April 13, 2009

Study Loans for International Students to Study Abroad

Easily Repayable Study Loans for International Students to Study Abroad

Last year, we ran an article on the sensible tips and advise necessary for all international students wishing to study outside of their home country to take prior to traveling. However, it is clear that financing international study for any student is not an easy venture for both the student and their families.

It is not out of place that one finds international students, at this time of the year, frantically trying to put together funding for the study year, and evaluating how much of a loan to apply for. It is still true that a lot of such students do not know who or where to go to for help. Although the steps are the same, we will be using the United States as an example since many African students have it as their destination of choice for study.

Types of student loans for study
Financing an education in the United States is difficult, even for a student of US origin. For international students, paying for study in the US is even harder. Almost two-thirds of all students enrolled in private four-year US schools receive loans of some type.

Students of US origin can receive loans guaranteed by the government (e.g. the Stafford loan program, among others), but these valuable loans are not available to international students. Luckily, some private student loans are available to international students on the same terms as received by students of US origin.

Before applying for a study loan
Before applying for a loan, international students should exhaust all potential funding sources, like as shown below:
  1. Apply for international student financial aid from your school.
    A searchable list of schools which award financial aid to international students can be found at: 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 or euro you can pay directly is one less dollar or euro you will have to borrow.
Some international students can fund their education in the US and elsewhere simply by using the sources above. However, like most students of US origin, most international students will still need to fund at least a portion of their education in the US or elsewhere, if not the entire amount, with loans.

The study loan
In the award of study loans to international students, certain requirements and procedures are customary and expected from each party (i.e. the student and the awarding body(s)); and they include:

a) A 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 a 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 every international student 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 these private student loans on the same basis and terms as students of US origin.

b) Funds Paid Directly to student. Loan funds are paid to directly to the student, and not to the school. This is a great feature in that the student can then use the funds for living expenses – but of course it also means that it is up to the student to use the funds responsibly.
The advise in these situation is: pay your tuition, room and board, health insurance and books first – anything extra is a luxury!

c) Repayment. Repayment of an international student loan is very flexible and can be deferred while the student is still in school, and also for six months after he/she finishes school. After that, the borrower (i.e the student) will usually have up to 20 years to repay the loan, with a payment due every month. He/she will also be eligible for hardship extensions if he/she runs into any unexpected circumstance that prevents him/her from being able to repay the loan for a short period of time.

Loan Resources
d) Interest Rates. Interest rates are variable, and are 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 the student's co-signer and the repayment plan the student selects. The better the co-signer, the better the rate! LIBOR changes monthly, up or down, so the rate will be reset monthly. 

Click here to calculate how much a loan (of say $10,000) for an undergraduate or postgraduate international student really comes to for repayment.

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

f) No Application Fees. There are NO APPLICATION FEES to apply for an international student loan. There is an origination fee if the student actually receives the loan, but that amount is rolled into the loan amount and does not have to be paid out of the student's pocket.

More Information on International Student Loans

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