Private student loans make up 7.80% of the total outstanding student loan in the USA. That is more than $130 billion.
Private student loans are some of the most useful financial tools that help students pay for their education, especially when traditional financial aid is not sufficient. A private student loan is a great alternative option if you don’t qualify for a federal student aid program. And because banks and lenders offer many options for repayment, private loans may also be more suitable for your own needs.
Also, there is a high chance of getting approved with private student loans because with certain lenders these loans are not even based on the credit history of the applicant. Therefore, a private student loan would be ideal if you don’t qualify for a federal student loan or if you don’t have any credit history.
In this article, we will be digging deep into private student loans! We will discuss how they work, their advantages and disadvantages, the application process, and other useful information so you don’t get confused when you apply for a private student loan. So let’s get started!
What are private student loans?
Unlike federal student loans, private loans don’t originate from the government. Private student loans are used when a student either doesn’t qualify for the federal student loan or when their amount of financial aid is not enough to pay for his/her education.
Private student loans are mostly offered by the major banks, savings & loans companies, credit unions, and some other lenders who provide personal or educational loans. A private student loan typically offers benefits that include low-interest rates, flexible repayment options, and lenient borrowing limits. However, the interest rates on private student loans are higher than federal student loan rates.
How does a private student loan work?
A private student loan is the same as any other student loan, but they are offered by private financial institutions. When you apply for a private student loan, you need to submit your credit history and income information. The bank or lender will assess your particular situation and determine if they offer you the amount of money that you require.
Once you get approved, the lender will send your school’s financial aid office the funds. They will credit the required amount of money directly to your account and you can use it for paying tuition, housing fees, or any other expense that is related to your education. If there are any funds remaining, your school will transfer those to your nominated bank account.
How to apply for a private student loan
Before you apply for a private loan, make sure you understand all the terms and conditions of the loan. Compare different lenders or banks that offer student loans before settling on one. Once you have identified the lender with whom you want to go, it’s time for applying for a private student loan! Here are some steps that you need to follow:
1. Check whether you qualify for a federal loan or not
It is advised to apply for a federal student loan before you go for any other type of student loan because these loans offer lower interest rates. Interest rates on private loans are higher than federal student loan interest rates. Therefore, it is better to opt for a federal loan if you qualify for one. In most cases international students in the U.S. do not qualify for federal student aid.
2. Get your credit history in order
If you do not have an established credit history, then it will be difficult for you to get approved by some of the major lenders or banks. Make sure your credit report is error-free and clean. You can check your credit history from the three major credit bureaus: TransUnion, Experian, and Equifax. Once you have a good credit history, apply for a private student loan. There are a small number of lenders that do not require credit history and you can find out about them here.
3. Find a cosigner
It can be hard for students to build their credit score, so the easiest way to get approved for a private student loan is by getting cosigned. If you have someone who loves and trusts you (family members), they can be your cosigner on your application form. This will make it easier for the lender to approve your application because another person has vouched for you! In addition, if your cosigner’s credit history is up to the mark, you can get better repayment terms. Your cosigner must be a U.S. citizen or permanent resident. Most international students will need a cosigner, but there are a number of lenders that do not require one.
4. Find a suitable lender or bank for your private student loan
The most important step in applying for a private student loan is to find the right lender or bank that can provide you with the amount of money that you require. Each lender has its own terms and conditions. You can find different lenders by searching online or visiting your local bank or credit union. Take time to review different loans, rates, and terms before choosing one. One of the easiest ways to find a loan as an international student is to use our loan comparison tool.
5. Fill the application form carefully
Once you have found a good bank or lender, it’s time to fill out their application form. You will need your social security number, credit history, annual income, and other details in order to apply for a private student loan.
Filling out this form should be done carefully because this information will be used to make a decision on your loan approval. If you have any doubts or do not understand something in your application form, it is better to ask the bank before filling it out. Once you are done with it, submit the form.
6. Be aware of hidden charges and fees
Once you have submitted your application, you will receive paperwork from the bank. Make sure you review all the terms and conditions carefully to avoid any hidden charges or fees that can increase your loan amount.
7. Get approved for a private student loan
After filling out an application form, waiting patiently for a response from a lender, and going through the required paperwork, it’s time for you to get approved for a private student loan! Once you have been approved for a loan, the lender will transfer money to your school.
