International student loans are a great financing option for African students aiming to earn degrees from colleges and universities abroad.
There are various lenders providing education loans for international students, including Africans.
While finding these lenders only takes a quick Google search, you may not have an idea on how to compare their products.
In this guide, we’ll give you the important factors to consider when comparing international student loans from different providers. By taking time to understand these factors, you’ll be fully armed with the information you need to find an international student loan that best suits your goals and needs.
#1- Your Eligibility
Before you start comparing other details, make sure that you’re eligible for the loans. Each lender has their own set of eligibility requirements. For instance, they may only be offering loans for graduate studies or specific majors.
Here are the most common international student loan eligibility requirements:
- Citizenship or residency status: Some lenders may only offer loans to international students who are citizens or permanent residents of certain countries. Check the list of countries whose citizens qualify for loans from each lender to make sure you’re eligible.
- Enrollment status: Some lenders may require that you be enrolled full-time in an eligible program or institution. To be considered full-time, you typically have to take at least 12 credit hours per semester.
- College majors and degree level: Lenders often only offer loans for specific high ROI majors. Majors with high potential future incomes assure lenders that the borrower is less likely to default on their loan payments. In addition, they may only offer loans for specific degree levels – undergraduate, graduate, or PhD.
- Credit history: Some lenders may require a credit check, and may only offer loans to students with a good credit history. For international students without any credit history in the U.S, this might present an additional barrier.
- Co-signer: Some lenders may require a U.S citizen or resident to cosign your international student loan. Having a cosigner can mean lower interest rates. However, if you don’t have an eligible cosigner, shortlist lender who don’t require you to have a cosigner.
It’s important to only apply for loans that you’re eligible for. This way, you’ll avoid wasting time and resources on comparing and applying for loans that you don’t qualify for.
#2- Loan Amount
After establishing your eligibility for the loan, check the loan amounts available. Different lenders have different limits on the amount you can borrow. You may also have a personal borrowing limit based on your financial situation and credit history.
Here are some things to consider when comparing loan amounts:
Education expenses: Make sure the loan amount covers your funding gap. For instance, you might have financial aid or scholarships that cover certain expenses. The loan amount should be able to cover all your other costs including tuition, books, housing, and other fees.
Affordability: Consider your ability to repay the loan, and make sure the monthly payments are within your budget.
Repayment period: Longer repayment periods may result in lower monthly payments, but will also increase the total cost of the loan due to interest.
Interest rates: Higher interest rates will increase the total cost of the loan, so consider the interest rates of different loans when determining the amount you need to borrow.
When comparing loan amounts, endeavor to strike a balance between covering all of your education expenses and being able to comfortably repay the loan.
Consider your current financial situation and future earning potential, and choose a loan amount that will allow you to achieve your educational goals without putting undue financial strain on your future.
#3- Interest Rates
Interest rates is one of the most important factors to consider in comparing international student loans.
The interest rate determines the amount of money you will need to pay back in addition to the original loan amount.
Comparing interest rates from different education loan providers will help you determine the total cost of the loan over time.
Consider whether the loan has a fixed or variable interest rate. A fixed interest rate means that the interest rate will remain the same throughout the life of the loan, while a variable interest rate may change over time.
Which one of the two options is better? Variable interest rates can be either cheaper or more expensive in the long run, depending on factors that are out of your control. On the other hand, fixed interest rates give you certainty on exactly how much your international student loan will cost.
While some providers might have high interest rates, their loans might come with fewer restrictions. For example, you may have more repayment options or the option to apply without a cosigner.
#4- Repayment Plans
Different lenders offer a variety of repayment plans, each with their own unique terms and conditions. Some of the most common repayment plans include:
Deferred Repayment Plan: Allows you to defer your payments while you are in school, but you will still accrue interest during this time.
Immediate repayment: With this plan, you’ll have to make full monthly payments while still in school. It can be a great plan for part-time students who have a stable income. Immediate repayment typically has the lowest interest payments. But it may not be a realistic option for most students.
Interest-only repayment plan: This plan means that you’ll have to pay only the interest on your loan while you’re still in school. It’s a great option as it makes monthly payments more manageable and it keeps your loan balance from building up while you’re in school.
