Planning to study abroad but don’t have sufficient fund? Apply for an international student loan; find out what a student loan is, what makes you eligible, how to apply, where and when to apply, companies offering student loans.
What is a Student Loan?
A student loan is a type of loan designed to help students pay for post-secondary education and the associated fees, such as tuition, books and supplies, and living expenses.
What is an International Student Loan?
International Student Loans are specialized private education loans that are available for international students who are studying in the USA or Canada.
Federal student loans are not available for International students. Except you want to get the one offered by your country of origin to students who want to leave the country and study outside, if you are from a country that offers such loans.
International students will have to apply with a qualified co-signer most of the time and should only apply for international student loans after exhausting all scholarships, personal funds and other options. If you’re not able to find a cosigner keep in mind that loans without a cosigner are available to students at select colleges and universities.
Who is Eligible to Apply for International Student Loans?
- Students who are not U.S. or Canada citizens or permanent residents and who are attending an eligible U.S. or Canadian college or university.
- Borrowers are almost always required to have a creditworthy cosigner who is a U.S. citizen or a non-citizen permanent resident.
Definition of Terms
CoSigner; cosigner is the person who is basically guaranteeing your student loan. So they are the ones who, if you can’t pay back your student loan, will pay instead. Now, when it comes to your cosigner, it’s very important that you make sure that they’re U.S. citizens or permanent residents, that they have lived in the U.S. for the last two years, and that they have good credit.
Credit Score; Credit Score. Now you may have heard this term before, but basically, what a Credit Score is the credit “worthiness” of either you or your cosigner. Now, keep in mind, if you’re an international student, you will need a cosigner. If you are a U.S. student, it will help the likelihood of getting accepted and under better, more favorable terms. So make sure that you know what your cosigner’s credit score is. Your credit score is essentially a number, a numerical value that identifies the financial responsibility of that person. So, it takes into consideration all of the financial history and gives them a number. And then, the Student Loaners will basically evaluate that number and then give you a price, or a cost of borrowing that loan, and it is very important.
Origination Fees; Origination fees are basically a cost to have the application. So when you apply for your student loan, you may or your may not have a fee associated with it. The good news is, that will all of our student loans on our InternationalStudentLoan.com site, you can see all of the loans and apply for them as well, and there is no origination fee. So you can apply free of charge. Now if you’re going to be looking at other student loan options, make sure to review the terms and conditions, and contact your lender to make sure that there are not any surprises along the way.
Social Security Number; This is the number that identifies you. You use this number when you apply for credit cards, you use it for student loans, and you even use it when you are applying for your taxes. So it is a very important number. If you are an international student, you may or may not have one. If you are working in the U.S. you will have one. If you’re not, that’s ok. When you apply for your student loan, there will be a field that asks you for your Social Security Number. If you don’t have one, that’s fine. It is not necessary for a majority of the lenders. If you have any problems with the application, you can always call the lender directly and let them know, and then they can sometimes send you the paper application. But for a majority of the applications, you actually don’t need that. When you get to that, you might be able to skip it. There may be different applications depending on where you are from, so you would just have to indicate that on the application.
Disbursement; The key word here is disburse. Disbursement is basically when you’re going to get the money. The most important point, right! When it comes to student loans, you want the money for that! What disbursement does is basically when the lender gives the money to your school who gives you, or disperses, the money.
Deferment Period; This is basically how long you have before you start making payments back to your student loans. It depends on the loan, it depends on the terms and conditions as to when that time will be. You will have to weigh the pros and cons to those options. Sometimes with certain student loans, you start paying back those loans right away. There are others that you can defer until up to 6 months after you graduate, so it is really going to depend on what you prefer. Now obviously we want to wait as long as we can before we start paying back the loan, but there is a cost and a benefit to that as well. When it comes to your student loan, if you start paying back right away, then your fee is going to be lower.
Repayment Period; When it comes to the repayment period, the key word is repay. So, when you are going to start paying back your student loan. When it comes to your repayment period, it depends on how long those payments are going to continue until. It could be 15 years, it could be longer. So, basically, it is making those monthly payments for “how long?” Now, the same thing with the deferment period, when it comes to repayment period, the longer you’re making those payments, while the cost per month will be lower, the amount you pay on top of the actual student loan amount will be higher.
