Study Abroad Loans
Studying abroad is a life-changing and well-worth-it experience — but it’s also an expensive one. For those who are in need of financial support, one option is to apply for study abroad scholarships and the other option is to apply for a study abroad financial loan. Applying for a loan could be a complicated, long, and even an intimidating process; however, if you refer to this guide before applying for a loan, you’ll be stuffing your face with pasta in Italy or canoeing down a flowing river in China in no time.
Here are some basic questions to consider before browsing through study abroad loan opportunities:
What Kinds Of Study Abroad Loans Are There?
Study abroad loans are treated differently depending on the program type, and each loan may require a different application process. Below are brief descriptions of all the different types of loans you may apply for.
General Student Loan:
The difference between a study abroad loan and general student loan is the type of application, repayment schedule, and qualifications. Each loan institution treats these two loans differently in regards to process, so it is important to talk with your university’s financial aid office to find out if you’ll need to apply for a study abroad loan or if you could get away with a general student loan.
Federal Student Loan:
This type of loan is usually need-based, can be applied for through your university’s financial aid office, and the loan amount varies from about $5,000 - $20,000. If you’re wanting to apply for a Federal Student Loan, you’ll need to complete necessary paperwork such as a FAFSA.
These loans can be used while studying abroad if you are currently earning credits through your home university. If you’re applying for this loan for the first time, you may be required to go through entrance counseling — a process that explains the general loan process and provides you with necessary financial planning tools. A few options of Federal Student Loans include:
- Stafford Loans: These are available as both subsidized and unsubsidized loans. Subsidized loans are loans that are offered to students based on their financial need.
- PLUS Loans: These loans are federal loans that are available for graduate students, professional students, or parents of undergraduate students, to assist them in college or career school financials.
- Perkins Loans: The Federal Perkins Loan Program provides aid for college or career school students with financial need. These are low-interest loans, but not all schools may have these available. Be sure to check with your university’s financial aid office before applying.
Private Loan:
This loan can be applied for up to the total amount you need, and if you have leftover funds, you can return the funds back to the lender so you don’t have to pay interest on it in the future.
- PNC Bank: This is one of the largest educational loan providers and offers financial products and services to help students and parents financially with college, graduate, and postgraduate degrees.
- Citizens Bank: This institution offers the TruFit Student Loan to both U.S. and international students. They offer a choice of a fixed or variable interest rate, flexible repayment options, and there are no application, origination, or disbursement fees.
- Wells Fargo: These loans are available for students and the parents of those students. Wells Fargo student loans have low interest rates and flexible repayment options.
- SunTrust: This loan is a great option for those who are looking for loans with flexible terms and conditions. They offer both, variable and fixed interest rates.
However, if you do choose to apply for a private loan, be sure you’ll be working with a credible company, are aware of scams, and are able to apply and prepare early. If you’re skeptical or need assistance applying, we recommend asking your university’s financial aid office for help!
How Can I Plan Ahead?
When it comes to applying for student loans, planning is everything. There are certain requirements you must meet and paperwork you must fill out, and it’s always good to apply way ahead of time in case something goes astray — knock on wood.
Be in good academic standing:
Having a less-than-stellar student status may deter your chances of getting a study abroad loan. Study abroad loans are more competitive than regular student loans; therefore, make sure your academic status at your university is as clean as possible.
Prepare a cosigner (if needed):
Study abroad loans may require a cosigner, AKA a U.S. citizen or a permanent resident with good credit who has lived in the U.S. for the past 2 years. Cosigners agree to pay the debt if you are unable; in this case, it’s good to choose a cosigner you know and trust.
Apply for a student credit card:
Applying for a student credit card well-in-advance of your loan application will help you build up your credit and increase your chances of being accepted for a loan.
Research your study abroad program:
Research your program and research it thoroughly. Your program is one of the best and reliable sources that will provide you will all the information you’ll need for financial aid abroad, and if you reach out to them, they may even assist with the process of applying for a loan. Either way, it’s always a bonus to prepare ahead of time with research.
Go to your university's financial aid office:
For more information or assistance on applying for loans, your university’s financial aid office is always the #1 go-to. They’ll guide you to trustworthy loan sources and loans to prevent potential scams.
Start applying ASAP (especially for federal student loans):
Most of these loan processes take quite a bit of time and require a multitude of procedures and documents. It is always recommend to start applying earlier rather than later, to prevent the hassle and stress of last minute applying.
Start saving early
In the case where the loans only cover a fraction of the cost, or if you end up ineligible for a loan, it’s always a smart idea to start saving up funds for abroad early. Some ways you could do this is by joining an online funding site, applying for a job to earn fast cash, or by asking your friends and family personally.
Keep the end goal in mind
When you're sitting amidst a sea of paperwork, it can be hard to remember why you're signing up to study abroad in the first place. Look at your loan endeavors as yet another awesome lesson to be learned throughout the process! #fiscalresponsibility4life
How To Be Eligible For Study Abroad Loans
You can check your eligibility for study abroad loans in two easy steps:
You must be enrolled and able to receive credit at an approved school in the U.S.
Double check if your school / university / institution is eligible with each individual award – would stink to go through the whole application process just to be told NO!
How To Apply For A Study Abroad Loan
If you have completed the two steps above successfully, then you are ready to apply for a student loan, and ready to start planning for a semester of a lifetime! You’re just three easy steps away from making lifelong friendships and adventurous experiences abroad.
Step 1: Compare study abroad loans
Complete the study abroad loan comparison tool by indicating your citizenship, and choosing the U.S. school you are studying through.
Here are a few more online resources you can use to find and apply for student loans:
Step 2: Review the lender's terms and conditions
You’ll be matched with lenders that are approved to work with you through your school
Compare basic loan terms, and choose the one that’s right for you
Step 3: Apply Online
Once you’ve completed the online application, you’ll receive initial approval within a few weeks.
After Applying For A Study Abroad Loan
So you’ve finally completed the process above and...now what? Well there are a few important things you should know in regards to the loan you just applied for.
- Where to get the money from the loan: once the loan is approved, the funds will be disbursed directly to your school. Financial aid will then provide these funds to you prior to your departure abroad!
- How the interest rate is determined: the exact interest rate depends on the type of loan you applied for; the rate is based on the Prime or LIBOR plus or minus a margin, depending on the credit evaluation of you, and your cosigner (if applicable). If you want a general idea of the interest rate before you apply, check your credit report.
Even though applying for a study abroad loan may not be as easy as 1, 2, 3...it is a well worth time investment that often leads to significant short-term financial gain – they’re a great way to help make your study abroad experience financially easier. The main key takeaways are to plan ahead of time, research your program and loan options, and to reach out to your university financial office aid for any questions or concerns you may have.
Best of luck in your financial and international endeavors!
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