The prospect of studying abroad is very huge with or without a foreign education loan. Not only does one get exposed to the diverse community most international schools possess, access to quality education and opportunities to put knowledge into practice is certain.
Many people travel overseas to earn their graduate degrees. This, however, doesn’t come cheap as the cost of international education can be quite expensive, and in most cases, continue to rise year after year. Thus, to afford their education, international students can opt for student loans that can cover a part of or the total cost of the education. There are key steps to take when considering a study loan as you will see.
#1: Identify Banks that offer Loans for International Students
Before applying for a student loan as an international student, it is important to use a comparison tool that will match your needs with a list of lenders specific to your school. There are several loan comparison tools on the internet available to students such as the International Student Loan Comparison Tool, Credible, LendKey and others. These tools enable you to review the list of lenders and compare their terms. Afterwards, you can select the student loan that meets your needs and proceed with the application.
#2: Know the Required Documents for Foreign Education Loan
Most international loans require students to have a co-signer. A co-signer undertakes the loan with you and is contractually mandated to repay your loan should you fail to do so. The co-signer must be a citizen of the country you want to study in. However, if you do not have someone who can stand in as a co-signer on your behalf, you can use the comparison tool to check lenders who offer a “no co-signer” option for your school.
Also, before applying for a student loan, you will need to tender most or all of the following documents:
- A completed application form
- Passport size photographs of you and your co-signer.
- Your admission letter
- Copy of employment ID or valid means of identification belonging to you and your co-signer
- Credit checks
- Your resident proof and that of your co-signer.
- Your Mark sheet and certificates
- Mark sheet (Score Report) of GRE, GMAT, TOEFL, IELTS, etc. whichever is applicable
- Admission letter shared by the university or college.
- Last six months bank statements of the co-signer
- Income proof of the co-signer
Note that these requirements can vary depending on the bank’s regulation.
#3: Check if Loan Collateral is Required
When seeking a study loan for abroad education, students can apply for two types of study loans- collateral or non-collateral loans. In the case of collateral loans, the student is required to present some form of property, savings, and/or investments. The collateral presented by the students serves as security for the bank and they have the right to withhold it in case the student cannot repay the loan. The good side to this type of loan is that the interest rate is very low.
On the other hand, non-collateral loans consider documents that show the student’s potential such as university transcripts, planned course of study, standardized test scores, etc. These documents are evaluated by the bank to ascertain if the student can pursue their education abroad and get a job after. Once they are sure of this, the loan will be sanctioned. However, the interest rate for non-collateral loans is higher as compared to its counterpart.
#4: Find out the Repayment Options for the Foreign Education Loan
There are several options available to international students to service their education loans. The repayment plan could either be a fixed monthly remittance, a percentage of the student’s income, a graduated repayment plan, etc. What is important is to pick a plan that works for you and meets your specific needs.
Although study loans can be great financial aids, they are accompanied by the consequences of debt. It is always advisable to search for scholarships and grants before resorting to a student loan.
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