Interest Rate; That is your cost of borrowing. Your cost of borrowing is expressed in an interest rate; expressed in a percentage. What it is saying is that on top of the cost of what you borrowed, how much you are going to pay in addition. Now there are two kinds of interest rates. There are the variable interest rates and there are the fixed interest rates. Variable interest rates fluctuate, and so that means it is going to be tied to some sort of index. Basically, that is a percentage that will vary, it could be by day, and it could be longer than that. It just depends on those terms. A fixed interest rate is basically a flat interest rate. So the good news with a fixed interest rate is that you know how much you are going to pay every month. With a variable interest rate, that can fluctuate. That can be good, or it could be bad. In some cases, if you have a fixed interest rate, you may be paying more or less than a variable interest rate. So make sure that you consider that.
Types of Student Loans
As you go through the application process, it’s helpful to be familiar with the most common types of loans available through the U.S. government.
Perkins loans should be your first choice—if you can get one. They feature a low, fixed interest rate and are available to borrowers regardless of their credit history. However, they are need-based loans, meaning they’re not available to everybody, and they are in limited supply.
Stafford loans are also easy to qualify for, and they provide more money than Perkins loans. In addition, interest costs might be subsidized, and they are available for graduate students as well as undergrads.
PLUS loans are closer to private loans, but they are federal loans. They require a credit review, and repayment starts soon after disbursement. PLUS loans for undergrads go to parents, which allow them to cover significant expenses for their children. In recent years, these loans have gotten bad press because parents can get stuck paying off PLUS loans for the rest of their lives.
Consolidation loans are loans that combine multiple student loans into a single loan. The result is simpler repayment (one payment instead of many), and there may be other benefits. Consolidation works differently for federal and private loans. Learn the differences before you decide to consolidate or mix federal loans with private loans. If you combine those loan types, you may lose valuable benefits only available from federal student loans.
Banking and Loans
Education is important. Unfortunately, it’s also expensive. Most people can’t afford to pay the costs of higher education out of their savings or current income (and some students don’t have any income), so they turn to student loans. But it’s critical to understand how student loans work and how to use them before you borrow.
Student loans can be a form of “good debt”—an investment in an education that would otherwise be unattainable. It often pays off: Workers with a college degree tend to earn about $20,000 more than those with a high school education each year.
Borrow Wisely
Before getting into the details, it’s worth mentioning that you don’t have to borrow, and the more you borrow, the harder it is to repay. It may be hard for you to imagine what life is like with student loan payments, and those loans are the key to a brighter future. But student loan debt is also a serious burden that can plague you for life. To minimize that burden:
Apply for grants and scholarships to reduce the amount you borrow. Even small grants help.
Work part-time to pay some of your education costs. You might gain valuable life experience that many of your peers won’t receive until after graduation. That head start helps you make important decisions earlier in life.
Evaluate less-expensive schools and in-state education. After graduation, how much will it matter where you went to school?
Cut costs where you can. Used books, inexpensive entertainment, and homemade food can yield significant savings.
Every time you receive funds from a student loan, remember that you’ll have to repay all of that money (plus interest) at some point in the future.
How Student Loans Work
Student loans are unique because they are designed specifically for education funding. But what makes them different from credit cards and other loans?
Relatively low costs: Student loans often charge lower costs than other types of loans that you might currently qualify for. Several factors keep costs low:
Federal student loans, offered through the U.S. government, have borrower-friendly features. Interest rates are relatively low and are fixed for new borrowers, so you don’t have to worry about dramatic changes in your interest costs or payment shock.
Interest costs might be subsidized (or paid by the government) for some students.
Student loans are relatively low-risk loans for lenders, and some lenders see a degree—especially in certain fields—as an indication of income available to repay your loan.
Easier approval: Most students don’t have high paying jobs or high credit scores. As a result, they might not get approved for any loan other than a student loan. Federal student loans typically don’t require any minimum credit score, but some issues in your credit history can disqualify you.
As your first loans, these loans can help you establish credit. It’s critical to pay on time so that you can more easily qualify for other loans in the future.
Benefits at payback time: Some student loans offer borrower-friendly features that make repayment more manageable. Loans through government programs are best, but private lenders provide flexible terms as well.
In-school deferment: With some loans, you don’t have to start making payments until you’re out of school, which allows you to focus on your studies. During that time, interest costs on subsidized loans may even be paid so that your loan balance doesn’t increase.
Unemployment: Some student loans, especially federal student loans, offer unemployment deferment. Under that scenario, you can stop making payments until you find a job.
Limited income: Federal student loans can adjust your required monthly payments when money is tight. If you sign up for income-driven repayment plans, you can avoid burdensome payments.
Potential tax benefits: Interest you pay on student loans may help reduce your taxes. However, the benefits may be limited due to your income and other factors on your return.
