The Credit Crunch and International Student Loans

April 21st, 2008 by admin

“College students in need of private loans to pay for the coming academic year will have to grapple with higher interest rates and tougher credit checks. Even then, some who have qualified for such loans in the past probably won’t this year.”
Wall Street Journal, 4/9/08

There has been a lot of media attention on the turmoil in the US student loan market over the past few months. In case you haven’t been paying attention, the Wall Street Journal quote referenced above should get your attention.

Student loans will be harder to get, and for those that get them, they will be more expensive. The harsh reality is that there will be less students who can afford to go to school this coming year. Of course the majority of those impacted will be US students, but international students will face the same hurdles.

The problem stems from the fact that student lenders typically sell their student loans, to raise more capital to make more loans as well as for overhead and profit. Right now, no one wants to buy those loans. So lenders have had to take a number of actions — here’s a few of the responses we’ve seen:

  • Tightening Credit. Many student lenders have had to increase their credit requirements, meaning that you or your co-signer will need to have better credit to get a loan this year than you did last year. Although specific FICO score requirements are not made public by most lenders, we know that FICO score requirements are going up.
  • Less Schools. Many lenders are trimming schools from their list of “approved schools,” both for federal and private loans.
  • More Expensive Loans. Lenders have increased the pricing on loans to make sure they are profitable enough to be able to sell.
  • Out of Business/Eliminating Programs. Over 60 lenders have decided to eliminate a private, consolidation or federal loan program or simply exit the market since they cannot make a profit on loans. Just last week, Bank of America decided that it will no longer make any private student loans, concentrating only on federal loans. Editor Mark Kantrowitz keeps a detailed chronology of the bad news on his site FinAid.com.

There is some good news. International student loans and study abroad loans are still available through InternationalStudentLoan.com and StudyAbroadLoans.com. We are committed to helping students fund an international education — we do not participate in the much bigger domestic student loan market, so international loans are all we do. We will continue to source and make available the best international loan products available. Also, interest rates are based on LIBOR, and that index has been going down,helping to offset the higher margin that lenders are requiring.

What can you do to ensure that you will have enough money to pay for your education, if you rely on loans? First, as always, borrow as little as you can. Use your own funds or family funds, apply for scholarships, cut as much as possible out of your budget. That advice never changes. But here is some guidance specific to the educational funding mess, bordering on crisis, that we are now in:

1. Apply Early. InternationalStudentLoan.com and StudyAbroadLoans.com both process and fund loans quickly, so students typically can apply at a very late stage and still have their funds in time. However, with the current uncertainty, it is best to apply, get approved, and get your funds for this coming academic year as soon as possible.

2. Good Co-Signers. Get the best co-signer you can. Since credit criteria and pricing have gone up, a good US co-signer is critical to getting your loan approved and priced reasonably.

3. Check Your School. Don’t assume that because you got a loan last year, you can automatically get another loan through the same program again. Many lenders have reduced their school lists. Also, InternationalStudentLoan.com now operates multiple programs — if your school is not on the list, contact us, as there may be another alternative for you.

No one knows for sure how long this credit crunch will continue, or what the student loan marketplace will look like when it is over. One thing is for sure — the earlier you start preparing for the coming school year, the less likely that you will be personally impacted by the turmoil.

We will continue to update any significant impact from the credit crunch on international student loans in this blog. Click here to subscribe to our blog and get an update when the next post comes out.


Canada Funds 500 New PhD Scholarships

February 29th, 2008 by admin

The new Canadian federal budget announced this week includes ambitious new funding for international education to help Canadian universities compete for top talent from Canada and around the world. From Macleans.Ca online:

“The program will award 500 PhD students with $50,000 each year for up to three years of study. The program will cost the government $25-million over two years. It will be open to both Canadian and international students.

The new initiative is a response to universities’ complaints that they are unable to attract the world’s brightest students to Canada. The program, named after Governor General George Vanier, aims to compete with high profile scholarship programs like the Rhodes program.”

Click here to read the rest of the story on Macleans.ca Online.

The Canadian Federation of Biological Societies also reported on a new study abroad program for Canadian students:

“The Government will also provide $3 million over two years for Canada Graduate Scholarship recipients ($6,000/year to 250 students) to help Canadian students study abroad for one semester.” For more information, visit the CFBS story.

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Dartmouth Goes Need-Blind for International Students!

