Private vs federal loans: Why most international students only have one option
If you’re researching how to finance your postgraduate degree in the U.S., you’ve probably come across advice about comparing federal and private student loans for international students. But here’s the reality: Most international students aren’t eligible for federal loans at all.
That means the typical U.S. financial aid playbook doesn’t apply – and your path to funding will likely look very different than that of domestic students.
So what exactly are the differences between federal and private education loans? And how can you navigate the private loan landscape with more confidence and less risk? Let’s break it down.
Why federal loans are off-limits for most international students
U.S. federal student loans – including Direct Subsidized and Unsubsidized Loans, PLUS Loans and income-based repayment programs – are only available to:
- U.S. citizens
- Permanent residents – Green Card holders
- Some eligible non-citizens – such as refugees or asylum seekers
If you’re on an F-1, J-1 or other temporary visa, you’re not eligible for federal funding. That means you won’t have access to:
- Government-set interest rates
- Income-driven repayment plans
- Federal deferment or forgiveness options
- Financial aid packages related to FAFSA (Free Application for Federal Student Aid)
This is why international students often hear “check with private lenders” as the default advice.
What private international student loans offer instead
Private international student loans are offered by banks, financial institutions and mission-driven lenders like MPOWER Financing. Unlike federal loans, they’re not standardized – and that’s both a challenge and an opportunity.
Things to watch for:
- Eligibility requirements vary: Some lenders require a U.S.-based cosigner; others don’t. Some only lend to citizens or residents of specific countries, i.e., locally-based students.
- Student loan interest rates may be fixed or variable – and can differ widely based on credit history or lender type.
- Loan limits vary by lender and may only cover tuition, not the full cost of attendance.
- Repayment terms differ: Some require immediate repayment, while others offer grace periods.
- Support and transparency depend on the lender – some are student-friendly, others are profit-driven.
Since there’s no centralized system like FAFSA, it’s up to you to research and compare private lenders directly.
What makes one private loan better than another?
Not all private loans for international studentsare created equal. The best one for you depends on your situation and goals.
Here’s what to prioritize as an international student:
- No-cosigner eligibility: If you don’t have family in the U.S. or Canada, make sure the loan doesn’t require one.
- Fixed interest rate: This provides inflation-proof predictable monthly payments and protects you from rate increases.
- Full cost coverage: Some lenders cap loans at tuition only. Others let you borrow for living expenses and health costs.
- No collateral requirement: You shouldn’t have to offer assets to secure a loan.
- Support systems: Look for lenders that offer free job-search help, visa guidance or career planning tools.
- Transparent terms: The best lenders clearly explain the APR (annual percentage rate), total repayment, including fees, and any potential penalties upfront.
This is about more than getting approved – it’s about setting yourself up for success during and after your degree.
A private lender built for international students
Because most international students don’t qualify for federal aid, MPOWER Financing exists to fill the gap with personal education loans designed around your real circumstances – not your credit score or passport.
MPOWER Financing offers:
- No-cosigner private student loans for approved schools and programs in the U.S. and Canada
- Loan amounts from US$2,001 to US$100,000
- Fixed interest rates and no prepayment penalties
- Support beyond the loan, through Path2Success – a platform with free career tools, optional practical training (OPT) job search guidance, planning resources and practical resume advice tailored for students
- No collateral or credit history required – just your academic and professional promise
If federal loans aren’t an option – and for most international students, they aren’t – MPOWER gives you a way forward that’s designed with your visa status, career plan and financial future in mind.
Focus on what you can control
It’s easy to feel left out of the federal aid system, but personal loans for international students don’t have to be a last resort. With the right lender, they can be a smart, strategic bridge to your next chapter.
Compare carefully. Ask questions. And choose a loan that fits not just your budget, but your goals after graduation.
