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 interest rate determines the total cost of the loan over time, affecting the monthly payments and the amount paid in excess of the borrowed principal. A lower interest rate can result in significant savings in terms of interest paid over the lifetime of the loan, so it's essential to carefully evaluate and compare the rates from various lenders to ensure you're getting the most affordable option.
7. Consider other fees.
While you may be drawn to a private loan with a low headline interest rate, it's the Annual Percentage Rate (APR) that should capture your attention. The APR incorporates both the interest rate and any fees associated with the loan, providing a complete picture of the loan's true cost. A loan with a lower advertised interest rate might actually be more costly once fees are included. Comparing loans by their APR allows you to make a like-for-like comparison, giving you a clear and comprehensive view of what you'll truly be paying.
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.
