If you’re an international student looking to study in the U.S. or Canada, finding the right education loan is crucial. With high tuition fees and living expenses, securing a loan is often a necessity, but it’s not always straightforward. International students face unique challenges, from limited access to government loans to requirements for cosigners and complicated application processes. In this article, we break down your loan options, key factors to consider, common mistakes to avoid, and how to navigate the process of funding your education successfully.
What are international student education loans?
International student education loans are designed to help cover the cost of tuition, living expenses and other school-related costs. Since international students don’t typically qualify for U.S. or Canadian federal aid, private loans or institutional loans are the most common options. These loans come from private lenders, universities or even home-country institutions and require careful consideration of terms, rates and eligibility requirements.
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4 key factors to consider when applying for international student loans
1. Cosigner requirements
Many private student loans require a U.S. or Canadian citizen or permanent resident to cosign your loan, meaning they’re responsible for repayment if you default. This can be difficult for international students who may not have connections in their host country. However, some lenders offer no-cosigner loans, typically for students in high-demand fields like STEM and who have strong academic performance.
2. Student loan interest rates
Interest rates on student loans can vary greatly. It’s important to understand the difference between fixed-rate student loans, which remain the same throughout the life of the loan, and variable rates, which fluctuate with market changes. Fixed rates provide stability, while variable rates may offer lower initial payments but carry the risk of increasing later.
3. Loan coverage
Not all loans cover both tuition and living expenses. When selecting a loan, you should make sure it covers all your financial needs, including housing, food, transportation and other essentials. Some loans are designed specifically for tuition, while others provide broader coverage.
4. Repayment terms
Check the repayment options and grace periods offered by lenders. Some loans allow you to defer payments until after graduation, which sounds convenient, but the interest still accrues and drives up the total cost of the loan. Consider lenders that may require immediate repayments because it reduces the total cost of the loan.
How to combine international student education loans with other financial aid
For many international students, securing a loan is just one piece of the funding puzzle. Combining loans with scholarships, grants and part-time work can help reduce your reliance on borrowing, easing your financial burden in the long run.
Common mistakes to avoid when securing international student education loans
1. Overlooking no-cosigner options
Many international students assume they need a cosigner to secure a loan, but that’s not always true. Specialized lenders cater to international students without requiring a cosigner, focusing instead on academic potential and future earnings.
Solution: Research private student loans without cosigners early in your search to see if you qualify for these alternatives.
2. Ignoring the total cost of the loan
Many students focus solely on interest rates without considering the loan’s total cost, including fees, accrued interest during deferment, and any penalties for early repayment.
Solution: Use a student loan calculator to estimate the true cost over the life of the loan and compare multiple lenders to find the best terms. And don’t forget to include additional fees like required insurance or foreign exchange fees when making payments between currencies.
3. Borrowing too much
It’s tempting to borrow more than you need, especially if the loan offers high limits. However, this can lead to unnecessary debt.
Solution: Calculate your exact financial needs based on tuition, fees and estimated living expenses, and avoid borrowing more than necessary.
4. Neglecting loan repayment planning
Many students overlook the importance of planning for repayment. Interest accrues even while you’re in school; if you’re unprepared, the debt can pile up quickly.
Solution: Understand the loan’s repayment structure, set a budget and consider starting small payments while in school to reduce interest accumulation.
Student loans with MPOWER Financing
MPOWER Financing is dedicated to helping international students access the education they deserve without the traditional barriers that often come with securing funding. With loans specifically tailored for international students studying in the U.S. and Canada, MPOWER makes it easier to finance your education and focus on what matters most – your studies and future career.
Here’s why MPOWER’s international student loans stand out:
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A loan based on your future earnings
FAQs
Yes, some lenders specialize in offering no-cosigner loans to international students. These loans often require a strong academic background or enrollment in high-demand fields like STEM.
Many loans cover not just tuition but also living expenses, including housing, food and transportation. Be sure to confirm this with your lender before applying.
The application process typically involves providing proof of admission to a U.S. or Canadian institution, financial documents, and potentially a cosigner (if required). For no-cosigner loans, your academic and professional potential will also be evaluated.
Repayment options vary from one lender to the next, but some loans offer a grace period after graduation before payments are due. Some lenders also offer income-based repayment plans, which adjust payments based on your salary.
DISCLAIMER – Subject to credit approval, loans are made by Bank of Lake Mills or MPOWER Financing, PBC. Bank of Lake Mills does not have an ownership interest in MPOWER Financing. Neither MPOWER Financing nor Bank of Lake Mills is affiliated with the school you attended or are attending. Bank of Lake Mills is Member FDIC. None of the information contained in this website constitutes a recommendation, solicitation or offer by MPOWER Financing or its affiliates to buy or sell any securities or other financial instruments or other assets or provide any investment advice or service.
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