Finance for studying abroad: What you need to know

Studying abroad can be a life-changing experience, opening up countless opportunities for personal growth, academic enrichment and cultural immersion. However, financing this adventure can sometimes seem like a daunting task. But have no fear! In this blog post, we’ll guide you through the essential steps to make your study abroad dreams a reality. From understanding federal and private student loans to exploring alternative funding options, we’re here to help you navigate the world of finance for studying abroad and make informed decisions every step of the way.

Key takeaways

• Understand federal and private student loans to finance your study abroad experience.
• Research top lenders, explore scholarships/grants and utilize university financial aid.
• Prepare for the loan application process, disbursement and repayment.

Understanding federal and private student loans for studying abroad

Federal and private student loans have benefits and limitations, and understanding these distinctions can help you make informed decisions about which loan options best suit your needs. In general, federal loans tend to offer more favorable terms, such as fixed interest rates and more flexible repayment options. On the other hand, private loans can provide additional funding beyond what’s available through federal aid and may come with higher interest rates and stricter repayment terms.

Let’s delve deeper into each of these loan categories and explore their unique features and benefits.

Federal student loans

Federal student loans are an excellent resource for eligible U.S. citizens. They are available through your university’s financial aid office and are need-based, meaning they are awarded based on your financial situation. One of the main advantages of federal loans is their fixed interest rates which are more predictable and stable compared to variable rates offered by many private lenders.

To apply for federal student aid, start by filling out the Free Application for Federal Student Aid (FAFSA). Your FAFSA form will determine your eligibility for various federal student aid programs, including subsidized and unsubsidized loans.

Keep in mind, federal student loans may not cover all your education expenses while studying abroad. The maximum loan amount you can receive will depend on many factors including your financial need and the cost of attendance at your chosen foreign university. Your loan amount may also might include your status as a dependent or independent student. 

Exhausting your federal aid options before seeking out private loans can save you money on interest and fees in the long run. It may even open up possibilities for loan forgiveness programs if you plan to pursue a career in public service.

One important factor to consider is that federal student loans are not available for international students (non-U.S. citizens) studying in the U.S.

Private student loans

Private student loans can be an excellent supplement to federal aid when studying abroad, especially if you’ve already maximized your federal borrowing limits or do not qualify for federal loans. Unlike federal loans, private loans are offered by banks, credit unions and other financial institutions. Their approval is often based on your credit history or other factors depending on the lender. This means you may need a cosigner with good credit to help secure a private loan if you don’t have a sufficient credit history yourself. Loans that do not require a cosigner are also available from some lenders – find out if you are eligible for a loan without a cosigner with our loan comparison tool.

Private student loans can potentially bridge the gap between federal aid and your total education expenses, but it’s important to be mindful of some factors. Private loans may have higher interest rates than federal loans. They may also have less flexible repayment terms. Additionally, private loans typically do not offer the same loan forgiveness programs available for federal loans. Therefore, it’s essential to carefully weigh the pros and cons of private loans and consider them as financial aid options.

Top lenders for study abroad loans

 The top lenders for private study abroad loans are:

• MPOWER Financing.
• College Ave.
• Sallie Mae.
• Ascent.
• Discover.

Each lender offers different terms and conditions, so it’s essential to carefully review and compare their offerings.

For example, College Ave is known for its flexible repayment terms, ranging from five to 15 years. It also has a quick online application process that takes less than five minutes to complete. MPOWER Financing offers loans specifically designed for international students studying in the U.S. without a cosigner, making it an attractive option for many.

Our loan search tool takes the research time out of your search – see what lenters you’re eligible to apply for in less than 10 seconds. 

Financing your study abroad experience without loans

Although student loans serve as a valuable resource for funding your study abroad adventure, there are other options. Scholarships, grants and university financial aid are all excellent avenues to consider. By tapping into these resources, you may be able to significantly lower your education expenses and minimize the amount of debt you need to take on.

Scholarships and grants

Scholarships and grants are a fantastic way to finance your study abroad experience without relying solely on loans. There are need-based, merit-based or diversity-based awards, depending on the specific scholarship or grant. Some scholarships are awarded based on academic achievements, while others may be geared toward students with specific interests, backgrounds or fields of study.

To find and apply for scholarships and grants, research opportunities through your university, as well as external organizations and websites such as IEFA.org. IEFA.org scholarships offers a comprehensive list of study abroad scholarships for students from various backgrounds and fields of study. Keep in mind that scholarship applications often require a significant amount of time and effort, so be prepared to invest your energy in crafting a standout application that highlights your unique strengths and qualities.

University financial aid

Your university’s financial aid office can be an invaluable resource. In addition to providing guidance on the various types of aid, it can assist you with the application process. 

Your university’s financial aid office may also offer additional resources, such as financial planning tools and budgeting advice, to help you manage your education expenses while studying abroad. 

