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Financing Options For International Students In The USA

Updated on Feb 12, 2021
Financing for students

Studying in the United States is a lifelong dream for many international students. Unfortunately, the cost of college education in the U.S. is very expensive for both its citizens and international students.

Scholarships, grants, student loans are popular financing options for students to meet their expenses.

Former U.S. president Barack Obama was famously quoted saying, "Michelle and I, we're only where we are today because scholarships and student loans gave us a shot at a great education."

Federal student loans such as Stafford Loans or Plus Loans are popular with students who are U.S. citizens but they are not readily available to international students.

The good news is that International students can still qualify for various loans to study in the U.S. There is no shortage of scholarships and financial aids available for students who want to pursue big educational goals but are short of funds.

In this article, we will discuss everything you need to know about financing options for students and ways to apply for scholarships, grants, loans, or a combination.

Financing Options for Students

When it comes to funding for your education, you generally have the option of applying for scholarships, grants, student loans, or even personal loans (if needed). Most students would go for scholarships or grants over loans.

A loan is a legal obligation that requires you to be responsible for paying back the amount you borrowed with interest whereas scholarships/grants are earned and you don't have to pay back.

But scholarships can be challenging to get and students awarded with them often require additional financial aid during the completion of their course. 

For international students who are ineligible for most of the U.S. federal scholarships and grants, international student loans are more reliable and readily available.

Nonetheless, any source of funding can reduce your educational expenses and it is important to know all of your available financing options as an international student.

Apply for University Scholarships/Grants


scholarship

Almost all universities in the U.S. have scholarship programs for international students besides special opportunities and provisions such as in-state tuition benefits and waived application fees and deadlines.

Do keep in mind that in order to continue receiving financial assistance, you need to maintain Satisfactory Academic Progress (SAP) which may mean you need to earn a minimum Grade Point Average (GPA), get the required percentage of credits, and be on track to graduate within a specified timeline.

Furthermore, there is a wide range of scholarships available to international students from private organizations or individual donors, with different eligibility criteria.

Even your home country can be a source of funding for your education abroad, either from the government in your home country or organizations/companies.

These scholarships are usually merit-based financial aid or based on financial need, special achievements, or extracurricular contributions. It can be even country-based (generally for students from developing countries).

It is noteworthy that scholarships are competitive in nature. Over 60% of international students in the U.S. are in fact funded by their family members or relatives.

If there are specific U.S. colleges or schools that you want to attend, you can directly contact them and simply ask about the financial aids the institute is providing to students from abroad.

Google is a good place to start with your search for scholarships/ grants. Some scholarships can also be targeted to only certain areas of study or a minority group. You will find plenty of options. Choose the ones that are applicable to you and apply for as many scholarships as possible.

Here are some sites where you can look for scholarships that might be applicable to you.

Additionally, there are international organizations, such as the Fulbright Commission, the United Nations, etc. that grant financial aids to students all around the world.

Apply for Students Loans

Student loans can be taken from the federal government, private banks or financial institutions, or other organizations. 

It can be quite challenging to get student loans if you are an immigrant in the U.S. It may be possible for you to get a student visa to study in the U.S. but to be eligible for federal student aid you need to be a U.S. citizen. 


student loans

Moreover, there are a host of requirements to qualify for one and the process can be complicated.

The three basic requirements to qualify for federal student loans are:

  • The student must be a U.S. citizen, permanent resident, or eligible non-citizen
  • Students must submit the Free Application for Federal Student Aid (FAFSA). The results on the FAFSA form will determine your qualification for financial aid such as scholarships, grants, and work-study, which can also include federal student loans
  • The student must be enrolled for at least a half-time basis

Who Is Considered A Non-citizen?

  • Permanent residents holding a green card
  • U.S. nationals (natives from American Samoa/Swains Island included)
  • Students or whose parents holding T nonimmigrant status
  • People designated as 'battered immigrant-qualified aliens' and their children
  • People designated as a refugee, asylum granted, Cuban-Haitian Entrant, Conditional Entrant (issued before April 1, 1980; or parolee)

If you are an eligible non-citizen, you can apply for federal loans and get the benefits. Federal loans have lower interest rates and benefits such as income-driven repayment plans and forgiveness programs.

