the event that you are unable to pay them. For international students, who are non-US citizens planning to attend a US university, having a co-signer is required. However, US citizens or permanent residents can choose to add a cosigner in order to increase their chances of loan approval and to receive better interest rates.Because your cosigner must be a US citizen or permanent resident (green card holder) you will need to have their personal information on hand such as name, address, telephone number, and social security number. It is important to inform your cosigner that they may have to log in themselves to fill out and sign a part of the loan application.
Read the rest of this entry »
For recent college graduates, between the celebrations, the job hunt, and just simply enjoying summer, you may have put thoughts of your student loans on the back burner. You may have remembered that your loan qualified for a grace period , but can´t remember exactly how long it was and don´t know how to enter into the world of loan repayments. Here are some tips to get you started on the right foot!
Double-check Your Calendar
Although, you haven´t been stressed about repaying your loans, the minimum grace period allotted tends to be about 6 months so your repayment season is more than likely approaching. Remember that lenders consider you a responsible adult who now has a debt to pay. This means you should not wait for them to contact you! If you´ve pushed your loans out of your mind for a while, now is the time to do all your research. To find out how long your grace period really is you can do the following:
- Read your loan promissory note:
Don´t remember what that is? Your loan promissory note is the contract you signed at the very beginning promising that you would repay your loan. It holds detailed information about your loan amount, the grace period, and the repayment plan you originally chose.
- Contact your lender: Can´t seem to find your promissory note or feeling a little overwhelmed looking over the paperwork? Whatever the case remember that your lender is only a phone call away. Don´t hesitate to take the time to contact your lender directly to discuss the details.
Research Your Options
Your promissory note may be a signed contract, but this does not mean that everything is set in stone. In general, lenders want to be paid back. What does this mean? It means that they are usually willing to work with you from the beginning to ensure that you will make on-time payments. The grace period you are given is meant to give you time to find work and establish yourself after graduating. However, things don´t always work out just the way we planned. If your financial situation isn´t where you would like it to be you have some options:
- Extend your grace period or request deferment: Not all lenders or loans provide this option, but it is worth looking into. If you are unemployed or going through financial hardship, it is possible that your lender will give you a little extra time. Depending on your lender, this can be considered an extension on your current grace period or fall under the category of deferment, a postponement of your loan payments. Being aware of what option they offer you is important, because you may only be eligible to request it once.
- Review your repayment plan:
As previously mentioned, all the details of your loan are spelled out on your promissory note. If financially you aren’t where you would like to be, but you think you can still begin to make payments, another option is to try and switch repayment plans. Lenders are aware that your originally chosen repayment plan may not fit your current situation and will be able to help you choose a better option.
By following these two steps you will be fully informed and ready to jump into the world of loan repayment. Take the time to do your research and don´t be afraid to ask questions. It is better to go into loan repayment fully prepared so that you never have to miss a payment!
For more information regarding your student loans, be sure to check out our International Student Loan Advice section.