In recent years, the number of Americans wishing to enroll in educational institutions abroad has overgrown. There are many reasons for this:
- In some countries, education is much cheaper than in the United States;
- European and East Asian education is highly valued in the professional environment;
- Many people want to change living conditions, travel, and enrich their knowledge.
However, in some cases, students do not have enough funds to enroll in a foreign college or university. One of the best solutions, in this case, is to obtain loans to study abroad, but such options are a little more difficult to find than loans for American colleges. Let’s review how to look for the best study abroad loans properly.
How do I apply for federal loans?
First of all, you will need to fill out the FAFSA (Free Application for Federal Student Aid) application to find out how you fit the conditions for issuing loans. That is, in this way, you will know in advance what your chances are for a positive response from the Department of Education. What’s more, there are several types of study abroad loans you can apply for:
To obtain it, you will need to prove that you are in financial need of a loan, and without the help of the federal authorities, you will not be able to cover all the costs of tuition. To do this, you will need to present a statement of your household income.
These loans are available for bachelor’s and master’s degrees. Unlike the first option, unsubsidized loans do not require a financial statement.
Direct Plus loans
This type of loan is intended for students and their parents to cover the costs of studying both in the United States and abroad. Although you do not need to prove your financial need, the federal authorities will ask you for a credit check. This type is best for parents who pay for their kids’ education.
Benefits of federal loans for Americans who want to study abroad
- Low level of interest rate;
- A plan for repayment of a loan based on income, which will reduce the loan burden of the borrower;
- The ability to obtain loan forgiveness in some instances in the future.
When and how should you apply for a private loan?
If federal loans could not fully cover your tuition and living expenses, or if you did not have time to prepare documents for the FAFSA deadline, then you can turn to private companies, most often banks, that are ready to provide you with loans for studying abroad.
Interest rates for private loans are higher than federal ones, but there are many discounts for students. You will repay the loan during your studies or take a deferral until graduation and return to the United States. It is easier and faster to obtain private loans than federal loans, although their conditions are less favorable for the borrower. Today, you can get many private loans online without even going to the bank.
What criteria do you need to consider when taking out a loan for study abroad?
- Interest rate determines how much your loan will be at the end of its repayment. In other words, how much money you will have to return for the money taken to the Department of Education or the bank.
- Repayment term sets the loan repayment time. The longer you pay the loan, the lower your monthly payment, but the higher the interest rate.
- Grace period specifies precisely when you will need to start repaying the loan. It can be just a month after signing the contract or right after graduation. Moreover, the repayment delay may be relevant in case of unemployment or treatment of the borrower;
- Forbearance conditions give the conditions under which you can ask for the cancellation of the loan if you are financially and physically unable to repay the loan.
Today, it is becoming more and more affordable for American students to study abroad. However, if you have to take student loans, you should carefully analyze the terms of the loans and the ways to obtain them. The best method is to contact the US Department of Education via the FAFSA and only then ask for aid from banks. Be selective in your choice, and then repayment of the loan will not be difficult for you in the future.