The cost of attending college or university has been on a steady increase the past decade, forcing many students to take out loans to afford higher education. While loans can be extremely helpful and make the dream of college attainable, it definitely complicates studying abroad.
Although you can apply to a study abroad scholarships and grants to offset costs, they may not necessarily be enough to cover everything.
The biggest questions we'll be answering in this article are whether or not your college loans an be applied to studying abroad? If not, what do you have to do to keep them rolling if you put them on pause? Secondly, can you get a loan to study abroad?
Can You Get a Loan to Study Abroad?
Yes, you can absolutely get a study abroad loan. Although you can apply to a study abroad scholarships and grants to offset costs, they may not necessarily be enough to cover everything. If you are planning a study abroad experience that exceeds available funding, it'll be helpful to look into study abroad loans.
Loans can help with expenses related to tuition and books, housing and board, and even cultural experiences. There are two different types of study abroad loans:
- Federal Students Loans
- Private Student Loans
Student loans can be confusing, so it’s very important to conduct read all the fine print and understand eligibility, the requirements, and what exactly you’re signing up for.
Generally speaking, to be approved for a student loan, the school you're attending abroad needs to be accredited. Now this sounds easy, but the US Department of Education doesn’t provide a list of accredited schools outside of the US. Instead, they rely on other agencies to approve and accredit international institutions. An applicant should be able to demonstrate that the college or university is in good standing and reputable.
Your college study abroad office and financial aid office should be able to help you with both identifying relevant post secondary institutions and the application process.
It's also important that the applicant (you) be in good financial standing. Study abroad loans can be more competitive than general school loans, so it’s even more important to demonstrate that you have good credit.
It might be required that you have a co-signer on the loan. If you're doing this research well before your study abroad program (say, a year or two out), it might be a good idea to apply for a student credit card (and pay off everything on time!) to help build your credit if you haven't already.
Loans Are Treated Differently Depending on Your Program Type
The student loan versus the study abroad loan process is nuanced.
Basically, most institutions and loan agencies treat the two types of loans separately and have separate processes for each one. The applications are different, the repayment schedules are different, and often the qualifications are different. Therefore, one of the easiest first steps to take is to start with your own institution to figure out if you'll need a study abroad student loan or if you can get away with a normal student loan.
Many schools are able to apply broader student loans to study abroad experiences if study abroad experience is through that school. For example, if you attend the University of Michigan, you will probably be able to apply your student loan funds to a University of Michigan study abroad program -- i.e. one of their faculty-led programs or a direct exchange with a partner university abroad.
While it may sound limiting, many schools have extensive study abroad programming, even some of the smaller liberal arts schools are offering programs in multiple countries. Your first step should be to meet with your study abroad and financial aid offices and see what your options are.
Federal Student Loans
Federal Student Aid, sponsored by the Department of Education, provides a helpful list of schools that are eligible to participate in federal loan programs. Here you can search programs and schools and learn more about the application process and what is required of students and their institutions. For students already receiving federal aid for college or university, you will be familiar with the standard FAFSA forms (Free Application for Federal Student Aid) that need to be filled out every year.
The key to successful application process is starting early (even as much as a year in advance), staying organized, and contacting your university, the FAFSA hotline, or your international institution when you have questions. You're probably not the first person to be applying for a loan at your chosen international school, so be sure to reach out and clarify any questions that might arise.
According to Federal Student Aid, there are several types of loans that you might apply for:
- A federal student loan from the William D. Ford Federal Direct Loan (Direct Loan) Program.
- A Direct Subsidized Loan or Direct Unsubsidized Loan.
- Direct Unsubsidized Loans and Direct PLUS Loans available to graduate students.
- Your parent also might be able to borrow on your behalf; he or she should ask about getting a Direct PLUS Loan for parents.
- International schools do not participate in the U.S. Department of Education’s grant programs, so you will not be able to obtain a Federal Pell Grant to get your degree at an international school.
Amounts for federal loans vary between $5,500 and $20,500 (definitely enough to cover much of the cost of study abroad). The amount will be determined by a large number of factors, including how long you intend to study internationally.
If you're applying for federal loans for the first time you will be required to attend entrance counseling, which explains the loan process in detail and provides financial planning tools. Repaying a loan after your study abroad experience is just like repaying it for an American school. Student aid has some helpful steps to understanding the process. For more questions, consult this helpful myths and realities page that addresses specific concerns of students on federal financial aid hoping to study abroad.
Can You Apply Your Current Loans to Study Abroad?
Truthfully, the answer is: usually. So long as long as it is an approved program, federal law dictates that universities and colleges must disburse funds to qualified students.
You may want to ask your aid counselor if there are any restrictions, but you shouldn't run into any trouble -- especially if you're participating in an exchange and continuing to pay tuition directly to your home university.
Just be sure to be clear as possible about what type of program you'll be participating in so they can help you determine it's eligibility. They can also help you with any additional paperwork you may be responsible for. Don't stress -- you won't lose your financial aid when you study abroad!
Also worth mentioning that not all financial aid counselors have the same opinion about whether or not it’s a smart idea to take out a loan to study abroad. To be fair, their scope is looking long-term at the financial repercussions of that particular amount the student would need to borrow (think monthly payments of X amount plus interest rate post-graduation). Bear in mind the information they’re giving the student might be skewed depending on their own opinion regarding the value of studying abroad. Regardless, be persistent!
There are plenty of institutions out there wanting to loan you money. Some are reputable and a pleasure to work with, some are not. You will really need to do your due diligence and make sure that you are working with an agency in good standing. Be aware of scams and loans with interest rates that are incredibly high.
Definitely feel like you can ask for help with this. Your university’s financial aid office and study abroad office should both have great resources for you. They can walk you through the possibilities and the pros and cons of the different options.
The key take away is to start this process EARLY! There is basically no such thing as free money with quick turn around. Even if you’re able to get scholarships or grants, these things take time and careful planning. You will want to make sure that you are aware of the deadlines and stay organized.
Ultimately, the good news is that being on financial aid does not preclude you from studying abroad. While it will take some hard work, careful organization, and diligent research, you can find the funding you need to take that summer, semester, or year overseas. There are plenty of people in place to help you understand your options and file paperwork (and there will be plenty of paperwork!) but if you start early and stay on top of things, you should be all set by the time you are ready to jet around the world.
Studying abroad can be a vital part of a well-rounded education. It can help open doors, widen horizons, and alter the way you think and feel about the world. It might change you and change your future. Don’t let extra paperwork and a complicated loan system deter you. It’s definitely worth the extra hassle to explore the world!Photo Credit: money, Laura Brond, and Katherine Knecht.