February 14th, 2008 by admin

Dartmouth College, a member of the Ivy League and at the “forefront of US higher education since 1769,” has joined the elite group of US universities and colleges that offer need-blind admissions to international students.

From Dartmouth’s news release:

“Need-blind admissions for International Students

Starting immediately with the Class of 2012, the College will extend its need-blind admissions policy to all international students. Previously the College was need-blind for students from the U.S. as well as those from Canada and Mexico and provided financial aid to other international students up to a preset budget maximum. This cap will now be lifted and Dartmouth will join a very small group of schools that have a fully need-blind admissions process for international students.”

Under a need-blind admissions policy, a school reviews a students application for admission without considering the student’s ability to pay. Then if the student is admitted, the school must make the tuition affordable by meeting the student’s demonstrated financial need for all four years of their undergraduate study, through a combination of grants and loans. Dartmouth will become the 7th US school offering need-blind admission, joining MIT, Harvard, Princeton, Yale, Williams College and Middlebury College.

Visit InternationalStudent.com’s Schools Awarding Aid page to see more on the US colleges and universities that offer aid to international students.

Read the entire press release on Dartmouth’s website.


$5.75 Million for African Scholarships at Brown

January 28th, 2008 by admin

From the Brown Daily Herald

A new endowment will increase financial aid for students from sub-Saharan Africa and will help them financially for two years after graduation if they pledge to return to work in Africa, President Ruth Simmons and Israeli businessman Idan Ofer P’12 announced Thursday.

The “Advancing Africa Scholarship Fund” was announced in Davos, Switzerland, where both Simmons and Ofer are currently attending the World Economic Forum. The scholarship requires students to sign a pledge to return home for at least two years after receiving their degrees – an effort to “build capacity” in the continent, Simmons told The Herald.

Ofer’s gift of $5.75 million will fund $250,000 a year in scholarships for undergraduate students starting with the 2008-2009 academic year. The endowment will grow over time due to returns on investment, Simmons said, allowing the University to fund more students in the future.

The establishment of the fund marks an important milestone in Brown’s efforts to attract international students. Until recently, Simmons said, it was hard to attract students from Africa. Even with financial aid, those students would have difficulty paying off loans or fulfilling the parent contribution. International students have long complained about a lack of economic diversity among their peers at Brown, something Simmons called “a valid concern.” The endowment came as good news after years of “agonizing” over financial aid for international students, Simmons said.

Click here to read the rest of the story from the Brown Daily Herald.

Here’s a list of US schools that offer aid to international students.

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International Student Loans for Study in the US and Canada

January 16th, 2008 by admin

Its that time of year again when international students are frantically trying to put together their funding for the year, and evaluating how much of a loan to apply for. To help, we are re-posting this article that originally ran last year.

Financing an education in the United States is difficult, even for a US student. For international students, paying for college in the US is even harder. Almost two-thirds of all students enrolled at private four-year US schools receive loans of some type. US students can receive loans guaranteed by the government (Stafford loans, among others), but these valuable loans are not available to international students. Luckily, private student loans are available to international students on the same terms received by US students.

Before applying for a loan, you should exhaust the following potential funding sources:

1. Apply for international student financial aid from your school. Here’s a searchable list of schools awarding financial aid to international students: http://www.internationalstudent.com/schools_awarding_aid/

2. Research and apply for international student scholarships on your own: http://www.InternationalScholarships.com

3. Carefully evaluate how much money you or your family can provide towards your education. Every dollar you can pay directly is one less dollar you have to borrow.

Some international students can fund their US education simply using the sources above. However, like US students, most international students will need to fund at least a portion of their US education, if not the entire amount, with loans.

· US Co-Signer Required. International student loans require a US citizen or permanent resident (Green card holder) as a co-signer. The loans are credit-based, meaning the co-signer must have good credit history, good employment history (or other income history if the co-signer does not work), and must have lived in the US for the past two years. Although not everyone can find a family member, friend or other US citizen or permanent resident to co-sign for them, for those that do, they can access private student loans on the same basis as US students.

· Funds Paid Directly to You. Loan funds are paid to you, not to the school. This is a great feature in that you can use the funds for living expenses – but it also means that it is up to you to use the funds responsibly. Pay your tuition, room and board, health insurance and books first – anything extra is a luxury!

