iStock-658164788 smaller.jpg

Can Immigrants Get Student Loans?

Oftentimes, immigrants assume they are ineligible for student loans, but there are loan programs and options available specifically for international students and immigrants who are on student visas.

Immigrants may need to meet higher requirements or take extra steps to get a loan, though, so it’s important to understand the proper steps to take and what the best options are. This article has all the information you need on how to get a student loan as an immigrant.

Student Loans for International Students: How to Get Started

The financial needs of international students can vary greatly depending on visa status, financial resources, and obligations outside of school. It’s important to have a thorough understanding of all the factors involved in taking out a student loan or you could end up trapped in unfavorable terms with obligations you didn’t expect. Below are some of the biggest considerations to make before taking out a student loan.

What Size Loan Should I Take?

The first step in deciding the size of your loan is determining the funds needed to get through school. Your paid interest amount grows with the volume of your loan, so taking out more in loans than needed will cost you more down the line.

Another important consideration is your future earning potential. If your studies are in a field with the potential for significant income after graduation, and you have a plan for reaching that level of income, then you have a little more leeway in taking out larger loans.

Understanding Interest Rates

Interest rates vary based on the lender and the circumstances of the applicant. Federal student loans typically have the lowest interest rates, but unfortunately, noncitizens are ineligible for federal loans.

Factors determining interest rates include term length, credit history and score of the borrower, as well as whether the borrower has a cosigner. Ultimately, the average student loan interest rate falls somewhere between 2% and 14%.

What Are the Terms and Conditions of Student Loans?

Standard and Extended Repayment

A standard repayment plan involves a single monthly payment at a fixed amount over the term of the loan, usually less than 10 years. An extended repayment plan follows those same terms, but over a longer term length.

Graduated Repayment

The interest rate increases over the length of the term with graduated repayment plans, the idea being that borrowers can make more substantial payments years after they graduate, when their income rises.

Income-Based Repayment

The underlying idea of income-based repayment is similar to graduated repayment, but instead of interest increasing at a fixed rate it is tied directly to your income, making it a slightly safer option.

Getting an International Student Loan — The Process

When Should I Apply for a Student Loan?

You should apply for student loans as quickly as possible so you will have the necessary funds on hand for tuition, books, or housing when school starts. Once you are accepted the funds are typically disbursed within 2 months, and sometimes as quickly as a week or two.

What Documentation Do I Need for an International Student Loan?

The following documents are usually requested by financial institutions for an international student loan application:

  • College Acceptance: Institutions will want proof that you’ve been accepted to a college or university, and plan to attend the upcoming semester.

  • Visa: You will need to have a valid student F-1 visa at the time of application.

  • United States Address: While a permanent residence in the U.S. is not necessary, you must provide the address that you will be staying at in the U.S.

Other supporting documents: The following visas and documents can be used to verify status and identity if you don’t have a social security card: F-1, H1-B, L-1, or Forms DS-2019, I-20, I-766, and I-797.

What is a Cosigner and Do I Need One for My Loan?

A cosigner is someone who leverages their own credit and finances on behalf of the applicant, taking on liability for the loan if the borrower does not repay. Since the cosigner functions as insurance for the lender, they typically must be a U.S. citizen with good credit.

How to Get an International Student Loan: Top 6 Lenders

Stilt

Stilt is a lender focused on immigrants and international students seeking loans. While most lenders require U.S. citizenship for access to lower rates, Stilt offers the same rates for citizens and noncitizens. With interest rates currently starting at 7.99% and no cosigner required, Stilt combines competitive rates with a lower threshold of requirements. This makes them a perfect choice for those struggling to meet the criteria of other institutions.

MPOWER

Like Stilt, MPOWER is geared specifically towards international students. They take academic performance and potential future earnings into account so a cosigner isn’t needed for eligibility. Qualifying for MPOWER can be difficult, though, because they use a strict criteria to determine future earnings potential that many applicants cannot meet.

Prodigy Finance

Prodigy Finance is another institution which offers loans for international students. They focus especially on academic pedigree, only providing loans to students at elite institutions and even excluding whole fields of study if they lack a significant future earnings potential.

Wells Fargo

Wells Fargo is one of the largest institutions offering loans for international students, though you must have visa status and a current U.S. address. While Wells Fargo is not specifically geared towards international students, their terms are in line with other lenders, they offer perks like a dedicated student loan specialist and forbearance programs.

Discover

Discover requires a cosigner for eligibility, but if you can find one for your application they have some favorable terms, such as no fees and rewards for academic performance.

College Ave

College Ave, like Discover, requires a cosigner for applicants without a credit history, which will include most international students. They offer a range of repayment terms for those who qualify, and include a host of repayment options.

Conclusion

While immigrants don’t have exactly the same access to credit as U.S. citizens, there are still a range of options available to fund the education of international students on a visa. Understanding the rates and terms institutions offer, and finding a lender that has criteria they can meet and terms suitable for their current and future circumstances, is the most important step international students can take when seeking a loan. With a thorough understanding of the conditions of the loan they will be able to get their degree and begin paying off the loan as quickly as possible.