Can International Students Refinance a Loan?
Paying back student loans can be stressful, especially if you’re sending payments overseas. Along with your monthly payments, you may be struggling with international bank fees, changing exchange rates and variable interest rates that keep going up.
If you’ve been wishing for a lower interest rate or more affordable monthly payments, student loan refinancing could be a smart solution. By refinancing your student loans in the U.S., you might get a lower, fixed interest rate and smaller monthly payments.
Plus, you can pay your loan back in the U.S. rather than having to send money to your home country. Whether you’re from India or another country, here’s why refinancing can be helpful and how to do it.
What exactly is student loan refinancing?
Student loan refinancing means taking out a new student loan to replace one or more of your existing student loans. The main purpose is to reduce your interest rate or release your family member from their cosigner responsibilities.
With a lower rate, you could reduce your education debt. Plus, you’ll get new repayment terms, which could come with a more affordable monthly payment.
When you refinance in the U.S., you can repay your U.S.-based loan directly in U.S. dollars. You won’t have to send monthly payments to a bank in India or another country.
That means you won’t keep losing money to exchange rates or international banking fees. You’ll have more control over your student loan and an easier time paying it back.
Learn more: Guide to managing money as an international student
What are the benefits of refinancing?
Refinancing your international student loans in the U.S. has many benefits, including:
- Reduced overall loan costs with a lower interest rate: Getting a better interest rate could reduce your overall loan costs by hundreds or even thousands of dollars. It might also reduce your monthly payments so you have more spending money each month.
- Switch from a variable rate to a fixed rate: If your student loan has a variable rate, your monthly payments could be unpredictable, and your costs could go up over time. With a fixed rate, you’ll have the same payment month after month, which would be inflation-proof and easier to budget for.
- Release your cosigner: When you refinance to a no cosigner loan you can release your family member from their obligations. In addition, you can release the collateral, often a house or property, allowing the collateral to be used to support another family member’s education. This takes the burden off your parents and helps protect any family assets that are tied up with your loan.
- Stop sending money overseas: When you refinance in the U.S., you won’t have to send money to your home country, deal with unpredictable USD-to-Rupee exchange rates or lose money to international banking fees.
- Qualify for employer benefits: Some employers in the U.S. will help pay back your student loan up to US$5,250 per year. Your international student loan may not qualify for this assistance, but your U.S.-based student loan could.
Common myths around student loan refinancing
If you’re concerned about refinancing your student loans, it might be because some of these common myths are holding you back.
Myth 1: International students aren’t eligible to refinance their student loans
False! International students can refinance their student loans in the U.S. MPOWER Financing specializes in helping international students and professionals refinance with no cosigner or collateral required.
MPOWER is also the only lender in the U.S. that refinances Indian student loans.
Myth 2: You need to have a high U.S. credit score to refinance
Some lenders do rely heavily on an applicant’s credit score, but MPOWER Financing understands that you’re still building credit in the U.S. MPOWER looks at other factors, like your income potential and job status, when you apply for refinancing. Timely repayments of your refinanced student loan can also help you build your credit in the U.S.
Myth 3: Refinancing is complicated and difficult
Refinancing is a straightforward process, and it doesn’t take long to apply. It can simplify your life with fixed interest rates, U.S.-based payments and less stress.
Explore more: How to build a strong credit score in the U.S.
What happens if you don’t refinance your student loans?
You can keep your loans exactly as they are, but this decision could cost you. Some risks of not refinancing include:
- High variable interest rates that keep going up
- Costly bank fees on international transfers that continue while you make payments
- Unfavorable exchange rates between the U.S. and your home country
- Burdening a family member who cosigned or put up collateral for your loan
- No way of building your credit in the U.S. with your student loan payments
- Difficulty qualifying for student loan assistance from your employer
Over time, the costs of a variable interest rate, bad exchange rates and international banking fees can add up, making your student loans more expensive than they need to be.
How to refinance your student loans in the U.S.
If you’re an Indian student or other international student interested in refinancing your student loans in the U.S., here are the steps you can take.
1. Find the right lender
Look for a lender that works with international students, like MPOWER Financing. MPOWER specializes in international student loan refinancing and doesn’t require collateral or a cosigner.
In fact, you can release any cosigner or collateral that’s attached to your old loans. With MPOWER, you can get a fixed interest rate and more convenient, potentially lower payments.
2. Check your eligibility
Eligibility requirements may vary by lender, but MPOWER asks for the following:
- You live in the U.S. and have been working in the U.S. for at least three months full-time after graduation
- You have a valid visa or are a DACA recipient, refugee, or asylum seeker
- You have twelve month or more of work authorization
If you’re not sure if you qualify, you can do a quick eligibility check with MPOWER online.
3. Apply online
Your next step is to fill out an online application. You’ll provide your personal information and verifying documents, which you can easily upload to the MPOWER dashboard.
If MPOWER approves your application, MPOWER will pay off your original lender for you. Then, you’ll get set up with your new, refinanced student loan and start paying it back on a monthly basis.
By making on-time payments, you’ll build your credit score in the U.S. A good credit score can make it easier to take out a loan, rent an apartment or unlock other financial opportunities in the future.
Refinance to save money and feel more in control
Refinancing could save you money on your student loans with a better interest rate. You won’t have to deal with the headache of sending money to your home country or paying international banking fees.
You can take full ownership of your loan and start building financial independence in the U.S. If you’re wondering if it’s the right move for you, start by checking your eligibility.
For even more benefits, check out these five reasons to refinance international student loans.
