How international student loans work in the U.S. for Pakistani students

Taking out an international student loan to attend college or graduate school in the U.S. is a big financial decision. You’ll be paying back your student loans for years to come, so it’s important to compare your loan options and find one that works best for your needs. To help you navigate these confusing waters, we’ve put together this overview of how student loans work for Pakistani students in the U.S. Read on to learn how to get an international student loan, how student loan interest rates work and more.

1. The average cost of a master’s degree in the U.S.:According to the Education Data Initiative, as of November 2024, the cost of a master’s degree typically ranges between US$44,640 (PKR 13,243,000) and US$71,140 (PKR 21,062,000), depending on the school, major and programme length. On average, the cost is around US$62,820 (PKR 18,345,000). (Note: Approximate exchange rate used is US$1 = PKR 296.66; actual rates may vary.)Source: Education Data Initiative – Average Cost of a Master’s Degree
2. Employment outcomes for master’s degree graduates in the U.S.Nearly 90% of master’s degree graduates from the class of 2023 were employed or continuing their education within six months of graduation, reflecting strong career prospects for advanced degree holders. While this marks a 0.9% decrease from the class of 2022, it remains higher than employment outcomes recorded during the pandemic, highlighting the resilience of the job market for master’s graduates.Source: NACE – Class of 2023: Nearly 85% of Bachelor’s Grads Employed or Continuing Education
3. Median living expenses in popular international student cities:Median living expenses in popular international student cities: International students from Pakistan looking for affordable options in the U.S. often consider cities like Columbus, Ohio; Pittsburgh, Pennsylvania; Houston, Texas; St. Louis, Missouri; and Atlanta, Georgia. Columbus offers a low average tuition fee of around US$19,800 (PKR 5,600,000) and a monthly cost of living of US$1,200 (PKR 340,000), making it an attractive choice for those seeking quality education at a lower cost.Source: 8 Most Affordable Cities for Studying in the US – Shiksha

A student loan is a type of instalment loan designed to help students pay for education. When you have a student loan, your lender typically sends the money straight to your school.

Your college or university in the U.S. will apply the funds to tuition, fees, room and board, and any other eligible expenses that were specified during the application process. If there’s any money left over, it may be returned to you so you can use it for books, supplies, and living expenses accordingly (make sure you check with your school to confirm their policies).

Student loans are not free money – you must pay them back with interest. Interest is the cost of borrowing a loan, and it accrues at a fixed or variable rate. Some lenders also charge a disbursement or origination fee on a student loan. It’s important to understand the differences between variable and fixed-rate student loans to decide which option is right for you.

American students applying for a student loan in the United States have fewer loan verification documents to submit than student applicants from other countries like Pakistan. As part of the loan application process, Pakistani students must submit an F-1 visa, which gives them permission to study in the U.S.

Pakistani students must first:

• Understand student visa regulations
• Learn how to get a visa

This includes knowing what type of visa they need for studying abroad, applying for a visa and preparing for and taking part in a visa interview with the U.S. Department of State.

You can spend student loan money on your education costs when studying in the U.S., and your school will need to certify the loan amount. These costs will vary from one school to the next, but they may include:

• Tuition and fees
• Housing
• Meal plans and groceries
• Books, laptops and other supplies
• Transportation

You can also use student loan money to cover your daily living expenses, but it’s important to create a budget and only borrow what you need.

As a Pakistani student, you aren’t eligible for loans through the U.S. government, but you are able to explore private student loan providers. Most private student loans start accruing interest from the day the funds are disbursed to your school.

Let’s say, for example, that you borrowed US$30,000 (PKR 8,589,000) at a 13.99% interest rate. Over a 10-year repayment period, your monthly payment would be US$466 (PKR 133,376) and you’d pay a total of US$25,874 (PKR 7,407,702) in interest charges. Keep in mind that if you choose a lender like MPOWER Financing that allows for interest only payments while in school, those payments will be less.

When you start paying back your student loans, a portion of your payment will be applied to interest charges and a portion will pay down your principal balance. If you can afford to make extra payments, you could pay off your loan faster – which means you pay less interest over the lifetime of your loan. If you plan to pay off your loan early, you will want to find a lender that doesn’t have prepayment fees.

One important item to consider is whether you want a loan with a fixed interest rate or a variable interest rate. Some international student loans are fixed interest rate student loans, meaning the interest you pay will stay the same over the life of your loan. Others come with variable rates, which often start out lower than fixed rates but can increase over time.

As instalment loans, student loans require monthly repayment. You’ll get a student loan bill every month for the duration of your repayment period. A common repayment period for student loans is 10 years, but you might have alternative options when you borrow depending on your lender and terms.

Repayment while you’re in school varies by lender. Some lenders have a grace period on student loans, meaning you don’t make payments while you’re enrolled in school or for a few months after you graduate. Once this grace period ends, you’ll start making full payments every month. Others have an interest-only repayment period, meaning you only make payments on the interest during a certain period, such as while you’re still in school. Keep in mind that the less you pay on your loan while in school, the larger your debt will be upon graduation.

You can usually set up automatic payments on your student loans, giving your lender permission to withdraw payments from your bank account every month on or before the due date. Many lenders offer an interest rate discount if you set up autopay. For example, MPOWER offers a discount of 0.25% for setting up auto pay.

As a Pakistani student, you might be eligible to take a private student loan from a bank, credit union or online lender. Many lenders will require you to apply with a cosigner who lives in the U.S., has good credit and has a steady income.

Not every Pakistani student has access to a cosigner who lives in the U.S. or wants to ask someone to share debt. At MPOWER Financing, our student loans are designed specifically for international students studying in the U.S. and don’t require a cosigner or collateral.

With an MPOWER student loan, you can apply to borrow up to US$100,000 (PKR 28,630,000) at a fixed interest rate on a 10-year repayment period. While you’re in school and for six months after you graduate, you will only have interest payments to cover. After this period ends, you’ll start making full payments toward both interest and your principal balance.

You can apply for an MPOWER student loan online as it’s a fully digital process. Depending on your situation, you could get your student loan approved and funded in as little as two weeks. See our article on when to apply for international student loans for more information about loan processing timelines.

Learn more about student loans from MPOWER Financing for Pakistani graduate students.

Interested in applying for an international student loan through MPOWER Financing?