· Repayment. Repayment of an international student loan can be deferred while you are in school, and for six months after you finish school. After that, you will have up to 20 years to repay the loan, with a payment due every month. You are also eligible for hardship extensions if you run into unexpected circumstances that prevent you from being able to repay the loan for a short period of time.

· Interest Rates. Interest rates are variable, based on the LIBOR plus a margin. LIBOR is always several points below prime, so the margin is from 3.5% to 7.75%, and will be set by the lender based on the credit history of your co-signer and the repayment plan you select. The better your co-signer, the better your rate! LIBOR changes monthly, up or down, so the rate will be reset monthly. Click here for repayment examples for a $10,000 undergraduate international student loan.

· Online Application. You can apply online or by phone, and receive an almost immediate response as to whether you are conditionally approved for the loan. Then, you will need to sign the promissory note, and provide proof of enrollment and immigration status to receive your funds.

· No Application Fees. There are no application fees to apply for an international student loan. There is an origination fee if you actually receive the loan, but that amount is rolled into the loan amount and does not have to be paid out of pocket.

For more information on international student loans, visit InternationalStudentLoan.com

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Rethinking College Rankings

November 19th, 2007 by admin

As we discussed in the last post, US News and World Report dominates rankings of colleges and universities in the US. The US News rankings are comprehensive and helpful in many ways, but there are critics of the rankings system. One small newspaper has proposed its own rankings system for the past three years.

When the Washington Monthly published its 2007 College Rankings, which can be viewed online here, it didn’t look at average SAT score, average starting salary or average alumni giving, all standard fare in the US News and most other rankings. Instead, it graded schools based on three general categories — Social Mobility, Research and Service. Why? In the words of Editor Paul Glastris, from his stint on the Colbert Report, colleges should be ranked on their contribution to the public interest, not on whether they have great rock-climbing walls.

Here’s the three things Washington Monthly uses to rank a college’s contribution to the public interest:

1. Social Mobility: “We want our colleges to be engines of social mobility so that the poor can get a better life.” Under this criteria, the magazine looks at the percentage of students receiving Pell Grants, which it considers a good indicator of the school’s commitment to poorer students, as well as the percentage of those students that graduate.

2. Research: “We want colleges to create the research and PhDs that can power the economy.” Because Washington Monthly believes that research and PhDs are the key to growing the economy in a global market, they measure numbers of PhDs and amount of research spending by the university.

3. Service: “And we want colleges to inculcate an ethic of service for young people.” For this, Washington Monthly looks at the number of students entering the Peace Corps, the size of the school’s ROTC program, and the percent of work-study funds spent on community service projects.

Click here to see the whole college rankings report.

As an international student, did you use the US News and World Report rankings to help you select a US school? Would this alternative rankings system play into your decision-making process at all? We would love to hear your input.

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The Problem With College Rankings

October 29th, 2007 by admin

US News and World Report has dominated the college and university rankings in the US for years. Eagerly awaited each year, school administrators with improving US News rankings earn bragging rights while those schools on a downward trend must react vigorously to determine what has gone wrong. Parents and students use the rankings to determine to which schools to apply. By all measures, rankings have become critically important to how a college or university is perceived, particularly the US News rankings.

Critics of the US News ranking system are widespread and nothing new. For a summary of common critiques, read this excerpt from The Presidents Letter (dated May 10, 2007), developed by Lloyd Thacker of the Education Conservancy, and sent to college and university presidents in the United States in May 2007, concerning the U.S. News rankings:

“Among other reasons, we believe […] rankings: imply a false precision and authority that is not warranted by the data they use; obscure important differences in educational mission in aligning institutions on a single scale; say nothing or very little about whether students are actually learning at particular colleges or universities; encourage wasteful spending and gamesmanship in institutions’ pursuing improved rankings; overlook the importance of a student in making education happen and overweight the importance of a university’s prestige in that process; and degrade for students the educational value of the college search process.”

Perhaps the simplest critique is that parents and students get overly focused on rankings during their college search, and ignore the most important thing: what college or university is the best “fit” for the student? With thousands of excellent colleges and universities in the United States, offering all kinds of programs and experiences, there are so many better ways to choose a school than whether it is in the top 20 in the latest US News rankings.