8. Paying back your private student loan
Once you get a private student loan, it is important for you to be aware of the repayment period and other charges. The bank will send you an email or letter that tells you about the amount that must be paid back. You should also know if there are any penalties or charges for not making monthly payments on time.
Federal student loan vs Private student loan
Federal loans are the safest option when it comes to taking out a loan for college if you are eligible for them. Federal student loans typically have lower interest rates compared to private student loans, they do not require a co-signer, and you will not accumulate any additional debt if your student situation changes.
Private student loans may be used for continuing education or for students who do not qualify for federal loans. Before applying for a private student loan, make sure that you understand the terms and conditions of your lender or bank. You can get your credit report and score from all three major credit bureaus: TransUnion, Experian, and Equifax to help you find a suitable lender.
Note: Consider getting a private student loan only when you don’t get approved for a federal student loan or your federal student loan is not enough for your education expenses.
Advantages and Disadvantages of Taking Private Loans
Private students are great alternatives for students who have a bad credit history or have applied for a federal loan but did not get approved. But they do come with both pros and cons that must be considered before applying for them.
1. Private student loans give you the freedom and flexibility of choosing your own loan amount and loan duration.
2. You can get rewards for having good credit. Your interest might get lower if you have a good credit history.
3. You get more freedom to use the money that you borrow in any way you want during your college years.
4. You can apply for a private student loan anytime you want. No matter if you are in the middle of your college career or if you are graduating, you can still apply for a private student loan.
5. Private student loans can be used to repay your previous student loans.
7. Ideal for students who have a bad credit score or didn’t get approved for federal loans.
1. You will be charged with higher interest rates than if you get a federal loan.
2. You are required to have a co-signer if you have a bad or no credit history with most lenders.
3. It is essential that you review all transaction and loan terms with your lender to avoid any misunderstandings or miscommunications.
4. You may not be able to change the duration of your repayment without increasing the interest rates
A few things to consider
Opt for private student loans only if you don’t qualify for a federal student loan
Compare multiple lenders and banks before finalizing a lender
Borrow only what you need to stay in school and pay for your education expenses
Don’t miss out on any repayment term and make sure you repay your private student loan on time
Find a co-signer if you need one
Read the terms and conditions carefully before signing any agreement
So there you have it! A private student loan is great if you don’t qualify for a federal student loan. Make sure you consider all options before you apply for a private student loan. Always review the terms and conditions with your lender before you sign anything.
There are many reasons why study abroad is not for everyone. You need to be aware of the costs, benefits of studying at home or abroad, and the pros and cons of taking out student loans for study abroad before you can make a decision on whether or not it will work best for you.
Study Abroad Costs
Remember that the cost of studying abroad is not just tuition, but also many other expenses such as accommodation and living expenses. A study abroad program is not cheap.
To make the most of your money, it’s important to budget accordingly. Consider everything you need to live like at home: food, clothing, transportation, books and school supplies, entertainment, insurance (health and travel), and incidentals (phone service, toiletries).
When you do this math ahead of time with realistic figures for your destination country, it’s easier to know what you can afford and if you’ll be able to go.
For help with budgeting and other practical questions see our budgeting guide [here].
What you might gain from studying abroad (or not)
Studying abroad is a great opportunity for a student to broaden their horizons and experience new cultures, countries, and lifestyles. It is an experience that will give them new perspectives on life that will have a great impact on them for years to come. Studying abroad will help their resume as they often learn different languages and customs.
But if you choose to study in your home country instead, you’ll benefit from having your parents or other family members available to help you when you need it. Your family will be in the same time zone, and much closer should an emergency arise. You won’t have to deal with language barriers either; instead, everyone speaks your language!
But maybe even more important than all of these is that studying abroad isn’t for everyone.
Don’t be pressured by parents, friends, or family members to do it if you’re unsure about doing so. It takes time to adjust when studying abroad in a different country, so before you commit to something that will change your life forever, consider your options carefully.
Taking out a Student Loan for Study Abroad
It’s rare for students or their families to be able to cover the full cost of a study abroad program without additional financial aid.
Many students get study abroad scholarships or are able to work to help pay for costs, but sometimes they need to take out a student loan. If you’re considering this option -and it is an option- be aware of the pros and cons of getting a student loan for studying abroad.
Student loans for study abroad are different from student loans for studying in your home country.
