Loan Option Application Process Timeline & Overview
For many international students coming to the United States for an education, there’s potentially a major hurdle to overcome: how to fund their education. Higher education in the United States can be incredibly expensive. Despite the potentially high price tag, there are ways for international students to still obtain the education and degree they desire. Some options include scholarships and financial aid, but perhaps the most common way to receive an education is through international student loan options (also known as an education loan options in some countries, such as India). The realm of student loan options, especially for international students, can prove difficult to fully understand. This article will help explain some of the basics of student loan options for international students coming to the United States.
What Expenses Will a Student Loan Option Cover for an International Student?
Tuition for a degree alone can prove to be extremely expensive for international students studying abroad in the United States. Unfortunately, tuition is not the only expense that an international student will encounter while studying in the United States. The total cost of attendance can also includes expenses such as:
- Living Expenses,
- School Supplies (such as textbooks),
- Health/Student Medical Insurance,
- Other Miscellaneous Fees.
This is by no means an exhaustive list of the expenses that make up the total cost of attendance for an international student, but rather a few of the more common ones. Each international student will have a different total cost of attendance. Some of these categories are also rather broad. For example, living expenses refers to the basic expenses that one has in order to survive such as: rent, meals, clothing, and other unforseen costs. School supplies also encompasses a large spectrum of expenses, everything from textbooks to the cost to go on field trips.
While it may seem difficult, or even impossible, to accurately calculate or estimate what the total cost of attendance may be for an international student, thankfully most universities usually have a breakdown of expenses or even an average total cost of attendance to help you out. In order to find information related to this, we suggest you visit your desired school and/or program’s website.
Understanding this concept is typically important because figuring out what your total cost of attendance may be is typically the starting point in figuring out the total expense you will need an international student loan option to cover. Besides the total cost of attendance, other factors to keep in mind are any scholarships and need-based financial aid that you may receive. To accurately determine how much funding you can receive from a student lending partner, universities subtract financial aid or scholarships to you from the total cost of attendance. The remaining amount is then the amount to which you can receive a student loan option for. Before a lending partner disburses your loan option, the school you will be attending may have to verify with the lending partner that the amount of the loan option is accurate.
All in all, there are many factors that can potentially determine the amount of your international student loan option. In addition to the eligible cost of attendance, each lending partner has their own conditions for how much they are willing to loan out. Ultimately, you will have to go through both the school application and lending partner application process to know for sure how much you are able to receive.
What are the Conditions for Getting an International Student Loan Option?
Perhaps the best way to think about getting accepted for a student loan option is to compare it to getting into your desired program. You have to go through an application process. However, as you may know, almost all school applications are different from each other. Some may require a minimum GRE score, while others do not but instead require three letters of recommendation. In other words, the conditions to acceptance vary by school. Likewise, the conditions for an international student loan option will differ by lending partner and program. For example, some loan option programs may have a condition that you need a cosigner, and have further conditions for where the cosigner is from. Other lenders have their loan options limited to a particular list of schools. It all depends. By no means is that an exhaustive list of conditions that may have to be met in order to get an international student loan option; rather, they are examples to help illustrate what you may encounter.
Another condition that may need to be met for certain lending partners is admission into a university. In other words, for the approval process to begin, you may have to show your lending partner proof that you’ve been admitted into a school or program. In addition, some lending partners can potentially consider other factors as well to see if you can get a “proof of funds” approval.
How Does Loan Repayment Work?
If you do get approved for an international student loan option, over time, you have to start paying that loan option back to the lending partner. The process of repayment and repayment terms differ from lending partner to lending partner, and there may be different options available regarding repayment. The amount of time it takes to repay a loan option depends on the amount of your payments. Generally, a typical amount of time it takes to repay an education loan option for international students is about 10 to 15 years.
Another question many international students have about loan options is, when do you have to start paying the loan option back? Again, it depends on the lending partner. Some may make you start repaying right away, while others may allow you to put off repayments until after you graduate from your program. When a lending partner allows this to happen, it is called a “grace period.” A grace period typically can last for up to six months after you graduate.
