Private Student Loans For International Students
It's challenging enough for an American student to scrounge up enough funds for college – but for an international student, financing a U.S. college education can be even more formidable. It doesn't help that U.S. tuition has increased by nearly 1,200% over the past 35 years. In 2013-2014, a middle-of-the-road U.S. college budget averaged $22,826 for an in-state public college and $44,750 for a private college, according to The College Board. The most expensive American colleges now cost more than $60,000 a year.
Like an American student, before looking for a loan your first step should be to investigate scholarships and grants. Apply for international student financial aid with your college, including teaching assistantships if you're a grad student and the university has programs. Hundreds of U.S. colleges and universities offer financial aid to international students. There might also be schools that offer a stipend for serving as a resident dorm advisor. Depending on the languages you speak, some universities might be eager to hire you if the school features dorms designed so American students can get better at speaking a foreign language.
Next, research and apply for international student scholarships and grants, including any that the government of your home country may offer. Then, determine how much you and your family can realistically afford to pay out of pocket.
Even with scholarships, grants and family funds, most international students still come up short. That's when it's time to look into private loans. A variety of banks and other institutions offer international student loans for borrowers who meet certain standards, including the following:
- International Student Loan Program
- Global Student Loan Corporation
- Credila Financial Services (for students from India)
- Sallie Mae
- Citizens Bank
With most of these lenders, you can easily apply online for an international student loan. But before you click Submit on that application, keep the following issues in mind:
You'll Probably Need a U.S. Co-signer
If you are not a U.S citizen or permanent resident of the U,S, (i.e. you have a green card), you'll most likely need a U.S. co-signer on your international student loan application. The co-signer must be a U.S. citizen or permanent resident who has lived in the U.S. for the past two years. Because these loans are credit-based, your co-signer must have an income history and a good credit history.
By signing your loan documents, the co-signer is agreeing to take responsibility for the repayment of the loan if you fail to pay in a timely manner. (Global Student Loan is one of the few international private student loan companies that does not require a U.S. co-signer.)
Consider Repayment Terms
Be sure to read the fine print about loan repayment. Although terms vary from loan to loan, the repayment period usually ranges between 10 and 25 years. Generally speaking, the larger the loan, the longer you'll have to repay it.
While some loans allow you to put off payments until after graduation, others require that you pay interest while you're still attending college. Still others require that you immediately start making payments on both the interest and principal of the loan. You may be eligible for hardship extensions if you are unable to make payments for short period of time. Be sure to ask your lender about these extensions.
Take an Interest in Interest Rates
With international student loans, interest rates are typically variable, meaning they will change over the life of the loan. The rates are usually based on either the LIBOR or prime rate plus a margin – two indices that are constantly changing—so your interest rate will go up or down with them. Depending on your loan, there will be an additional margin based on certain factors, including the credit history of your co-signer and your chosen repayment plan. This is why it's important to choose a U.S. co-signer with a good credit history. The better your co-signer's credit, the better interest rate you'll receive.
Look for First-Class Customer Service
Expert customer service reps will be able to answer all of your complex questions and act as an ally when you need support in tough financial times. Look for a company where you can reach a live operator for as many hours during the day as possible.
Some colleges provide a list of preferred international student lenders with contact information for reputable lenders they've worked with in the past. These recommended lenders usually offer the most competitive rates and superior customer service. Check out your school's website or ask the college student aid office for a list. And check out Top Student Loan Providers for names to research.
The Bottom Line
International students should first tap into financial aid, scholarships and family savings to fund the cost of college in U.S. However, if you still don't have enough to cover the full price tag, there are plenty of private international student loans available to you. Before you apply for a private loan, do your research and try to find the best deal from the most reputable lender. See How to Score a Private Student Loan for more advice.