International Student Blog
USD Loan Option FAQs

USD Loan Option FAQs

USD Loan Option FAQs

Nomad Credit FAQs

Who is Nomad Credit?

Nomad Credit is a financial marketplace that acts as an intermediary between international students and potential loan options from our lending partners.

Nomad Credit helps international students search for and compare education loan options from our lending partners who are located in both the U.S. and India. 

Advantages of going with Nomad Credit vs going directly to the bank website on their own?

  • Expertise in working specifically with international students
  • We can help you compare your potential available loan options
  • An ongoing resource to help with additional issues you may run into with the loan option application process

What are potential benefits of a loan option through Nomad? 

Autopay Discount:

Some lenders offer an Autopay Discount. You may be eligible to receive a discount if you sign up for auto-pay at certain lenders to have monthly payments automatically deducted from your bank account.

For more information, please see an example discount here: Autopay Discount

Interest-Only Payment Discount:

Some lenders offer an Interest-Only Discount. You may be eligible to receive an additional rate discount if you make interest-only payments while in school. This is typically only for loan options with an eligible US cosigner. 

For more information, please see an example discount here: Interest-Only Payment Discount

Cash Back:

Some lenders offer cash back for good grades. You may qualify for a cashback reward if you maintain a good student status.

For more information, please see an example discount here: Cash Back

Additional benefits offered by some US-based lending institutions:

  • No prepayment fees
  • No origination fees
  • No application fees

Loan Option FAQs 

What is the difference between variable and fixed rates?

Fixed interest rates:  fixed-interest rate means the rate doesn’t change through the entire life of the loan option. The last payment will have the same interest rate as your first payment. Unless you refinance, the interest rate never changes.

Variable interest rates: Variable rates change based on economic conditions. The interest rate can rise or fall based on the index rate. If the index rate increases, your interest rate and monthly payments will go up, as well. If the rate drops, so does your monthly payment.

What are the terms and conditions of the lender/loan option?

There are numerous loan options and repayment options dependent on the borrower, cosigner profile, and lender that the terms and conditions can vary vastly between options. Due to this, submitting an application to seek a pre-approval first will allow you to review the terms and conditions relevant to you. 

With that said, typically there are options for both variable or fixed interest rate options and repayment terms typically are between 5-20 years, which may include an option of interest only payments while in school and/or deferred payment until six months after graduation. 

How will I get the lowest interest rate?

We cannot speak to the exact underwriting of each lending partner, but the rates are often impacted by the financial strength and credit quality of your cosigner.

Repayment options?

Typically the following are repayment options that one might find for a USD loan option. 

 1. Immediate Repayment: You start making principal and interest payments immediately after the loan option is fully disbursed.

2. Interest-Only: You make interest-only payments while you are in school, and start making principal and interest payments after you leave school or drop below half time.

3. Full Deferment: You make no payments while you are in school at least half time. Typically, there is a six month grace period after graduation/leaving school. At the end of that period you will start making principal and interest payments.

4. Minimum Payment: You make low fixed monthly payments, typically $25 per loan option per month, while you are in school, and start making regular principal and interest payments after you leave school or drop below half time.

Are there prepayment penalties?

No, there is no prepayment penalty or any other penalty for paying more than the minimum monthly payment or for paying off the entire loan option early. 

Cosigner FAQs

What is a cosigner?

A cosigner accepts equal responsibility for the repayment of a private student loan option. A cosigner need not be related to the student. Many international students will ask a relative or family friend that currently lives in the US.

Cosigner requirements:

  • Must be a US citizen or permanent resident
  • Must be creditworthy

Generally, the higher a cosigner’s salary, the higher their credit score, and the lower their debt-to-income ratio is, the better their chances of receiving a favorable credit decision. However, many factors are involved in determining if a cosigner is creditworthy and until an application is submitted it will not be known. A loan option approval and/or low rate is not guaranteed. 

Why does the student need a cosigner?

Private student loan options are credit based. Typically, international students will have no credit. 

Students with no credit history or a low credit score may find it difficult to qualify for a private student loan option on their own. 

International students may have the option to apply for a US dollar loan option with a creditworthy cosigner. By applying with a creditworthy cosigner, they may improve their likelihood for loan option approval and may receive a lower interest rate than other no cosigner or INR loan options. 

With many schools not eligible for a no cosigner loan option and/or unable to cover up to the full cost of attendance – a US cosigner loan option can often be the only avenue for an international student to study in the US. Even if the student qualifies for a private student loan option on their own, the student may receive a much lower interest rate by adding a cosigner.