Apply for International Student Loans if Not Eligible for Federal Loans

It is easier for non-U.S. citizens to get approved for a private/international student loan.

Private loans are provided by private lenders and have different eligibility criteria from federal student loans. The eligibility criteria are more flexible. 

Some lenders have alternative ways to determine borrower's creditworthiness. There is no credit check or credit scores which are often lacking for many students. 

How to Get Started With International Student Loans?

  • Get Started with Working Out the Finances 

One of the first things to do is to evaluate your finances. Evaluate what is best for your educational and career goals and how much money you need to pay for college in the U.S. Do remember that the education you are pursuing will be worthwhile in the long run and will make you able to pay off these loans.

Determine the approximate cost of your education and decide how much funding is required. Also add additional expenses such as living expenses, even health insurance and apply for the appropriate loan amount.

  • Have Your Documents Ready to Start with the Application

Get your documents ready (F-1 student visa, college acceptance letter, your U.S. address, and other supporting documents).

Plan your loan application timeline. Once accepted, the loans are usually dispersed in a week to 2 months time. To get the money in plenty of time, the sooner you apply, the better. Some colleges can even provide leeway in paying the tuition fees if something does happen.

  • Compare the Lenders

All private lenders are different. You can get pre-approved loans from different lenders and compare the interest rates offered by each lender.

Loans with lower interest rates are easier to pay back and you will have to repay less in the long run. And it is better to go for fixed interest rates than a variable one.

The interest rates may also be determined by credit history, credit score, or whether a cosigner is involved.

  • Know Your Loan Repayment Plan Options 

Always use a student loan calculator to know the kind of payment you will have to do once you borrow the money.

Here are the general types:

  • Standard and Extended Repayment: Pay a fixed amount each month (over 10 years or less or more)
  • Graduated Repayment: Monthly payments gradually increases over time
  • Income-Based Repayment: Similar to graduated repayment but can go or down based on your income at a given point in time

Ways to Apply for International Student Loans:

  • Requires a Cosigner 

Private student loans requiring a cosigner are plenty. You simply have to pick the one with the most competitive interest rates and the lowest fees.

The cosigner must be a U.S. citizen or a permanent resident with good credit. 

The cosigner is legally obligated to repay the loan upon failure of loan repayment by the borrower. The cosigner is often a close relative or friend who can help you in getting the loan.

You are likely to get a private student loan on favorable terms if your cosigner has a credit score of 690 or above.

Suntrust is one of the top private lenders offering international student loans with a cosigner. Its Union Federal Private Loans provides loans to international students, which you can earn a 0.25% interest reduction rate after 3 years of on-time payments.

  • Does Not Require a Cosigner 

In case you don't have a cosigner who is a U.S. citizen, there are lenders that provide no cosigner loans specially designed for international students.

Stilt loans, for instance, are meant for international students and others that have difficulty in getting a private or federal loan in the U.S. Stilt offers a competitive interest rest of 7.99% and has minimum qualification requirements on top of not needing a cosigner.

Prodigy Finance is another private lender. The eligibility criteria can be stringent.

International or private student loans are practical approaches to finance your international education. Such loans are flexible, have reasonable interest rates, favorable repayment options on top of covering your entire education expenses.

Don't settle for the first private lender you come in contact with. Do research, shop around, and compare the loan features.

Make sure the lender you decide fulfills your requirements. That's why planning ahead is important. It makes the selection process easy. Also, find out how easily you can get in touch with your lender if you come across any problem related to the loan.

Read more on credit cards for international students in the U.S.

Refinancing Your Student Loans

In order to refinance your private student loans to a lower interest rate, you will need to build a good credit history, have a solid income, a credit score of 690 and above, and a strong debt to income ratio. 

For students studying extended degrees (medicine, law, etc.), refinancing can save a lot of money. Prodigy Finance is one private lender that refinances student loans to international working graduates in the U.S.

Conclusion

If the cost is your main concern, research and planning can ensure that you will have a rewarding educational experience in the U.S. without the financial burden.

Think of student loans as an investment in your future and be smart about it.

Once you do get into a college of your choice, maintaining good academic records can also get you funding as students with good grades are often rewarded with scholarships, grants and can sometimes cover your tuition fees and other expenses.

With careful planning and research, getting a U.S. education can be made affordable and with high returns of your educational investment in the long run.

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