For U.S. citizens or permanent residents, federal student loans can be used for study abroad programs as long as you meet all the criteria. There are also private study abroad loans. If you choose to study your entire degree program abroad then you may still be eligible for federal funding or private “foreign enrolled loans”.
For other international students the availability of loans to study abroad depends upon your nationality and your destination country. U.S. federal loans are not available for international students in studying in the United States, but there are some federal student aid programs that can help certain groups like DACA recipients. Non-citizens would need a private international student loan.
Understand the pros and cons of taking out student loans for study abroad before making a decision
A student loan is a type of loan that enables you to pay the costs of your education. It can also cover for the cost of living, books, and even tuition fees. The great thing about a student loan is that it is quite manageable, as the monthly repayment is calculated to be manageable for a student or recent graduate.
As there are a limited number of lenders that specialize in international student loans, you’ll be working with a company that has the expertise you need in this area rather than a generic lender. This means you can expect a higher level of service at every stage of the application process.
On the other hand, the bad side is that student loans are not as common as other types of lending, and therefore there is less information about them.
Of course, the main downside of a loan is that you have to repay it plus interest, and since you’re probably going to be a student or fresh graduate with little income, the repayment may seem difficult at first. Student loan debt is no joke if you let it get out of hand and borrow more than you need (and more than you can afford to repay).
Student loans for study abroad can also be quite tricky because you have to take into consideration things such as the currency exchange rates and the different cost of living abroad.
At internationalstudentloan.com we match our readers with the best student loan lenders based on their situation. If you want to use educational loans for your studies, we hope this will help you select the right lender and loan for you.
Research schools abroad and in your home country to make sure you make the best decision for you
Before you can really decide if studying abroad is the best option for you, you should research your options both at home and overseas to find the right combination of school or university plus course plus location.
You may find that some schools abroad are better suited to your needs than similar schools in your home country, and if this is the case then studying abroad is probably a good option for you.
Or you may find that there are similar options in your home country and studying abroad doesn’t suit your needs.
When you’re looking to study abroad, learn as much as you can about the school you want to attend; don’t choose a course purely because it’s cheaper than similar courses at other universities and colleges.
It’s easy to take your safety for granted when you are near home, but when you’re abroad there are additional considerations such as crime and health risks, which can affect your study abroad experience. When picking a campus and housing location, keep this in mind. Ideally your campus should be located in an area where you feel safe, as should your living arrangements.
Another consideration is language issues. For example, if you are from a non-English speaking background and want to study in the United States, you’ll need to demonstrate good English language proficiency when applying for or enrolling at an American college or university. You may be able to take some English language proficiency courses before starting your degree course, but this will depend on the college or university you choose and how intensive it is.
The cost of living in different countries is very different, so don’t assume that the tuition fee for a college or university abroad is similar to what you would pay at home. For example, English universities charge international students up to three times more than domestic students, and in some countries international students can pay up to ten times more than locals.
At internationalstudentloan.com, we are dedicated to helping students get the best student loans possible for their education abroad. We’ll help you find the right lender and loan combination that suits your needs so you can focus on what’s really important: studying!
As a new graduate with little income, it may seem difficult to repay your student loans at first but our partner lenders have experience working with international students who want to study abroad. You can rest assured knowing that after signing up for an educational loan from one of our approved lenders, you will be matched with someone who understands how your brain works when making decisions about your student finances.
Each country in Europe offers an amazing opportunity to study abroad. US students benefit from living and studying in a multicultural academic environment where you can find a plethora of courses taught in English. 90% of study abroad programs require English test scores from non-native speakers.
If you study abroad, even if language learning is not your primary objective, and even if you take only english-taught courses, you will inevitably learn a new language and uncover secrets of a new and different culture.
If you choose a host university in a European country you will make new friends, benefit from high quality higher education and experience the kind of cultural immersion that is not possible in the US – and all at an extremely affordable cost as tuition fees for study programs in popular European destinations tend to be lower than many domestic colleges.
The UK, Italy, Spain, Germany, Ireland, Portugal, Portugal and the Nordic nations are some of the most popular countries that receive the most foreign students each year. Europe is full of cuisines, languages cultural activities, and is a relatively small geographic area making it easier to explore than you might think.
Europe is fascinating. A collection of 50 nations each with its own distinct identity.
