Studying abroad is rewarding. But it comes with a hefty price tag. Tuition fees, boarding costs, and dining costs in the U.S. can be unaffordable to many international students. Scholarships and grants might help you ease the financial burden, but they can’t cover the entire cost. Most students don’t qualify for scholarships. That’s why you shouldn’t put your hope in them.
That’s where international student loans come in. Many foreign students apply for loans and borrow money to pay for the costs of studying and staying in the U.S.
Understand Some Important Terms for Your International Student Loan
During the process of choosing a student loan, you’ll come across some terms you might not be familiar with. You should understand them first to make the process effortless for you. Here are some of the terms that you will come across:
Interest rate: It’s a percentage of the total amount that you borrowed which is to be paid to your lender. In short, it’s an additional fee you must pay for the amount you borrowed. Keep in mind that interest rates aren’t fixed. They fluctuate depending on the market and the lender.
You can opt between the variable interest rates and fixed interest rates while repaying your student loan. It’s recommended that you go for the fixed interest rate. This rate remains constant over the time of repayment. This way it becomes easier for you to create a repayment plan by building efficient timetables.
Keep in mind that the interest rate you’ll have to pay the lender depends on your credit score. So, not everyone will get the same interest rate for the same amount of money borrowed.
Credit score: It’s a three-digit number that depicts the likelihood of the borrower to repay the loan to the lender. It’s based on the borrower’s credit history: the number of accounts they have, their repayment history, and the level of debt the borrower is in.
In short, it shows the lender your worthiness in repaying the loan in time. The higher your credit score, the better are your chances of finding lenders offering loans at low-interest rates.
International students who are not U.S. citizens will not have a good credit score. This is because they have limited financial information that is essential in building a good credit score. Thus, you’ll need to find a U.S. citizen or a permanent resident who can act as your co-signer.
Co-signer: As mentioned above, a co-signer is a U.S. citizen or a permanent resident. The co-signer is legally obligated to repay the loan if the borrower fails to pay. The co-signer is often a relative who has lived in the U.S. for at least two years.
If you’re unable to find a co-signer, you should opt for no-co-signer loans. But you’ll find fewer options if you opt for the latter.
For a no-co-signer loan, your lender evaluates your academic success and career path instead of looking at credit history. They will take into account many other factors too. This could include your home country, the university you’re attending, and the date you’re supposed to graduate.
How to Apply for an International Student Loan?
Step 2: Compare different student loans. For this, you can use the international student loan comparison tools which are available on the web. Select the name of your institution and the amount you need to borrow and compare the results.
Step 3: Select the loan that meets your criteria. Make sure you go through the terms and conditions of the lender before proceeding further.
Step 4: Fill out the application form. If you’ve opted for a co-signer loan, you’ll need the help of your co-signer to fill the form.
Step 5: You’ll get the approval of the loan within a week if you meet the criteria set by the lender.
- Compare the plans of different lenders. rather than settling on the first one you come across.
- Opt for a loan with a fixed interest rate.
- Find a co-signer for your international student loan.