An additional benefit is as they begin to make on-time payments, it’s also a great way to help them build their own credit history.

Cosigner roles & responsibilities:

As a cosigner, you share the responsibility with the borrower for on-time loan option payments until it is paid in full. 

Depending on the lender and the loan option, in the event of a loan option default, the cosigner will assume full responsibility of the loan option repayment.

Depending on the lender and the loan option, in some cases, the borrower can apply to have their cosigner released after meeting certain requirements. 

Cosigning process:

Nomad Credit will assist the cosigner to complete a loan option application on their own, this process typically requires Nomad Credit to collect no personal information of the cosigner. 

Do they require relationship proof (between student and cosigner)?

Typically for USD loan options, there is no relationship required between borrower and cosigner. 

For No Cosigner Loan Options, does the school take on the role of cosigner?

No, the school does not take on the responsibility of a cosigner for no cosigner loan options.

Can a cosigner be released of their responsibility after some time, if the student starts earning money?

You should check specific lender’s disclosures and contracts, but typically, the cosigner is responsible for paying the loan option in the event that the student defaults on it.

What happens in the event of death and/or permanent disability of the borrower?

Typically, the loan option may be cancelled in this event, sometimes at the sole discretion of the lender. Please reference your specific lender’s terms, disclosures, and contracts to review the terms that may apply to you. 

Can I make an agreement to shift liability to the parents/students?

This type of arrangement does not exist within the confines of a student lender agreement between the borrower, the cosigner and the lender in the US.  There is nothing to stop you from creating a separate contract with the borrower/parents however this would not involve Nomad Credit or the lender. 

Does the cosigner have a hard pull on their credit?

A cosigner should expect that they will have a hard pull on their credit when applying for a US cosigner loan option. 

What is the difference between a hard pull and a soft pull? 

Lenders can do a soft pull check for an overall idea of your financial status before pre-approving your loan option application, or credit bureaus can soft pull your file if you request your credit score.

Soft pull inquiries have minimal impact on your credit score, but may be noted as a file access. 

Hard pull credit inquiries involve an official check of your credit report. While soft pull inquiries have minimal effect, hard pull checks are listed on your credit file and therefore can affect your credit score.

Nomad will always let you know if a hard pull is to occur before we initiate one on your behalf.  

Process FAQs

What is the total time frame from loan option application to certification usually?

Lender certification typically may take between 1-3 weeks after the application is completed and documents have been uploaded. 

Recently with the pandemic, this typical timeline may be longer. 

What set of documents are required to submit a US cosigner loan option application?

 From the student:

  • Identification Documents
  • I-20 Documentation

From the cosigner:

  • Identification Documents
  • Financial Documents

What is school certification vs lender certification?

If your loan option is approved and accepted, then the lender will send the loan option to your school to be certified. The school then confirms that you are enrolling for the academic period that the loan option is for, and that the amount you have been approved for is allowed per the school’s cost of attendance minus any other aid you may have received. They will also tell the lender when the funds should be disbursed to the school. 

There is no such thing as “lender” certification, once the loan option is approved by the lender, accepted by you, and certified by the school, the loan option will typically be disbursed. 

How long does school certification take?

School certification/disbursement processes can vary, and may be further altered due to the pandemic. Typically schools will certify a loan option 2-6 weeks before the intake start date. 

You should check with your school for their exact timeline of certification.

Does the US Bank sanction letter affect my Visa clearance? Will it reflect that I have a connections/relatives in the US?

There is a belief by some that having a US Bank sanction letter is a detriment to success of visa approval. Nomad has seen no compelling evidence to suggest this is true and has had numerous customers that have taken their US Bank sanction letter to their appointment and had a successful visa approval. 

Disbursal process as a whole?

Disbursement basically means that your school is making the funds of your loan option available to you after they have received it from the lender. Disbursement refers to the pay out process of funds from the borrowing source you have used. You may receive the funds in one disbursement or in a few. It depends on the lender, your school and the loan option.

Once the school receives the funds from the lender, they will disburse the loan option. A common way that a school may disburse loan option funds is by crediting what is known as your student account. In turn, those funds may be used to pay your tuition and any other associated fees. There may be a remaining balance left on your account. If there is an extra amount, then that amount may be credited to you by another method, like a check, for example.

For more details, please read: https://blog.nomadcredit.com/international-student-loan-disbursement-work/ 

Is it a mandatory requirement to be physically present in the US to get disbursals from US Lenders?

This will vary by lender and by school, and is further complicated due to the pandemic.

You should check with your school for their exact requirements.

Braylan Saunders-Effort

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