The first step you should take towards studying overseas is to examine the cost. With this, you would know which scholarships or grants to apply for, and whether or not you would need the financial aid offered by your school.
However, these options are still not enough to fully fund some international students, hence the need for student loans.
What is a cosigner?
A cosigner is someone who joins a student in applying for a loan. The cosigner is obligated to pay the debt if the primary borrower is unable to pay. Only non-US citizens would require a cosigner while applying for a student loan in the US.
A cosigner must be a US resident for at least 2 years and must have good credits. Most preferably, a cosigner should be a close friend or relative, who can assist in getting credits.
US citizens and permanent residents do not need a cosigner to apply for student loans in most cases. However, having a cosigner would increase the likelihood of getting your loan approved, and at lower interest rate.
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Types of student loans
There are two major types of student loans: Federal student loans and private student loans. Each type has subtypes that have distinct features for different groups of students.
Federal student loans
Federal student loans have been preferred by many students because of the favorable payment options, and low-interest rates. Unlike private student loans, federal student loans do not require a co-signer. The types of federal student loans include:
Direct Subsidised Loans
This type of federal student loan is only available to undergraduate students who have communicated a need for financial assistance. Interest does not accrue in this type of student loan.
Direct Unsubsidized Loans
This type of student loan is available to undergraduate, graduate, and professional students that did not communicate any financial need. The loan starts accruing immediately.
Direct PLUS Loans
This is available to graduate or professional students and parents of dependent undergraduate students. Only parents are legally and financially responsible for the repayment of this loan.
Federal Student Loans For International Students
In most cases, federal student loans are not available for international students. However, some countries offer federal student loans to specific groups of international students.
- Canada: The Canadian government has established the Canada Student Loan Program to aid citizens and international students with protected status (e.g, refugees).
- United Kingdom: Students from European Union countries such as Italy, Germany, France, Sweden, or Spain are eligible for the UK government student loan. Also, US citizens and permanent residents are eligible for the UK International students loan. For undergraduate studies, this loan covers your tuition fees and living costs. However, the loan for International students is paid directly to your university and not to you.
- Germany: BAföG – Federal Financial Aid is financed by the German government for international students in Germany. This aid is granted to students that have been residents of Germany for at least 5 years.
Private student loans
Private student loans have fixed and variable interest rates according to the borrower’s academic performance, and other criteria. The types of private student loans include:
Undergraduate Student Loans
Private undergraduate student loans come with different repayment options and incentives. However, most undergraduate student loans require a co-signer and have higher interest rates and loan limits than graduate loans.
Private graduate loans can either be for a specific career study (like law school, business school, medical school, etc.), or general. You might not need a cosigner to get a graduate loan. Graduate loans often have higher loan limits, lower interest rates, and longer repayment plans.
International student loans
Studying in a college is expensive, and doing it overseas is even more expensive. Many international students struggle to fund their studies and fend for themselves while studying, by taking up 2-3 side jobs.
Scholarships and grants, which are financed by companies or organizations, are available as solutions. However, they hardly cover all the expenses and are difficult to get.
A student loan can cover all the academic expenses, and supporting expenses for International students like health insurance and living expenses. Some of the expenditures that can be covered by an international student loan include; books, room and board, tuition, mandatory fees, insurance, and transportation.
What to Examine in International Student Loans in 2023
Different private student loans have unique terms that you must examine to find what works for you best. Here are key things to look out for while examining an international student loan;
Some student loans require a cosigner, but others, like most federal student loans, might not. Most international student loans would require a cosigner.
The interest on a student loan is the additional money added to the principal amount by the lender. The borrower is to pay this amount alongside the principal amount that was borrowed.
An interest rate is decided based on a benchmark and a margin. The benchmark for interest rates of international student loans are;
- Prime Interest Rate – determined by the US Federal Reserve
- Secured Overnight Financing Rate (SOFR) – determined by the Federal Reserve Bank of New York.
A private student loan company would use one of these benchmarks, and add a percentage to it according to the creditworthiness of the borrower.
The repayment terms depend on the loan option that you choose. You would need to consider;
- When will the repayment begin?
- How long could be the prospective deferment period?
- How much would you have to pay monthly?
The larger the student loan, the longer the repayment period. There are three standard repayment options for student loans;
- Full Deferral – In this option, payment can be deferred until 6 months after graduation as long as the full-time status is maintained. The student loan can be deferred for a maximum of four years, which is the typical length of a degree.
- Interest Only – This option enables International students to only pay the interest while in school, for up to four consecutive years. Students can defer the principal until 45 days after graduation, or when he drops the course load to part-time.
- Immediate Repayment – In this repayment option, the payments on both interest and principal are to begin immediately once the loan has been disbursed.
Private Loans For International Students
International student loan companies available in 2023 include;
- Citizens bank
- PenFed Credit Union
- MPOWER Financing
- Prodigy Finance
International Student Loans Without Cosigner
The following are some international student loans that do not require a cosigner;
- Stilt: Slit is one of the few international student loan companies that does not require a cosigner, and does not partner with universities. The process of application is fast, which makes it one of the best options for many international students.
- MPOWER: MPOWER offers international student loans to students with prospective high earning potential. The company works with some schools in a few courses.
- Prodigy Finance: This is an international student loan company that has seen great success over the years. However, they are focused on international students that are pursuing a master’s program. They only aid students in high-ranked universities and restricted areas of study.
International Student Loans for African Students
International student loan companies for Africans available in 2023 include;
Student loans for international students are available in a variety. Students should know what they are looking for and examine the features of the available loans to find which fits perfectly with their plan.