Navigating the study abroad loan application process

It’s essential to take proactive steps to ensure a smooth and successful loan application experience. That includes preparation and understanding eligibility requirements. In the following sections, we’ll provide you with practical tips and insights on how to prepare for the study abroad loan application process, including advice on cosigner requirements and what to expect throughout the application journey.

Preparing for the application

Prior to embarking on the loan application process, it’s important to establish a solid foundation for a successful application. Here are some steps to follow:

1. Maintain good academic standing, as this can demonstrate to lenders that you’re a reliable borrower.
2. Take the time to research your study abroad program, considering factors such as location, length and program type.
3. Understand the costs associated with your chosen program to inform your financial planning.

Another critical step in preparing for your study abroad loan application is reaching out to your university’s financial aid office. Financial aid officers can provide valuable guidance on the types of loans available, as well as assist you in navigating the application process. 

Cosigner requirements

Cosigner requirements for study abroad loans can vary, but in general, having a U.S. cosigner with a good credit history can significantly improve your chances of loan approval and securing better loan terms. A cosigner is typically a U.S. citizen or permanent resident who agrees to take on the responsibility of repaying your loan if you are unable to do so.

Without sufficient credit history yourself, it’s important to engage a potential cosigner well before your loan application deadline. This allows ample time for them to review their financial situation and consider whether they’re willing and able to support you in this capacity.

If you’re looking for a lender use our loan search tool to quickly find one! 

Managing repayment after studying abroad

After successfully securing funding, maintaining your loan repayment obligations becomes paramount. Managing repayment after studying abroad involves:

• Understanding the repayment plans available to you.
• Exploring loan forgiveness programs if applicable.
• Ensuring you stay on top of your payments to avoid falling behind on your loans.

The upcoming sections will address different repayment plans and loan forgiveness programs.  

Repayment plans

Repayment plans for study abroad loans will depend on the specific loan you’ve chosen, whether it’s a federal or private loan. Options for repayment may include:

• Standard repayment: This is the basic type of loan repayment where you pay a fixed amount every month for a set period, usually 10 years. It’s straightforward but may require higher monthly payments.
  
• Extended repayment: This plan stretches your loan repayment over a longer period, typically up to 25 years. This means smaller monthly payments, but you end up paying more in interest over time.
  
• Graduated repayment: With this plan, your payments start low and increase over time, usually every two years. It’s designed for people who expect their income to grow in the future.
  
• Income-driven repayment: This is a flexible plan where your monthly payments are based on your income. If your income is low, your payments could be very small.
  
• Pay-as-you-earn repayment: This is a type of income-driven repayment where your monthly payments are generally a set percentage of your discretionary income.

Each option offers its unique advantages and disadvantages.

For example, standard repayment involves fixed monthly payments over a period of 10 years, providing predictability and stability in your repayment schedule. On the other hand, income-driven repayment plans allow you to make payments based on your income, ensuring that your monthly payments remain manageable even if your financial situation changes.

Loan forgiveness programs

Loan forgiveness programs can provide relief from student loan debt for borrowers who work in specific fields or meet certain eligibility criteria. These programs typically require that you work in a qualifying field, such as nursing or teaching, and often involve work done in underserved areas or with populations in need.

Examples of loan forgiveness programs include Income-Driven Repayment (IDR) Forgiveness, Public Service Loan Forgiveness (PSLF) and Teacher Loan Forgiveness (TLF). By researching and understanding the eligibility requirements for these programs, you may be able to secure partial or full forgiveness of your study abroad loans, reducing your overall debt burden.

Tips for choosing the right study abroad program

Choosing the ideal study abroad program requires consideration of several factors, including location, program length and the type of program that aligns best with your academic and personal aspirations. In addition to these considerations, it’s essential to understand the financial implications of your chosen program. Factors like tuition fees, living expenses and available scholarships can all play a role in determining the overall cost of your study abroad experience.

Some of the most sought-after study abroad destinations offer excellent quality of life, but may come with a higher cost of living. Researching and comparing different study abroad programs can help international students find the best fit for their preferences and budget.

Summary

Studying abroad can be an incredible, life-changing experience. Understanding the various financing options available to you will help you move toward your goals without being overwhelmed financially.

Remember to thoroughly research and compare loan options, seek guidance from your university’s financial aid office and explore alternative funding opportunities to minimize your reliance on loans. With the right preparation and commitment, you can make your study abroad dreams a reality and create memories that will last a lifetime.

Frequently Asked Questions

How do people afford to study abroad?

You can make studying abroad affordable by applying for scholarships and grants and getting help from your financial aid office. Scholarships and grants can help you cover tuition fees, travel expenses and even living costs. Even small, niche scholarships can make a difference in funding your education abroad. 

How does studying abroad help you financially?

Studying abroad can give you a unique set of skills and experiences that might give you an edge in the job market.

Can I get student loans for study abroad?Yes, you can definitely get student loans for studying abroad! Don’t let lack of financing stand in the way of this incredible opportunity – explore your options today by finding and comparing loans!

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Posted in Financial Aid, International Education, Study Abroad