The cost of attending college or university has been on a steady increase the past decade, forcing many students to take out loans to afford higher education. While loans can be extremely helpful and make the dream of college attainable, it definitely complicates studying abroad.
Although you can apply to a study abroad scholarships and grants to offset costs, they may not necessarily be enough to cover everything.
The biggest questions we’ll be answering in this article are whether or not your college loans an be applied to studying abroad? If not, what do you have to do to keep them rolling if you put them on pause? Secondly, can you get a loan to study abroad?
Can You Get a Loan to Study Abroad?
Yes, you can absolutely get a study abroad loan. Although you can apply to a study abroad scholarships and grants to offset costs, they may not necessarily be enough to cover everything. If you are planning a study abroad experience that exceeds available funding, it’ll be helpful to look into study abroad loans.
Loans can help with expenses related to tuition and books, housing and board, and even cultural experiences. There are two different types of study abroad loans:
Federal Students Loans
Private Student Loans
Student loans can be confusing, so it’s very important to conduct read all the fine print and understand eligibility, the requirements, and what exactly you’re signing up for.
Generally speaking, to be approved for a student loan, the school you’re attending abroad needs to be accredited. Now this sounds easy, but the US Department of Education doesn’t provide a list of accredited schools outside of the US. Instead, they rely on other agencies to approve and accredit international institutions. An applicant should be able to demonstrate that the college or university is in good standing and reputable.
Your college study abroad office and financial aid office should be able to help you with both identifying relevant post secondary institutions and the application process.
It’s also important that the applicant (you) be in good financial standing. Study abroad loans can be more competitive than general school loans, so it’s even more important to demonstrate that you have good credit.
It might be required that you have a co-signer on the loan. If you’re doing this research well before your study abroad program (say, a year or two out), it might be a good idea to apply for a student credit card (and pay off everything on time!) to help build your credit if you haven’t already.
Loans Are Treated Differently Depending on Your Program Type
The student loan versus the study abroad loan process is nuanced.
Basically, most institutions and loan agencies treat the two types of loans separately and have separate processes for each one. The applications are different, the repayment schedules are different, and often the qualifications are different. Therefore, one of the easiest first steps to take is to start with your own institution to figure out if you’ll need a study abroad student loan or if you can get away with a normal student loan.
Many schools are able to apply broader student loans to study abroad experiences if study abroad experience is through that school. For example, if you attend the University of Michigan, you will probably be able to apply your student loan funds to a University of Michigan study abroad program — i.e. one of their faculty-led programs or a direct exchange with a partner university abroad.
While it may sound limiting, many schools have extensive study abroad programming, even some of the smaller liberal arts schools are offering programs in multiple countries. Your first step should be to meet with your study abroad and financial aid offices and see what your options are.
Federal Student Loans
Federal Student Aid, sponsored by the Department of Education, provides a helpful list of schools that are eligible to participate in federal loan programs. Here you can search programs and schools and learn more about the application process and what is required of students and their institutions. For students already receiving federal aid for college or university, you will be familiar with the standard FAFSA forms (Free Application for Federal Student Aid) that need to be filled out every year.
The key to successful application process is starting early (even as much as a year in advance), staying organized, and contacting your university, the FAFSA hotline, or your international institution when you have questions. You’re probably not the first person to be applying for a loan at your chosen international school, so be sure to reach out and clarify any questions that might arise.
According to Federal Student Aid, there are several types of loans that you might apply for:
A federal student loan from the William D. Ford Federal Direct Loan (Direct Loan) Program.
A Direct Subsidized Loan or Direct Unsubsidized Loan.
Direct Unsubsidized Loans and Direct PLUS Loans available to graduate students.
Your parent also might be able to borrow on your behalf; he or she should ask about getting a Direct PLUS Loan for parents.
International schools do not participate in the U.S. Department of Education’s grant programs, so you will not be able to obtain a Federal Pell Grant to get your degree at an international school.
Amounts for federal loans vary between $5,500 and $20,500 (definitely enough to cover much of the cost of study abroad). The amount will be determined by a large number of factors, including how long you intend to study internationally.
If you’re applying for federal loans for the first time you will be required to attend entrance counseling, which explains the loan process in detail and provides financial planning tools. Repaying a loan after your Study Loan Abroad experience is just like repaying it for an American school. Student aid has some helpful steps to understanding the process. For more questions, consult this helpful myths and realities page that addresses specific concerns of students on federal financial aid hoping to study abroad.
Source: https://www.gooverseas.com/blog/what-you-need-to-know-about-study-abroad-financial-aid
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