U.S. college education is expensive. Especially for international students, who are not eligible for a lot of federal benefits, having to worry about money while living in a foreign country is not easy. However, the mission is not impossible.
While options may be fewer and restrictions tighter, the amount of financial aid awarded to international undergraduate students has been increasing. According to College Board, from 2011/12 to 2014/15, the amount awarded to international undergraduate students in the United States increased by 46%.
The key here is to be diligent and thorough. So, don’t be too down yet, and let’s look at the options.
1. Family funding
Obviously, the easiest and surest way to pay for college is family funding. International students applying for a visa to study in the U.S. — F-1 visa for academic students or M-1 visa for vocational students — must show documents to prove that they have enough liquid assets — money in cash or that can be converted to cash easily — to pay for at least their first year of study. Starting from the second year, they can use fixed assets, such as loans or property valuation reports, to show funding.
Although very competitive and few in number, scholarships and grants for international students are available. First, check your school to see if they offer any scholarships and/or grants to international students. Then, check TUN’s Scholarship Engine for more options.
3. Work-study program
International students with F-1 visa can work up to 20 hours a week on campus. If you want a paid internship off-campus, you must apply for Curricular Practical Training (CPT), which allows international students to work legally in the U.S. before graduating if the job is related to their study.
While the number of part-time CPT you can use is not limited, the use of full-time CPT is limited to a maximum of 12 months throughout your degree program.
Plus, if you use up all of the 12 months of your full-time CPT before graduation, you will not be allowed to apply for Optional Practical Training (OPT), which allows international students to work legally in the U.S. after graduation. So, be sure to plan wisely.
International students with M-1 visa face more limitations.
4. Private student loans
International students cannot apply for federal student loans, which are loans borrowed from the U.S. government, because federal loans are only for U.S. citizens and permanent residents. However, they can apply for private student loans.
Private student loans are borrowed from private lenders, such as banks, and must be used for education purposes only, such as tuition, room and board, fees, books, computers and electronics for school, transportation etc.
Although you don’t technically need to fill out a FAFSA (Federal Application for Federal Student Aid), because it is used by U.S. citizens and permanent residents to apply for federal loans, many schools will ask international students in need of financial assistance to submit a FAFSA so the schools can use the data to assess the students’ financial need.
In addition to FAFSA, international students will mostly likely need to fill out different documents. Reach out to your school and find out what kind of form you need to complete to apply for private loans.
Understanding financial terms
Private student loans don’t require application fees. But, there can be an origination fee if you actually receive the loan. However, that amount is rolled into the loan amount and does not have to be paid out of pocket.
Every private student loan has different repayment and interest rates. The repayment period typically ranges from 5 to 15 years, and interest rates get better with a more creditworthy cosigner.
Typically, the larger the loan, the longer the repayment period. It is very important to consider different repayment options and your ability to pay them back before borrowing.
Interest rates can be fixed or variable APR (annual percentage rate). When the rate is fixed, your monthly payments will be the same amount. With variable rate, however, your monthly payments will vary because the rate is tied to the market, which can go up or down. Keep this risk in mind when you choose your rate.
The interest on private student loans accrues while you are in school, but you generally have the option to defer payments. Making payments while you are in school will lower your loan cost, so try not to defer payments if you can afford it.
For prospective international students, you can apply for private student loans without proof of enrollment from your school and even receive conditional approval. Also, you can show your school the pre-approved loans to satisfy the financial requirement. Then, with the final acceptance letter from the school and your visa, you will receive the loan.
Once approved, private student loans are sent directly to your school for certification and then to you.
Necessity of cosigner
Most private student loans require a creditworthy cosigner, who is a U.S. citizen or permanent resident and has lived in the U.S. for the past two years.
To most international students, finding a cosigner can be tricky. If you are without a cosigner, you can still look for private student loans that do not require a cosigner.
For example, MPOWER loans are designed specifically for international students without a cosigner. Prodigy Financing also doesn’t require a cosigner for international students from certain countries, who intend to pursue an MBA degree or a postgraduate degree in engineering, business, law or public policy in listed schools.
Instead of determining your eligibility based on your cosigner, no-cosigner loans look at other factors such as your career potential, your estimated graduation date, and whether your school is on the approved list.