Loan forgiveness: It may even be possible to have your student loans forgiven. Borrowers with federal student loans may qualify for forgiveness after ten years of payment and employment in certain public service jobs. Others, on income-driven repayment plans, might qualify after 25 years—but forgiven balances may be taxable as income.
Federal vs. Private Student Loans
You can borrow from any lender you want. However, loans offered through government programs are typically the most affordable, borrower-friendly, and easy to qualify for. As a result, it’s wise to use those loans first.
After borrowing everything you can with government loans, you can turn to private lenders if you still need more. Those lenders are typically banks, credit unions, and online lenders. They might market the loans as “student loans,” or they might offer standard loans that you can use for anything you want.
Approval: Private lenders typically require you to qualify for approval. As a result, you need good credit and sufficient income to repay the loan. Many students don’t have either, so a parent (or somebody else with good income and credit) often applies for the loan or cosigns the loan with the student, which makes both people 100% responsible for repaying the loan.
Variable rates: Newly-issued federal loans have fixed interest rates, but private loans can have variable rates. As a result, you take more risk—if rates rise significantly, your required payment could also increase.
How to Apply for and Get Student Loans
Start with your school’s financial aid office and ask what types of aid are available. Be sure to discuss grants and scholarships as well as loans.
Fill out the FAFSA form, which gathers information about your finances. The U.S. government and your school use that information to determine your “need” for financial aid. Complete your FAFSA as soon as possible every calendar year. Just do the best you can when filling it out—you can go back and update any estimates later in the year.
Apply for aid with your school’s financial aid office and through any other promising sources, and wait for the results. If approved, you can decide to take all or part of the aid available, and you’ll probably need to complete an introductory entrance counseling session to learn how your loans work.
For private loans, find a lender and complete a loan application with that lender.
Determine when you need to repay. You might not have to start paying immediately, but it’s critical to understand when payments are due.
Federal vs. Private Student Loans
You can borrow from any lender you want. However, loans offered through government programs are typically the most affordable, borrower-friendly, and easy to qualify for. As a result, it’s wise to use those loans first.
After borrowing everything you can with government loans, you can turn to private lenders if you still need more. Those lenders are typically banks, credit unions, and online lenders. They might market the loans as “student loans,” or they might offer standard loans that you can use for anything you want.
Approval; Private lenders typically require you to qualify for approval. As a result, you need good credit and sufficient income to repay the loan. Many students don’t have either, so a parent (or somebody else with good income and credit) often applies for the loan or cosigns the loan with the student, which makes both people 100% responsible for repaying the loan.
Variable Rates; Newly-issued federal loans have fixed interest rates, but private loans can have variable rates. As a result, you take more risk—if rates rise significantly, your required payment could also increase.
How Student Loans Work
Student loans are unique because they are designed specifically for education funding. But what makes them different from credit cards and other loans?
Relatively low costs: Student loans often charge lower costs than other types of loans that you might currently qualify for. Several factors keep costs low:
Federal Student Loans, offered through the U.S. government, have borrower-friendly features. Interest rates are relatively low and are fixed for new borrowers, so you don’t have to worry about dramatic changes in your interest costs or payment shock.
Interest Rates might be subsidized (or paid by the government) for some students.
Student loans are relatively low-risk loans for lenders, and some lenders see a degree—especially in certain fields—as an indication of income available to repay your loan.
Easier Approval; Most students don’t have high paying jobs or high credit scores. As a result, they might not get approved for any loan other than a student loan. Federal student loans typically don’t require any minimum credit score, but some issues in your credit history can disqualify you.
As your first loans, these loans can help you establish credit. It’s critical to pay on time so that you can more easily qualify for other loans in the future.
Benefits of Payback Time; Some student loans offer borrower-friendly features that make repayment more manageable. Loans through government programs are best, but private lenders provide flexible terms as well.
In-school deferment; With some loans, you don’t have to start making payments until you’re out of school, which allows you to focus on your studies. During that time, interest costs on subsidized loans may even be paid so that your loan balance doesn’t increase.
Unemployment; Some student loans, especially federal student loans, offer unemployment deferment. Under that scenario, you can stop making payments until you find a job.
Limited income: Federal student loans can adjust your required monthly payments when money is tight. If you sign up for income-driven repayment plans, you can avoid burdensome payments.
Potential Tax Benefits; Interest you pay on student loans may help reduce your taxes. However, the benefits may be limited due to your income and other factors on your return.
Loan forgiveness: It may even be possible to have your student loans forgiven. Borrowers with federal student loans may qualify for forgiveness after ten years of payment and employment in certain public service jobs. Others, on income-driven repayment plans, might qualify after 25 years—but forgiven balances may be taxable as income.
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