Borrowing money through a private, legal lender is the best way to afford school without involving the mafia ? . Numerous companies lend to U.S. citizens, but those that offer loans for international students are fewer and further between.
Most lenders require international students to get a loan with a cosigner who is a U.S. citizen or permanent resident. This gives the lender security in case the borrower cant afford to pay back the loan or leaves the USA. Unfortunately, it also limits who is able to get a loan, as some potential borrowers may not have family or friends in the USA who are willing or financially able to act as a cosigner.
However it is possible to get an international student loan without a cosigner from a small number of lenders.
Even when you do find a lender willing to provide student loans for international students, its important to consider the loan rates, since theyll affect you for the next many years. Private student loans are usually credit-based, as opposed to federal student loans using FAFSA , and provide either variable interest rate loans or fixed interest rate loans . Variable-interest loans, which are also known as floating-rate loans, provide loan terms that change depending two factors: The benchmark used to be based on the London Interbank Offered Rate (LIBOR) but it is now based on the SOFR (the Secured Overnight Financing Rate), while the fixed spread evaluates a borrowers likeliness of repaying the loan. Variable-interest loans are risky, since, unlike diamonds, the rate isnt forever; even if a low SOFR at the start gives you a low-interest rate, if SOFR increases, so does your interest rate. By contrast, fixed-interest rate loans remain the same throughout the course of the loan, but of course this can also be risky, because if a borrower starts with a high rate then that rate will remain high throughout the tenure of the loan. Many people advise that in uncertain economic times, a fixed-rate loan is best for international students who desire stability and certainty in their repayment plans.
As you start doing the math, you should also take into account other terms of the loan that might affect when you pay and how much you pay. Is there a grace period before you have to start repaying the loan? Are there penalties for prepayment or paying back the loan early? Are there late fees? Whats the actual process for paying every month? Can the terms of the loans be changed? And when will you be able to afford doing fun things again?
What happens if your interest rate is so high that youre having trouble paying back the loan? You can refinance.
Refinancing gets you a new loan with a lower interest rate and/or lower monthly payments, or lets you switch the type of loan you have. To be clear, borrowers who are able to get their loan refinanced will end up repaying their loan for a longer period of time than the terms of their original loan, but will end up paying less money overall so its still a good plan.
Below is a list of some of our favorite private lenders. Whether you apply to one of these or to another company you find yourself, dont forget to look closely at the terms of a loan before you sign anything. If youre going to be paying someone back for years, you might as well be comfortable with how you do it.
Want to take guesswork out of the equation? Try our International Student Loan Finder.
Student Loans