Europe is one of the most popular study abroad destinations in the world. Immerse yourself with a homestay in Barcelona, step into the world of international business with an internship in Brussels. Develop your drafting and design skills in Berlin or hone your filmmaking chops in Prague. Celebrate Bastille Day by the Seine, or “The White Nights” by the Neva. Explore world renowned museums in some of the most beautiful cities in the world and choose from a truly diverse range of study programs and cultural excursions you won’t find at home.
With so many amazing courses offered at some of the top universities in the world, it can be hard to choose between all of the European countries and the study abroad programs at universities there. There are, of course, some countries that will naturally spring to mind when you consider your options, but some of the more overlooked European countries also happen to be more affordable (and off the beaten path). If you want to expand your options beyond the stereotypical destinations, you could also consider many “less popular” destinations in Eastern Europe, for example.
But let’s start with some of the most popular European destinations:
The United Kingdom (UK) attracts a wonderful mixture of thousands of international students from all over the world every semester. The country boast over 150 institutions to study. The UK is home to some of the world’s most prestigious and top-ranked universities, and there is a long tradition of welcoming foreign students year round.
International students flock to the UK for the incredible cultural experience, unmatched higher education standards, and history.
Spain is a hugely popular study abroad destination for Americans – especially those that want to learn Spanish as they study. Thousands of students choose to study at higher education institutions in Spain every year, placing it in Europe’s top 10 Study Abroad Countries in Europe.
Spain is known for both cultural experiences and culinary arts. Local history and culture make it a great study abroad destination. Enjoy tapas bars, great food, football and the country’s rich history.
If you’re looking for a dynamic, exciting, culturally rich experience, vamos a Espana!
Portugal is another popular destination for studying abroad in Western Europe. The country offers over 300 days of sunshine every year, a wide range of beaches, vineyards and wine. Enjoy the sun, food and nightlife, while taking a study abroad program at a historic university.
Switzerland is known for its beautiful mountains, delicious cheeses, yummy chocolates, and clean towns. Tuition fees at most public universities are the same for all foreign students, irrespective of where they are from, meaning that even though it can be an expensive destination, you are not penalised over an EU student when it comes to tuition fees. You have the chance to learn four languages – French, German, Italian, and Romansh in Switzerland. When you’re not hitting the books you can make the most of your study abroad experience and enjoy the beauty of the Swiss Alps, explore picturesque towns, and taste some of Switzerland’s mouth-watering cuisine.
Italy is home to a wide range of excellent academic institutions. International students are warmly welcomed in the country’s universities. Italy is known to have some of the best fashion design programs in Europe if you are interested in fashion, design, art and similar courses.
Immerse yourself in Italian culture and enjoy the Italian way of life!
Denmark regularly ranks on lists of the most liveable, safest, and happiest places in the world. Why wouldn’t you want to explore the study programmes offered there?
The Danes are known for their sense of togetherness and cohesion, good news for international students trying to make new friends and adjust to a new culture and way of life. Danish universities are set up to promote creativity and innovation, so this is an ideal place to pursue creative courses.
Study Abroad Programs in Europe
Social sciences, life sciences, computer science, natural sciences, language studies, public relations, law, human rights, information technology, history or any other program – you will find the perfect course if you study in Europe.
Europe is incredibly welcoming to international students from all over the world. Europe has one of the highest study abroad participation rates globally. The European Union is dedicated to promoting cooperation and collaboration between countries including the USA, and higher education is one area where this is particularly prominent.
Cost of Living
The cost of living in Europe can vary greatly depending on where you study, overall, however, if you’re coming from a big city in the US you’ll feel like the cost of living is generally lower unless you choose to live in one of the big cities like London, Madrid or Berlin.
Scholarships for studying abroad in Europe
European universities and government agencies offer scholarships to students studying in Europe. There are also scholarships offered in the US, such as Fullbright and Gillman scholarships.
For the most comprehensive international scholarships listing, see www.IEFA.org
Study abroad students should be vigilant when travelling in tourist hotspots as these tend to attract pickpockets and as a result petty thefts are fairly common. To avoid this, don’t leave valuables unattended and stay alert in crowded areas. Overall it is very safe to study abroad in Europe, and your university will be able to provide plenty of information about particular areas to avoid or anything to be wary of.
Study Abroad Loans
Study abroad loans are designed to help students from the US to cover the costs of their studies abroad on short programs of up to one year. That may be a short summer program of a few weeks, a single semester or a full academic year. Depending on your chosen program you could study in multiple countries in a single year (for example staking one semester in France and another in Italy).
