If you are an international student, there are many opportunities for education loans for you in the US. This article explains the conditions to be satisfied, a few examples of loan options available and their salient features. Although not comprehensive, the article will help increase your knowledge base so that you would be prepared to begin the search and application processes.
The term ‘International Student’ typically refers to any non-US citizen who is pursuing an Undergraduate, Graduate or Doctoral Program in any College or University in the United States.
This is a mandatory requirement.
The co-signer is a person who meets the following criteria:
He has a satisfactory FICO credit rating. He is employed or self-employed for at least two years. He is a US Citizen or permanent resident [a green card holder]. He has resided in the US during the previous two years.
Role of the co-signer:
The co-signer is also a co-borrower. In the loan agreement, the co-signer guarantees the lender that if the student [primary borrower] does not make payments in accordance with the agreement, the co-signer will make payments.
Information needed when you apply for a loan:
Full name, Date of Birth, Residential Address in the U.S. and Length of stay, Permanent Residential Address in the home country and Length of Stay in Number of Years, Monthly House Rent, Residential Phone Number, Proof of enrollment: Letter of acceptance, Tuition invoice, etc., and Reference [A relative or friend who doesn’t with you and knows you well. The referees should be different for the applicant and the co-signer]: Name, Residential Address, Home / Business Phone Number. Your co-signer will need to furnish the following data additionally: Occupation/Position, Employer and Period of Employment, Business Phone, Gross Annual Income and Credit Rating.
Credit Rating is one of the most important factors on which the approval of a loan depends.. They are: Borrower’s Payment History [Punctuality of repayment] (35%), Amount owed by the borrower on various accounts (30%), Credit History Length [Length of Payment history] (15%), Borrower’s existing credit accounts and how they are used (10%), and New Credit [Ratio of newly opened credit accounts to that of total number of credit accounts] (10%).
Cost of a student loan:
The cost of any loan is indicated by an important factor known as Annual Percentage Rate (APR).. APR includes the interest rate, all fees and points charged by the lender. Lenders arrive at the Annual Percentage Rate by considering the initial down payment, loan length, frequency of repayment and most importantly, the Credit rating of the loan applicant and the co-signer. APR is a convenient parameter to compare costs of different loans.
The interest rate and the APR can fluctuate depending on a world financial index known commonly as ‘LIBOR’, the acronym for “London Inter-bank Offered Rate’.
Interest paid on student loans are normally tax deductible.
Examples of loan plans:
Guaranteed Access To Education (GATE) Student Loan Program is a non for profit student loan program offered by Bank of America, Bank of Boston, and the National Collegiate Trust (NCT). It is developed to cover education expenses in an undergraduate program.. The loan can be repaid in 15 years’ time from the time repayment begins.
TERI Education Loans:. (TERI). These loans cater to students pursuing graduate and professional education programs. Students can borrow up to $20,000 per year with a cumulative limit of $80,000. Interest rates and fees depend on the lender.
TERI loans are also available for pursuing non-Certificate/Degree Programs. Minimum loan amount is $1,000. Students can borrow up to $15,000 per year, with an aggregate borrowing limit of $30,000. The loan is repayable in 20 years at a minimum monthly payment of $25. These loans are offered by Bank of America with The Education Resources Institute, Inc. (TERI) as a guarantor. To qualify, the applicant needs to attend a TERI approved college, display satisfactory academic performance and meet other requirements.
International Student Loan Program (ISLP): ISLP is a loan program offered by InternationalStudentLoan.com, funded by PNC Bank and guaranteed by The Education Resources Institute (TERI). The minimum amount advanced is $1,500 per academic year. Students are given a time period of up to 25 years to repay the loan.
Canadian Student Loan Program (Can HELP): It is a loan program meant for Canadians pursuing their higher studies abroad [US or other countries]. If they apply independently, that is without any co-signer, Graduate students can borrow up to $15,000 per year without a co-signer. The minimum amount of loan is $1,000 per academic year. Time period to repay the loan is 20 years. Undergraduate students are essentially required to have a creditworthy Canadian citizen as co-signer.
Tips in loan management:
1. Apply for different loan programs, compare costs and then decide on the best option.
3. Maintain all relevant records and review them periodically.
4. Make your payments on time. Failing to repay any loan in time is a punishable offence.
5. If possible, make prepayments so that you can clear the loan before the stipulated time period. This will reduce the interest rate and help you save money.
6. Develop a budget to manage your monthly expenses and stick to it
7. File all your payment receipts and keep track of where and how you spend your money.
8. Keep your credit record in consistently good shape. It reflects your money management skill. You have the power to control or change it, for worse or for better.
If you stick to the terms of the loan agreement promptly, and follow the tips, educational loans are a boon.
Related topics and useful links:
The Education Resources Institute, Inc. (TERI)
FICO Credit Score