The United States of America is a dream destination for most international students. The country is home to some of the best universities in the world. Degrees earned from educational institutes of the US are highly attractive to employers around the globe. However, studying in the USA costs a lot of money in addition to the high cost of living. After evaluating all the options for funding your education, applying for scholarships and aid; some students need further assistance to support their education abroad, and this is where international students’ loans play a vital part.
So, what are international loans?
- International loans and specialized private education loans are available to international students pursuing study in the USA.
- By means of international loans, students can fund their education through financial bodies in the USA.
- Loans cover the entire educational cost; this means that students can apply for larger loan amounts with flexible interest rates, and interesting schemes.
Are education loans available to Indian students in the US?
Getting a loan is difficult as an international student attempting to apply through conventional financial providers in the US. Furthermore, the struggle to apply for a loan back in India cannot be overlooked. Banks and providers back in the native country are sceptical to sanction loans to students for reasons of them leaving the country and defaulting on payment. The same is true for providers in the US. Mentioned are some reasons why an Indian student finds it difficult to get a international student loan in the US –
- The student is not a citizen of the country
- There is no prior credit history.
- The student is likely to return back to their homeland and default in repayment
- The requirement of a co-signer.
Having stated the above, students may apply for loans in the US with private providers.
Who can be your co-signer?
- To apply for a loan in the USA, the student is required to have a co-signer who is a citizen of the USA.
- In the event of the applicant failing to repay the loan amount, the co-signer is liable to repay the loan on their behalf.
- To be a co-signer the person must be a citizen of the USA, and additionally should have a good credit record for a consecutive period of 2 years.
Interest is charges on the amount borrowed. There are two main indices used for international students are the Prime Rate and LIBOR Rate.
- Prime Interest Rate – This index is pivoted on by the federal funds rate which is set by the US Federal Reserve.
- LIBOR – The LIBOR (London Interbank Offered Rate) is based on the British Bankers’ Association and is used on the London interbank market. The rate is an average of the world’s most creditworthy bank’s interbank deposit rates for overnight and one year terms.
Repayment of the loan
- Most students opting for an international education loan are not able to earn while studying in the USA.
- Banks make it a necessary clause of loan repayment.
- The loan tenure ranges from 10 to 25 years, students with higher loan amounts generally have longer payment periods
- You should consider how much money would like to spend monthly towards the payment of the loan
- Standard loan repayment options
- Full deferral – Students can defer their loan payment for a maximum of 4 year, which is also the length of their course. Student may also defer their loan payment for 6 months post-graduation as long as they are enrolled into a full-time course
- Interest only – Students have the option of paying the interest on the loan for the period of 4 years, consecutively. The student may defer their repayment on the principal by 45 days from graduating or when the students makes a shift from full-time to part-time
- Immediate Repayment – Payments towards the principal and interest commence on loan disbursement.
Loan providers for international students (non –US citizens) with a co-signer
- Ascent Credit-Based Co-signed
- Discover Student Loans
- Sallie Mae
- LendKey Private Student Loan
- Citizens One Private Student Loan
- EDvestinU Private Student Loan
Loan providers for international students (non –US citizens) without a co-signer
- MPOWER Private Student Loan
Private loan providers without a co-signer require the student to pay a higher interest
It is important to know that international students have few student loan options in the US. Unless, the student is eligible non-US citizen who can qualify for a federal student loan, they have to apply for a loan with a private lender.