Study Abroad Loans are available in the same way as if you required additional funds to cover tuition in the US – they are administered through your “home university” – the university in the US that you are enrolled at as a full-time student.
Foreign Enrolled Loans are for those students who enrol directly as a full-time student at a foreign university not just for a semester or two, but for the duration of their entire course of 3 or 4 years.
Leaving for college abroad is an exciting time in a student’s life. However, choosing where to attend can be overwhelming. Students often pick their school by location, programs offered, or scholarships available. Ultimately it’s a personal choice depending on your preferences and interests. There are many things that students should take into consideration, including cost of living, safety, and culture.
Which is the cheapest country to study in Europe?
Generally speaking in Western and Northern Europe the cost of living is more expensive, while in Southern and Eastern Europe it is cheaper. However the cost of living can vary greatly within a country – depending on whether you live in a big city or a smaller town. You should find the universities that you would like to attend, and get advice from the financial aid office or international student advisors. Remember that tuition fees for foreign students can range from free to very expensive depending on your program and you must factor that in.
What should I study abroad in Europe?
The program you choose to study in Europe depends only on your chosen career path or major. Whatever you choose, you’ll find a study abroad program that meets your needs. Of course, if you are a languages student, then it makes sense to visit and study in a country where you can use your language skills in daily life and really benefit from the language learning opportunity.
How much does it cost to study abroad in Europe?
It can be significantly cheaper to live and study in Europe from day to day – but don’t forget the additional costs like travel expenses and insurance, plus the extra money you might spend exploring the continent in this once-in-your-life experience.
Student loans are an integral part of college, especially in a country like the U.S. where tuition rates are sky high. However, international students are at a disadvantage when it comes to obtaining loans to help pay tuition. Federal loans are off the table and can only be acquired by citizens. However, more and more private loans are becoming available to international students. This is great news, as are some important benefits from obtaining student loans. Here are the benefits of student loans when you’re an international student:
They Fill the Gap That Scholarships Cannot
If you’re studying internationally, hopefully you’ve scoured all available options for scholarships. Many universities will have opportunities for you, while some are known for being extremely generous to their international students. Getting your education fully funded is still unlikely unless you’re one of the absolute top students in your class.
Student loans aren’t merit based, so anyone attending an eligible school can potentially receive what they need to pay for school regardless of their grades. However, if you’re looking to go to school in the U.S., you’ll need a co-signer who’s either a permanent resident or a citizen. Your home country might also have some financial aid for international students; do a search for those.
Regardless, having to pay back loans is a lot less fun than receiving the money outright in a scholarship. Don’t fret – this brings us to the next benefit of student loans. Read the rest of this entry »
Step-by-step process on getting loans at the best rates available
Join us tomorrow, August 15, 2014, at 11:00 am EST, on our Google Hangout!
This hangout will focus on US citizens and permanent residents who are either doing a short-term study abroad program through their home university, of through another university in the US, as well as US students enrolling in a degree program overseas.
Be sure to get your questions ready as we’ll be answering them live on air. Do you have questions to ask? View our Google Hangout now and ask your questions now!
Depending on where your studies take you, you may find that the opportunity to study abroad can be quite expensive. If you are an undergraduate study abroad student, you have access to federal grants and loans as well as scholarship opportunities. Once you’ve maximized these options, you can apply for private study abroad loans to help make up the difference.
How does this all work, you ask? Here is a step-by-step process to get you on your way to learning about financial aid for study abroad students:
1. Know Your Costs
This is not always easy, since you may not know what the cost of living will be in your host country. Costs are variable and will depend on the country, the length of your program, what’s included in your program fees, and the type of program you’re enrolled in – not to mention your quality of living. While there are program fees, there is also airfare, local transportation, lodging, entertainment, health insurance, meals, immunizations/vaccinations, and visa fees to consider. Be sure to: Read the rest of this entry »
With so many options out there, it can be difficult to know just what category of student loans you fit into. When applying for student loan for your studies overseas, it is particularly important that you know exactly what loans you qualify for. This blog post will help you answer the question, “which student loan is right for me?” and determine whether you qualify for international student, study abroad, or foreign enrolled loans.
These loans are intended for foreign students coming to the United States to earn their degree. If you are pursuing a degree in the US and are not a US citizen or permanent resident, you do not qualify for federal loans, but some banks offer private loans to international students. Read the rest of this entry »