Today we will be discussing all things loan options for international students and things to consider before accepting the loan.
Before you consider taking a loan please be certain you have exhausted all means to get scholarship and every other option. Only consider a loan as your last resort.
LOAN OPTIONS
So we have many loan options available to International students but I broadly categorized them into 2 groups.
- Loan that requires a cosigner
- Loan that doesn’t require a cosigner.
A cosigner must be someone that is a citizen and that is willing to be a guarantor for the loan you are applying for. This person is also legally liable to pay back the loan in case you are unable to pay it back. If you have someone willing to be cosigner for your loan application, you will be getting 2 benefits.
You will likely be getting a lower rate on interest than you would have gotten if you are just applying yourself without a cosigner.
You will have more options of banks willing to give you the loan as oppose to the very small option you would have if you apply without a cosigner.
I understand that many international students do not have people willing to cosign for them and ready to take the risk of paying back the loan when applicants default so I will be focusing more on the other option which is loans that do not require a cosigner.
So for loans that does not require a cosigner, there are couple of popular options for international students namely PRODIGY Finance, MPOWER Financing and Quorum Federal Credit Union. On this post I will not be going into deep details about the aforementioned but if you need more information about any of those I just mentioned kindly drop a comment in the comment sections and I might consider writing a post on them if we have a lot of people interested in it but my advice, Try to apply to at least 2 of this options, Because first application fee is Zero and secondly, Sometimes people get rejected or they do not get the amount they applied for so it’s just best you have more than one option for your loan.
Things To Consider Before Getting a Loan
The Interest Rate: These always have a fixed portion and a variable portion. The Fixed portion is determined by the bank you borrowed the money from and the variable portion is usually pegged at some index either the LIBOR or PRIME rate that’s why sometimes you see your interest is something like 6% + LIBOR. That 6% is the fixed portion of your interest rate. Before applying for a loan from any bank, I’d advise you read more about these indices that the variable rate is pegged on.
Loan Repayment Plan: You need to check your repayment plan as some loans require you start paying back while still study like from day one, you need to check if you are only required to pay only the interest while still on school then pay the principal after graduation, you also need to check if you are required to pay both the interest and the principal while still studying, these are very vital and important things you need to check, You also need to check if there is a grace period, Some loan companies will say you don’t have to pay anything until after 6 months after graduation, some will say 3 months after graduation so you have to check the grace period, if there is a repayment that needs to happen while you are still a student, all these are very important things to check and confirm especially as you can only work for 20 hours in a week as an international student and you are most likely will not have huge money to start paying back the loans so fast.
Maximum Loan Offered: Some loan companies do not offer international student without a cosigner more than $50,000 some are $35,000. If you are going to a business school and you are looking to loan like $100,000 then that might be difficult. You might need to look for a loan company that will offer you the amount that you need, basically they don’t have any rules that says they can’t give specific amount, you just need to know that this company can offer you the amount you need.
The Processing Fees: You need to confirm the exact processing fees, what are the additional fees that you will incur while taking the loan, these are also very important because everything accumulates and when you graduate you will be marveled when you see the total amount of debt to be paid back.
Discounts: Basically some will tell you if you setup an automated repayment method you will get an instant 0.25% discount from your interested rate while some say if you end up after some years now have a cosigner they will reduce you rate by 1%. You just need to watch out for all these and they will make a whole lot of difference between one loan options and another.
Penalties: Are they any penalties for early payments? Some companies will say if you pay too early you will incur some extra fees or some penalties so just need to check for all those penalties you can face if you do one thing or the other because every 1% matters if we are talking about compounding.
I hope this post has been helpful and like I said, if you need me to write more details about any options I shared above kindly drop a comment in the comment section.
Wish you all the best
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