For international students in the US, finding the right fit in a US school is even more important. Since you will be far from home, largely on your own, and probably on a limited budget, setting up a life you will enjoy in a comfortable environment is critical. The key is to start your research early, and be clear and realistic about your educational goals and budget. To get you started in choosing a school in the US, visit the Study USA section of InternationalStudent.com. This will help you think through questions like, city vs. country, large public university vs. small private college, community college or four-year college, specialized school vs. liberal arts college, etc., and will put you on the track to finding the school that is the right fit for you.

In the next post, we’ll discuss an alternative rankings system proposed by Washington Monthly, a small, progressive DC-based magazine. Maybe you caught the editor on the Colbert Report last week? Check it out here.

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2nd Annual InternationalStudent.com $2500 Travel Video Contest

September 28th, 2007 by admin

InternationalStudent.com is running its travel video contest again this year, with an entry deadline of November 1 and an increased first prize of $2500. The winner will be announced in early November,and the finalists will be available for all to see on InternationalStudent.com. You can win $2,500 to travel anywhere in the world — not to mention worldwide fame if your video is posted on the site! Any trip you want to take, and InternationalStudent.com will pay for it. There will also be runner-up prizes.

To enter, you must submit a 4-8 minute video that describes the trip you would take if you win, and why you should win. The best entry will win the $2,500 grand prize — so be funny, or include some great footage and music, or tell a great story — something to get your
entry noticed and stand out from the crowd. Check out last year’s winning video and some other great entries.

The contest is open to anyone 18 or older and studying outside their home country, or planning a trip to study abroad.

For more information and to get an entry form, go to:
http://www.InternationalStudent.com/contest/


UAS7 Announces 45 Scholarships for Study in Germany

September 21st, 2007 by admin

If you are interested in studying and interning in Germany, you need to look at this program. UAS7, a consortium of 7 leading German Universities of Applied Sciences, announced this week that their Study & Internship in German program (SIP), launched last year, will continue and expand this year. UAS7 is cooperating with the German Academic Exchange Service (DAAD) and is granting 45 scholarships for the academic year 2008/09.

The program includes one semester of study at one of the 7 participating German universities, followed by a one semester internship in a company or research institute in Germany. Winners will receive a scholarship for the academic semester, a monthly stipend for the duration of the internship, and travel assistance, making it a very generous overall award.

To be considered for the program, students have to be currently enrolled in an undergraduate program at an accredited US or Canadian college or university (although US or Canadian citizenship is not required). Sophomores and Juniors in the fields of engineering, science, life sciences, business,management, economics, architecture, art, design, journalism, or social work are invited to apply. German language proficiency is an asset, but not mandatory.

All applications for the academic year 2008/09 must be postmarked no later than February 15, 2008. The application requirements are quite thorough and explicit, so make sure you start early and do the best job you can.

For complete details about the program, please visit the SIP website.

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Australian Technical Colleges Attract International

September 7th, 2007 by admin

For some international students, the ultimate goal of an overseas education is to obtain residency and the right to work in their adopted country. An article in today’s Sydney Morning Herald, excerpted with explanation below, shows how international students have flocked to vocational training programs in Australia as an easier way to permanent residency.

In Australia, vocational training colleges are increasing their share of international students at a rate eight times faster than that of universities, after changes to the Australian Government’s skilled migration system made vocational courses a more affordable way to gain residency.

Australian TAFE (Technical and Further Education) institutes provide mainly vocational and technical courses. Hospitality, secretarial skills, visual arts, computer programming, hairdressing and cooking are some of the courses and training typically offered through TAFE institutes. By contrast, higher education in Australia is dominated by universities offering degree courses in more typically academic subjects.

Universities remain the biggest educator of international students, with just under half the market share, but enrolments grew by just over 5 per cent in the year to July, compared with growth of more than 43 per cent in the vocational sector, government figures show. “It’s clear that the main reason for that expansion is that it’s seen as a relatively cheap and accessible route to migration,” says Bob Birrell, a Monash University demographer who has mapped international students’ paths to residency.

In 2005 the Australian Federal Government made it more difficult to migrate without expertise in an area of skills shortage, leading to a flood of international students taking cooking and hairdressing courses. Both courses give students extra points towards permanent residency. Unpublished government figures show that in 2005 just 3560 international students took vocational courses in services, hospitality and transport, which includes cooking and hairdressing courses. By last year, the number had swollen to 6339. And by this year it was 9454.

Read the whole story in the Sydney Morning Herald online.

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