How U.S. Students Can Get Student Loans for International Schools

May 26, 2020 Loans & Finance

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Every foreign college or university is different, and each international school can offer unique benefits to U.S. students enrolled there.

You might get an opportunity to immerse yourself in a new culture and way of life. Plus, many foreign schools cost less than comparable U.S. institutions — some may even provide a tuition-free college education.

Even if you choose a foreign college with low costs, you’ll still need to find the funds to cover them. And it’s possible to get student loans for international schools — here’s what you need to know about both federal student loans and private student loans for studying abroad.

Federal student loans for international schools

U.S. students can use the same federal student loans available at stateside schools to pay for their international programs. Over 750 international schools participate in federal student loan programs.

The Direct Loan Program offers some of the most affordable and accessible student loans for international schools. Here are your federal student loan options:

Undergraduates can get Direct Subsidized and Unsubsidized Loans. For loans disbursed between July 1, 2019, and July 1, 2020, the interest rate was 4.53% with a 1.059% fee. If you’re eligible, subsidized loans should be used first to take advantage of the federal interest subsidy.
Parents of undergraduates can help finance their child’s degree with Parent PLUS Loans. For the 2019-2020 academic year, these loans had an interest rate of 7.08% and a fee of 4.236%.
Graduate and professional students could access Direct Unsubsidized Loans with a rate of 6.08% and a 1.059% fee. Grad PLUS Loans are also an option, with a 7.08% interest rate and a 4.236% fee. (Both of these rates applied to the 2019-20 academic year.)

All of the usual student loan limits apply to federal student loans for international schools, as well. For example, a college sophomore classified as a dependent student could borrow up to $6,500 ($4,500 of which could be in subsidized loans) for the school year.

Unfortunately, these student loans are the only form of federal aid offered to U.S. students at foreign colleges. Other types of federal student aid, such as Pell Grants, won’t be an option when you earn a degree at a non-U.S. school.

Getting Direct Loans for foreign schools

Accessing federal loans at a foreign school is similar to getting them at a U.S. college. Here’s what you must do to get these federal student loans for international schools.

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Make sure your international school is eligible for federal student loans. You can check the Federal Student Aid’s list of participating foreign schools, which is updated quarterly. Verify with your school that it’s currently eligible and participating in the Direct Loan Program.

Submit a Free Application for Federal Student Aid (FAFSA). The form is the same for students attending U.S. and foreign colleges. When submitting your FAFSA, make sure to select the international school you’re attending. This will allow the school to receive and process your FAFSA information so you can get the federal student loans you need.

Meet all federal student aid eligibility requirements. In addition to submitting the FAFSA, you’ll need to be eligible for federal student aid. You’ll also need to maintain satisfactory academic progress by completing courses and getting decent grades.

Work with your international school to complete the student loan process. Your school will be able to guide you through its process to claim your federal student loans. These funds will be disbursed to your foreign school directly.

Private student loans for foreign colleges

You might also explore private student loans as an option to fund your education abroad. While the U.S. government grants federal student loans, banks, credit unions and online lenders issue private student loans.

Direct Subsidized, Unsubsidized and PLUS Loans are more accessible. They often have lower rates and more flexibility than private student loans, too. If you’re interested in private student loans for international schools, make sure your lender offers you a better deal than you would get from the federal government.

Of course, sometimes federal student loans aren’t an option — or enough. If you’re ineligible for federal aid, or if you’ve reached the borrowing limit on Direct Loans, private student loans could be your next best choice.

However, like with study abroad loans, it can be a challenge to find private loans for your international degree. Many U.S. lenders limit loan offers to stateside students. Few lenders extend private student loans to American students attending a foreign school.

How to find private student loans for international schools

The search for private student loans for international study is tricky, but not impossible. A great place to start is with your foreign university or college. Your international school should know what options are available to its U.S. students and point you to the right lenders.

If you find your school’s options lacking, or you simply want to ensure you get your best deal, consider top-rated private student loans and compare interest rates and terms of at least a handful of lenders.

Sallie Mae, for example, lends to students attending some, though not all, schools outside the U.S. The online lender allows you to search for your school within its loan application to clarify eligibility.

When searching with lenders, just make sure that your school doesn’t have a similarly-named peer within the U.S. — there’s a Regent College in Vancouver, for example, and a Regent University in Virginia.

Of course, you’ll likely run into lenders that simply don’t offer loans for international study, limiting their products to students who stay in the U.S.

Here’s what to look for in private student loans for international schools:

Eligible lenders: You’ll want to apply with lenders that extend funding for your foreign school. Most borrowers will also need a student loan cosigner to meet the higher credit requirements on private student loans.
Affordability: Look for private student loans with low interest rates and fees. Estimate your monthly payments to ensure you can afford the loan once it enters repayment.
Deferment option: Ask about deferment policies on private student loans. For example, if you don’t want to make payments while you’re in school, make sure the lender will allow you to defer payments until after graduation.

Unless you’re heading to one of the countries with free college, financing is a must. Overall, you’ll have the easiest time getting student loans for international schools if you choose to attend a program that offers Direct Loans.

By planning ahead to get the student loans you need, you can attend your dream school outside the U.S. while minimizing financial stress.

Andrew Pentis contributed to this report.

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