If a lender requires you to start making your repayment installments while you are in school, sometimes those payments are less than they would be post-graduation.. Again, this varies from lending partner to lending partner and what is most plausible for you. We strongly suggest that you understand the obligations and expectations of your repayment plan with your lending partner fully and clearly before you agree to a loan option.
What is A Cosigner?
When you are looking for international student loan options, a term you might come across is “cosigner.” Some lending partners require a cosigner while others do not. Basically, a cosigner is a person who agrees to be legally bound to repay the loan option if you do not or cannot pay it back. Asking someone to be your cosigner is not a light request. You are potentially asking someone to put thousands of dollars on the line if you cannot or do not repay your loan option.
Often, international students ask their parents or close relatives to be a cosigner if that person is in a financial position to do so. However, a cosigner does not have to be a family member. It can be a friend or acquaintance.
All in all, loan option cosigners are potentially open to financial risk as the loan option repayment obligation will fall on them if you cannot or do not pay it back. However, if you are able to repay the loan option, the cosigner then has no financial obligation.
Does an International Student Need a Cosigner?
Many international students may be worried that they cannot study in the United States without a cosigner. Again, whether you need a cosigner depends on the lending partner and the loan option program that you choose. Having a cosigner on hand may allow you to have access to options that you would not otherwise have. That being said, even if you have a cosigner, that does not guarantee that you will be approved for an international student loan option.
How Do You Find a Cosigner?
As stated above, many international students that need a cosigner will ask their family members. However, if you cannot find a cosigner in your family, you may look to friends or acquaintances that would be willing to help. Another possible option to finding a cosigner is by contacting the alumni association of the program you are planning to attend. By doing that, you may be able to see if you can find someone willing to cosign for you. This is just one suggestion for finding a cosigner outside of your family and friends.
Not just anyone can cosign a loan option for you. Here are some broad guidelines for finding a cosigner:
- It helps to have a stable income. This can often mean that the cosigner has a solid credit history. Some lending partners can even go so far as looking at the cosigner’s place of employment.
- It would be helpful for your potential cosigner to have a solid credit score. A cosigner’s payment history helps demonstrate this. A solid credit score shows that the cosigner has a reputable history of paying people/businesses back for products, services, and/or loans.
- Perhaps most importantly, and obviously, the cosigner you choose should be able to pay the loan expense if need be. Oftentimes, in order for lending partners to evaluate this, they may look at factors such as the cosigner’s total income and/or total debts.
Please keep in mind that this is by no means an exhaustive list of qualities to look for in a cosigner. More so, it is intended to be a general guide for you to help you find one. Further, a cosigner having these qualities will not guarantee approval for a loan option, it is dependent upon many factors. For more information on how to find a cosigner, please visit our blog: How to Find a United States Cosigner as an International Student.
How Does Loan Option Disbursement Work?
Another question many international students may have is, if I have been approved for a student loan option, and I have accepted it, what happens with the money? Typically, the lending partner will then forward the money to your school or program. This is called a disbursement. However, before the disbursement can occur, the lending partner may verify that you are enrolled and attending that school and that the amount of money you are receiving is accurate. After the disbursement, it is then the school’s responsibility to make those funds available to you. This process differs by lending partner and by school. For information on the school’s verification process and their correlating disbursement procedures, we strongly suggest contacting their financial aid office to find answers to the questions you may have.
Can International Students Take Out U.S. Federal Loans Options?
The United States has four federal student loan option programs. They are:
- Federal Perkins Loan,
- Direct PLUS Loan,
- Direct Unsubsidized Loan,
- Direct Subsidized Loan.
Unfortunately, only permanent residents and citizens can be eligible for any of these United States federal loan programs. If you are on a student visa, including an F1 visa or J1 visa, you unfortunately cannot apply for one of these federal education loan options. Even though international students cannot get a federal loan option, there are still private international student loan options available.