Many lenders today offer education loans that will enable you to get an education abroad. If you are a student and have wanted to live in another country and learn about their way of life and customs, this could be the ideal situation for you. Each lender will have different qualifications and some loans are better than others, so looking over the terms and comparing study abroad loans before signing is very important.
Two Types of Loans
Loans from the federal government of the United States are quite straightforward. Everything is spelled out rather clearly, but you still need to know what to expect. Before applying, you will need to find out if the school you are applying to will accept that type of loan – some do not.
Federal Student Loans
The government offers three types of student loans: Stafford Loans, PLUS Loans, and Perkins Loans. In order to start the loan process, it is necessary to fill out the FAFSA application. You also want to start applying months in advance of the date you want the loan, because there is a lot of paperwork to fill out. Each loan is different and you will need to determine which government student loan you qualify for.
- Stafford Loans – These loans are given to students who have financial need. Stafford Loans are available as a loan in which the government pays the interest while the student is in school (subsidized), or as a loan that starts accumulating interest right away (unsubsidized).
- PLUS Loans – These Federal loans provide money for graduate studies. PLUS loans are available to students, to parents of undergraduate students, and to professional students.
- Perkins Loans – This government loan provides money for needy students for college or career schools. Perkins loans are low interest, but not every school offers them.
The private loan industry will differ considerably from government education loans. This difference requires that you look carefully at the documents before getting the loan. The things that you want to look at include:
- The Interest Rate:
This is the rate of interest you are going to pay each year on the loan. The interest rate may be either fixed or adjustable. The rate on private loans is apt to be higher than Federal loans, but compare rates to be sure you are getting a good one. Find out what the average is and watch out for rates that are much higher than that. When rates are too high, it can make repayment difficult.
- The Repayment Period
Some lenders will expect payments to be made each month after you take out the loan. This can be a problem if you are overseas, and are not allowed to work there without special permission. Other lenders will allow you to not pay anything until after you graduate, but may require payments to start immediately. Federal loans have the advantage of not requiring any repayments until six months after completing your degree.
The amount of time that you have to repay your student loan will also vary with lenders. The Federal government will give you up to 10 years to repay a loan, but private lenders will offer varying periods – possibly even half that time.
- Co-signer May Be Required
Many lenders are apt to require a co-signer on a study abroad loan. The co-signer will be required to live in the United States and must be financially able to repay the loan. Those qualified may include parents, a spouse, guardians, siblings, and parents in laws.
Before applying for a student loan to go overseas, you will need to meet two basic qualifications. It will be necessary to have good grades at an American college, and good credit.
If you do not have any credit yet, you can establish some by applying for a credit card. If you do not already have a good credit score, you will want to get one right away, and do it several months prior to sending in your application. Your credit score will be looked at before you are given a loan to ensure that you are likely to pay it back.
Many lenders will require that you come up with a percentage of the cost of going overseas to study. It may be around 10 percent, or more. You also need to be sure that you have money for a good health insurance policy that is accepted in the country you are going to, as well as for books, food, housing, etc.
Insurance for Your Loan
Students can unexpectedly die just as easily as anyone else. If there is a co-signer on your student loan to go abroad, it is a very good idea for you, or for the co-signers to get a life insurance policy on the student for the amount of the loan. This way, if the student does die, the co-signers (or the spouse) are not in debt for the loan, which could place them in serious financial straits for many years. These loans are inexpensive and will be well worth it, if a death should occur.
It is equally important for students to get health insurance as healthcare costs abroad are significantly higher than domestic expenses. It protects students from financial burden if an unexpected illness/ injury should happen.
Although there are many good lenders out there, not everyone offering student loans is honest. There are many scams out there, but sticking to a major well-known lender may be a good idea. If you choose to go with a lender that is unheard of, be sure to learn more about them first.
Study abroad student loans are available to students who qualify. They can offer you the opportunity of a lifetime for a unique learning experience and provide you with fun at the same time.