Partial interest repayment plan: With this plan, you’ll be required to make a fixed monthly payment while still in school that only covers part of the interest you owe. For instance, you may be required to pay $25 or $50 dollars each month. Partial interest payments will keep your loan balance from growing as fast as it would otherwise. However, you’ll still owe more upon graduation than if you had opted for an immediate repayment or interest-only repayment plan.
Full deferment: If you don’t want to be making payments while in school, this is the best option. With full deferment repayment plan, you only start making payments after the grace period. However, the loan continues to accrue interest while you’re in school. That means you will probably ending more in interest than you would with other plans.
When comparing international student loans, make sure to consider the different repayment plans open to you. Go for a plan that best suits your needs and financial situation.
#5 – Loan Fees
Don’t forget to compare the fees associated with each loan. While fees might seem insignificant, they can quickly add up and drive up the total cost of your education loan.
Some of the most common international student loan fees include:
- Application fee: Some lenders may charge a fee to process your loan application.
- Origination fee: This is a fee charged by the lender for processing the loan, and is typically a percentage of the loan amount.
- Prepayment fee: A fee charged for paying off your loan early.
- Late payment fee: A fee charged for missing monthly payments.
Carefully make note of the fees for each loan to get a good idea of how they’ll affect the total cost of your loan. By comparing the fees of different loans, you can determine which loan is the most cost-effective and will ultimately cost you the least amount of money over time.
#6- Cosigner Requirements
As we’ve mentioned, some lenders will only give loans to international students with eligible U.S citizen or resident cosigners. A co-signer is someone who agrees to take joint responsibility for the loan, and may be required by the lender to guarantee the loan.
Having a co-signer can have several benefits, including:
- Improved eligibility: Without credit history in the U.S, having a co-signer with a good credit history and income can help you qualify for a loan.
- Lower interest rates: Having a co-signer with a good credit history can also help you secure a lower interest rates, which can ultimately lower the total cost of the loan.
- Increased borrowing limit: Having a co-signer may also increase the amount you are eligible to borrow.
However, finding someone suitable to agree to cosign your international student loan isn’t easy. Since the cosigner is held jointly responsible for the loan, their credit may be negatively impacted if you miss payments or default the loan. That makes most people wary of cosigning international student loans.
Fortunately, some lenders also provide the option of releasing your cosigner from the loan after a specified period. That’s an additional factor you should consider when comparing cosigner requirements.
#6 – Lender’s Reputation
Lastly, don’t forget to check the reputation of each lender that you’re considering taking a loan from. A lender’s reputation can give you insight into their history, customer service, and overall financial stability.
Here are some things to look for when evaluating a lender’s reputation:
- Financial stability: Research the lender’s financial stability, including their credit rating and history of profitability.
- Customer satisfaction: Read reviews and ratings from past and current customers to gauge their satisfaction with the lender and the loan process.
- Legal and regulatory compliance: Make sure the lender is operating within the legal and regulatory framework of the country and is in compliance with all relevant laws and regulations.
By considering a lender’s reputation, you can gain a better understanding of the lender’s ability to provide you with a loan that meets your needs and helps you achieve your education goals. A lender with a good reputation is likely to offer high-quality service, flexible repayment options, and a loan that is affordable and meets your needs.
Get the Best International Student Loan For Your Needs
If you’ve read up to this point, you’re now fully equipped in comparing international student loans from different lenders.
By carefully evaluating each of the factors we’ve highlighted, you can choose a loan that meets your needs and helps you achieve your study abroad goals.
Take your time and do your research before making a decision. To make a great decision, also consider:
- Your current financial situation
- Future earning potential
- Long-term financial goals
By following the tips we’ve outlined, you will be equipped to choose an international student loan that will allow you to pay for your education without putting undue financial strain on your future.
Remember, taking out an international student loan is a major financial commitment. It’s important to choose a loan that fits your needs and is manageable for you in the long term.
Are you looking for international student loans to finance your education abroad? 8B offers no cosigner, collateral-free international student loans to eligible African students in global universities. Compare different loans on the 8B student loan marketplace.