The financial aspect of studying abroad is an unavoidable issue that all international students must confront early on in the application process. While some students may already have a means to finance their education, most students as well as their parents would love to have a means of financial assistance that would both help the student live independently and lessen the burden on their parents. Though many, if not all universities offer scholarships, not all students meet the necessary requirements to qualify for one. As an alternative, one option that students can look into is applying for a student loan.


Based on the country and university a student chooses, fees and funding can vary. For instance, studying an undergraduate degree in the US varies for public and private colleges and universities. For the year 2017-18, the tuition fees at private colleges for a four-year degree averaged at $50,000, including the cost of accommodation.

Requirements for a student loan

Student loans can be offered by a bank, financial institution or the federal government. One of the main requirements by most banks is that the loan applicant must apply for the loan from their home country. Although many banks have a network of branches globally these days, this does not mean that you can apply for a loan at any branch; this has to be done in your home country. There are some banks in the United States that offer student loans for international students. Citizens Bank, for example, allows international students to apply for a loan with the requirement being having a co-applicant or cosigner that is either a US citizen or permanent resident.

There are also local loan providers available in some countries. One such example is Credila, an education loan provider in India. Credila requires students applying for a loan to have a cosigner. The role of the cosigner is quite important. This person signs on to handle repayments should the student not be able to make the repayments on their own. Based on that, the cosigner needs to confirm that they are employed and that they have an income that meets the bank's requirements. This gives the bank more security when they give you the loan. A cosigner is usually a parent or extended family member. Federal loans generally provide flexible payments and lower interest.

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To apply for a loan you have to provide some basic documents that include a passport copy, and the salary slip from your cosigner. You may also have to provide proof of university admission. Some lenders like Credila, however, can offer you a student loan even before applying to a school. This is very beneficial as it will let you know what your budget will be, and therefore you will know which schools you should focus on. Having said that, other loan providers may require you to at least list which schools you are interested in.

Benefits of a student loan

Every lender offers different amounts of money for student loans and this amount can cover not just the tuition fees, but other university-related expenses like housing, buying a laptop and books. Most banks also offer loan recipients flexible loan repayments. The loan terms are usually between five and 10 years.

Perhaps the main concern with taking a student loan is the repayments. Students may worry about paying back the loan and might find this to be a distraction to them during their studies. Most student loans however do not have to be paid back until after you graduate. In fact, you might have a certain period of time after you graduate (grace period) to start paying back. This is beneficial because it will give you some time to search for a job and settle yourself financially. The grace period usually lasts for six months after you graduate.

There are two kinds of student loans: subsidized and unsubsidized. Subsidized loans are loans for undergraduate students with financial need, as determined by your cost of attendance minus expected family contribution and other financial aid (such as grants or scholarships). Subsidized loans do not accrue interest while you are in school at least half-time or during deferment periods.

Unsubsidized loans are loans for undergraduate and graduate students and unlike subsidized loans, they are not based on financial need. Eligibility is determined by your cost of attendance minus other financial aid (such as grants or scholarships). Interest is charged during in-school, deferment, and grace periods. Unlike a subsidized loan, you are responsible for the interest from the time you receive the unsubsidized loan until it is paid in full. 

Loan consolidation

Additionally, there is something called “loan consolidation” which is when you combine all of your student loans (if you have taken out more than one) so that you can get a lower interest rate or monthly payment. You also have the option of extending the life of the loan, meaning you have more time to pay back the money you borrowed. Keep in mind that doing this will result in an increased interest rate because you will be paying back the loan for a longer period of time. If you choose to consolidate your federal student loans, do so via the federal government instead of a private student loan servicer because with a private loan you will no longer be eligible for student loan debt forgiveness programs. 

Federal student aid

The Free Application for Federal Student Aid (FAFSA) is used by American citizens and permanent residents to apply for financial aid from the US federal and state governments. International students are not eligible for federal student aid in the US, however, your university may ask you to complete the FAFSA so that they have an idea of your financial need. If this is the case for you, you should also ask the school what else you need to submit if you require financial assistance.

Tips when you take out a student loan
  • Don’t take out more than your expected first year’s salary. You can find salary information online at, and
  • Look for free money. Loans have to be paid back, but grants and scholarships don’t. Scholarships might not cover the entire cost of tuition, but they can help. Just make sure you start applying as soon as you get your acceptance letter so you can spend enough time on your application – receiving a scholarship can be very competitive.
  • Start at a community college. Many international students will start their studies in the US at a community college. These schools offer an excellent education at a lower price and they are a great stepping stone to a four-year university. At a community college, you can begin your Bachelor’s Degree studies and then continue at a partner university, which can save you a lot of money. SchoolApply has partnered with many community colleges throughout the US and can help you find one that offers the degree program you are interested in. 
  • Plan ahead. Once you are accepted, plan the classes you will need to take over the course of your degree program. Consider what classes you could take over the summer when tuition might be less, and see when you could take a heavier course load to complete your degree in less time. Most importantly, try not to make you program last longer than it should. Four years should not turn into five, and two years should not turn into three. Avoid repeating classes or changing majors because this will require more time in school, which means more tuition costs. 
  • Keep expenses low. Think about where you can save money – live with roommates or family members who live nearby, use public transportation instead of buying a car, keep your books in good condition so you can sell them at the end of the term. There are plenty of ways that you can keep costs low so you can dedicate more money to paying back your student loans, or take out fewer loans to begin with.

Other ways to finance your studies overseas

Budgeting for and financing an international education can be tricky. Therefore, it is vital that you (and your parents) have a clear plan of action in order to pay for your overseas education. A range of other options are available:

  • Scholarships: If you have excelled both academically and socially, you might be eligible to apply for scholarships when submitting university applications. Most universities offer scholarships to excellent students based on merit as well, however, scholarships worth a significant amount usually require an application form to be submitted alongside a short essay stating reasons for eligibility.
  • Fixed Deposits: Most parents of children studying abroad usually consider fixed deposits (FDs) as a viable saving option. Fixed deposits offer a higher rate of interest than a regular savings account until a maturity date and in some cases, opening a new bank account may not be required. Typical interest rates for fixed deposits lie between 4% and 7.25%.
  • Work-Study Job: Another way to save money and/or fund your education is to work part time while at university. Not only will this help you develop necessary life skills, it will give you the chance to work alongside people from different cultures. Just make sure that your visa allows you to work while you are studying abroad. There is most likely a department or office at your school that will help place you in a work-study job on campus.

According to Toyosi Omope, a parent of two international students: “For me, the advantages of an international education are too numerous to mention. The wide exposure it affords makes studies abroad a very good option for any parent. However, the biggest advantage of an international education is the opportunity to be gainfully employed thereafter. So, to the parents who are planning to send their children abroad, yes, this is a sacrifice. But if you have a passion for education and you are financially stable, its a price that can be paid. So start saving for your children's education now.”

The financial aspect of your study abroad experience can be a challenge. But with SchoolApply's support, you can get guidance on how to apply for a student loan to fulfil your dream of studying abroad.