10 Considerations When Applying for Foreign Student Loans

If you are a US student planning on earning a degree in a foreign country, chances are you have a lot on your mind. One of the most important issues is the question of student loans. Here is a list of ten considerations to keep in mind when applying for foreign student loans.

1. What financial aid do you have?

It is generally recommended that students apply for as much federal aid as they can get before taking out a private loan. As a foreign enrolled student, you are eligible to receive both subsidized and unsubsidized Stafford and PLUS loans. However, you are not eligible for any of the grant programs, such as the Federal Pell Grant or the Teacher Education Assistance for College and Higher education (TEACH) Grant.

2. How much money do you need to complete a degree program overseas?

The cost of earning a degree will vary depending on where you choose to study, but there is a very good chance that the overall cost will be significantly less than what you would end up paying in the US. Research the cost of living in your host country, as well as the price of tuition of your overseas institution.

3. How do you apply for financial aid?

To apply for federal financial aid, you must first complete the Free Application for Financial Student Aid (FAFSA). After you've filed your FAFSA, you will receive a Student Aid Report (SAR). Read this carefully and follow the instructions provided.

4. When do you need to apply?

The FAFSA becomes available online on January 1. It's a good idea to complete and submit this form as soon as possible, so you know what kind of aid you will have and how much your family will have to contribute.

5. Do you have a cosigner?

When applying for a student loan, there is a good chance that you will need a cosigner. As a student, it is likely that you have not yet had much opportunity to build up good credit, and lenders often take a cautious approach to first-time borrowers. Having a cosigner will increase your chances of being accepted for a loan and lower interest rates. Most students who need a cosigner ask a parent or guardian, a relative such as a grandparent, aunt, uncle, or cousin, or a spouse.

6. Compare interest rates.

The best private student loans will have interest rates of LIBOR + 2.0% or PRIME – 0.50% with no fees. These rates are generally only available to borrowers with great credit as well as a creditworthy cosigner.

7. Consider other fees.

Although it's tempting to choose a private loan based on interest rates alone, the fees charged by some lenders can significantly increase the cost of the loan. A loan with a relatively low interest rate but high fees can end up costing more than a loan with a somewhat higher interest rate and no fees. A good general rule of thumb is that 3% to 4% in fees is about the same as a 1% higher interest rate.

8. How much can you receive in financial aid?

You can borrow up to the full cost of your education, minus any other aid, in private loans. This encompasses tuition, fees, living expense (room and board), books and supplies, and transportation. Every school has a different Cost of Attendance (COA).

9. Are you eligible?

In order to be eligible for federal financial aid, you must satisfy the following requirements:

  • You must be enrolled as a “regular” student
  • You must be qualified to study at a postsecondary level
  • You must be enrolled at least half time
  • You must make Satisfactory Academic Progress (SAP)
  • You must be a US citizen or eligible non-citizen
  • You must have a correct Social Security Number (SSN)

10. How long will it take to finish your degree?

In many foreign countries, student can earn a degree in three years instead of four. This will save you a year's worth of expenses—or you could take that fourth your to complete your master's degree.

Watch videos and learn more with our International Financial Aid Resources center

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