Although each loan is different, most no-cosigner loans require documents like your resume, university transcripts (past and current), standardized test scores, employment letter or pay stub, and Form I-20, “Certificate of Eligibility for Nonimmigrant Status.”
When you find a no-cosigner loan, be sure to check interest rate and repayment terms before signing up. Although it can be exciting to find a no-cosigner loan that fits your situation, make sure you check all the terms and conditions and understand your responsibility as a borrower.
Not all U.S. banks and institutions offer private student loans to international students, but below is a list of some that do:
- Discover offers private student loans for international students that require a cosigner with good credit history. Since interest rates are credit-based, the better your cosigner’s credit history is, the lower the interest rate. You can choose between fixed or variable interest rate. You can receive benefits, such as 1% cash reward of the loan amount for good grades and 0.25% auto debit reward. Check here for the different types of loans.
- Citizens Bank allows international students to apply for private student loans if they have a creditworthy cosigner who is a U.S. citizen or a permanent resident. While the minimum borrowing amount is $1,000 for both undergraduate and graduate students, undergraduate students can borrow up to $100,000 and graduate students up to $110,000. Check here to see which student loan best fits your needs.
- CollegeAve offers private student loans to international students with a valid social security number and a qualified cosigner. You will receive 0.25% auto pay interest rate deduction as long as a valid bank account is designated for required monthly payments.
- EDvestinU is a nonprofit higher education lender that offers private student loans with low-cost fixed and variable rates. To qualify for the lowest rate, you must have a creditworthy U.S. citizen or permanent resident cosigner and be eligible for the 0.50% interest rate reduction for Autopay benefit.
- Sallie Mae’s Smart Option Student Plan for undergraduate students is available to non-U.S. citizen students with a creditworthy cosigner who’s a U.S. citizen or a permanent resident and required U.S. Citizenship and Immigration Service (USCIS) documentation. The minimum borrowing amount is $1,000. Your interest will be lowered by 0.25% with auto debit of your monthly payments. Sallie Mae also offers private student loans for international graduate students.
- SunTrust Bank offers the Union Federal Private Student Loan to international students with a cosigner who is a U.S. citizen or permanent resident. Applicants must provide a valid USPS domestic mailing address, a passport and appropriate documentation showing a legal right to remain in the U.S. throughout the relevant academic period, such as I-20. The minimum loan amount is $1,000, the maximum for the year is $65,000, and the maximum a student can borrow is $150,000. The interest rate, which can be fixed or variable, is lowered by 0.25% with auto pay. SunTrust customers get an additional 0.25% rate deduction if the auto pay is from a SunTrust bank account.
- Credible lets you compare private student loan rates — both variable and fixed APR — from several lenders, including the six named above, for free. The process is quick — you can get personalized rates in 2 minutes — and won’t affect your credit score. There are no origination fees or prepayment penalty. Check your student loan rate here.
- NOMAD helps find potential available student loan options for international students studying in the U.S. and around the world. NOMAD works with multiple lenders and have no-cosigner loan options. NOMAD doesn’t charge a fee for use of its online search platform, but it also offers consulting services for which it charges a fee. Check your student loan rate here.
5. Personal loans
Besides private student loans, which must be used to fund your education only, personal loans are available for international students to cover costs outside of school, like buying a car or relocating. For example, NOMAD helps international students connect with potential lending partners to secure private loans.
Unlike with most student loans, repayments on personal loans start right away. So, if you were to borrow a personal loan, you would need a job that can cover the repayment fees. Since this is often unlikely for students in need of financial assistance, personal loans should only be a last resort.
Finding the best fit
Paying for college can be daunting. As international students, the process may seem even more so. However, if you’re willing to look around more thoroughly, there are many people or institutions who are willing to help you enjoy college and invest in your future. If you keep searching, you will find your best fit.
But, keep in mind that student debt can be crippling, so borrow only what you absolutely need. It’s never a good idea to borrow just to improve your lifestyle.
Hyeyeun Jeon is from South Korea and a graduate from Carnegie Mellon University with a double major in Professional Writing and International Relations. She is passionate about non-fiction storytelling. She loves reading, watching, writing and producing stories about extraordinary lives of everyday people.