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Guide to Study Abroad Student Loans

Guide to Study Abroad Student Loans
Melissa Brock
Melissa BrockUpdated April 14, 2023
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“Study abroad” means pursuing your education in a foreign country. You might continue your major classes, take elective courses, or learn a foreign language. It could be the experience of a lifetime.If you’re a study abroad student, you may need help affording this experience of a lifetime. Funding this education may involve private or student loans. Studying abroad can vary in cost, depending on whether you choose a direct enrollment option (you handle the application process and move to the university on your own), which usually saves money because you don't pay a third party. Third-party providers arrange everything for you, including offering support for your visa application and registration for classes. Third-party providers usually cost more.We'll look at how student loans for study abroad work, the types of loans available, the requirements to get a loan, and how to get them.

Can Student Loans Be Used for Study Abroad?

Yes, you can use a student loan for study abroad as long as you attend an eligible program. You may also get other types of aid to help you finance your student loans, including scholarships and grants. Note that you have to pay back loans with interest, while you don't have to pay back scholarships and grants. Consider contacting your college or university to learn more about what types of aid that fit your eligibility.

How Do Study Abroad Loans Work? 

You must apply for study abroad student loans, and getting one depends on the type of loan you plan to get. Qualifying for federal student loans involves filling out the Free Application for Federal Student Aid (FAFSA). Your college or university will send you a financial aid award letter that lists the types of federal student loans you can get, including the following:
  • Direct Subsidized loans: These types of loans allow eligible undergraduate students with financial need to cover college costs, including study abroad.
  • Direct Unsubsidized loans: Undergraduate and graduate students can take advantage of these non-need-based types of loans. 
  • Direct PLUS loans: Graduate/professional students and parents of dependent undergraduate students can take advantage of non-need-based Direct PLUS loans. Borrowers must get a credit check to qualify. 
If you need additional loans or if your school doesn't participate in the federal student loan program, private student loans may help fill in the gaps. Note that private student loans do not receive federal student loan protections such as federal student loan benefits, such as through deferment and forbearance, and income-driven repayment options. Deferment means you receive a temporary pause in student loan payments where no interest accrues on Federal Direct, Federal Family Education (FFEL) Program, and Perkins Loan borrowers. You may qualify while undergoing cancer treatment, during economic hardship, while in school, while completing military service, or through post-active duty, and more. Forbearance is also a temporary pause on your federal student loans, but interest may accrue. You must continue to pay any interest that accrues during the forbearance period. An income-driven repayment plan means your monthly student loan payment sets at an amount that reflects your income and family size. It's a good idea to look at what you might pay later out of college. Knowing your average student loan debt to repay can help you prepare for future payments and help you handle future student loan debt.  

Types of Study Abroad Student Loans 

You can get two different types of study abroad loans, federal and private student loans:
  • Federal student loans: Federal student loans come from the federal government. You must file the Free Application for Federal Student Aid (FAFSA) to qualify for them.
  • Private student loans: Federal student loans may not cover all your expenses, so you may also get private student loans to study abroad. Private student loans do not come from the federal government. They come from private lenders, such as banks or online lenders.

Requirements for a Study Abroad Student Loan 

The most important study abroad loan requirement involves making sure that your U.S.-based school participates in the federal student loan program. Once you know your school does, you can file the FAFSA and apply for federal student loans.Beyond that, you will also need to know whether you will qualify for a private student loan if you choose to take one out. You may need to put together some pieces of information to make up your application, including the following: 
  • Address
  • Birthdate 
  • Email address
  • Phone number
  • Social Security number
  • Employer name
  • Proof of income
  • Bank account information
  • Rent/mortgage payments
  • College/university name
  • Cost of study abroad program
  • Student status
  • Financial aid received
  • Cosigner information

Getting Student Loans to Study Abroad 

Getting student loans to study abroad may prove more challenging if you enroll directly in a college abroad. However, some colleges and universities not located in the United States participate in the U.S. Department of Education's federal student loan program. You'll need to reach out to lenders individually to learn about your eligibility.Understand how you can use the loan money and how your lender disburses funds. Disbursing means how the payment gets paid out from the student and how it goes to the school you attend. Remember that you may also need to research the costs of transportation, housing, and food costs. Some programs don't build these expenses into the cost structure.

How Can You Get Study Abroad Student Loans? 

You can get federal student loans by filing the FAFSA. The FAFSA form requires you to add personal and financial information about you and your parents, including age, marital status, degree level, military status, and dependent information. You must also input information about your federal income tax returns and tax documents for both you and your parents, and you can use the IRS Data Retrieval Tool to make the process go faster.Applying for private loans involves visiting a lender's website (bank, credit union, or online lender) directly on the site. Some colleges and universities have "preferred lender lists," so check with your institution about the private lenders they recommend. Research interest rates, payment schedules, and fees before you apply. Calculating student loan interest can help you determine how much you'll owe later on. Private student loan lenders may require the following information from you: 
  • Social Security number
  • Proof of income
  • Government-issued ID 
  • Estimated graduation date, academic term, and study abroad term
  • The amount you plan to borrow
  • Other financial aid you expect to receive
In many cases, you can learn your rate and determine whether you're pre-qualified before you finish your application. You can also choose your rate (fixed, which stays the same, and variable, which changes depending on market conditions) while you go through the private loan process. Lenders often do a soft credit check during the pre-qualification process, which won't hurt your credit score. When you submit your official application, the lender will do a hard credit check, which could temporarily dent your credit score.Consider whether you want a cosigner or not. A cosigner is a trusted adult who will agree to pay back your debt if you do not pay it back. In many cases, you can add a cosigner to your loan application reasonably quickly.

How Much Do You Need to Cover a Study Abroad Program? 

The amount varies depending on the program and your choice of country, but it typically costs between $4,000 and $10,000 to study abroad. Check with your U.S.-based college or university about the cost details, or pencil out the costs with the international university you plan to attend.

The Takeaway

It's a good idea to research how you might want to fund your study abroad experience. Financial aid often looks like a jigsaw puzzle. It's a matter of trying to put all the pieces together — loans, scholarships, grants, and personal savings — to determine how to fund this once-in-a-lifetime experience.After your study abroad experience, remember that you can always refinance your student loan for studying abroad. (Learn more about paying student loans while living abroad if you decide to stay permanently.) Refinancing will help you lower your monthly payments. 

3 Student Loan Tips  

  1. Once the pandemic-related pause on federal student loan payments ends, going back to making payments may be hard on budgets. One solution is to refinance to a lower interest rate, longer loan term, or both, depending on your situation. (The tradeoff is that you’ll be forfeiting federal benefits such as repayment programs.) Find and compare your student loan refinance options.
  2. Paying extra each month on your student loan can reduce the interest you pay and so lower your total loan cost over time. (The law prohibits prepayment penalties on federal or private student loans.)
  3. One pain-free way to pay down your student loan sooner: send in your tax refund to put against the principal balance. Since it’s money that has already been taken out of your pay, you won’t miss it.

Frequently Asked Questions

Can I take out student loans to study abroad?
How much loan can I get to study abroad?
How does a study abroad loan work?
Photo credit: iStock/blackCAT

About the Author

Melissa Brock

Melissa Brock

Melissa Brock is a higher education and personal finance expert with more than a decade of experience writing online content. She spent 12 years in college admission prior to switching to full-time freelance writing and editing. Her work has appeared on Yahoo Finance, Entrepreneur, Investopedia, The Balance, FinanceBuzz, The Journal of College Admission, MarketBeat, College Finance, Rocket Mortgage, LeverageRx, Benzinga, Morty, Ally, and more.
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