What Do I Need to Qualify for an International Student Loan?

by | Apr 22, 2022 | Finance

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With more than 1 million international students, the United States boasts the world’s highest foreign student population. International students account for about 5% of all students enrolled in higher education in the United States.

The US is a popular study destination for African students too. For the 2019-2020 academic year, African students made up 4.5% of the international student population in America. 

Unfortunately, pursuing a degree in the United States doesn’t come cheap. On average, international students pay $25,000-$35,000 per year at public universities and $30,000-$45,000 at private colleges for an undergraduate degree.

Factor in airfare, visa costs, living expenses and other costs, and it’s easy to get discouraged about pursuing your dream to study in the United States—especially if you don’t have the benefit of a fully-funded scholarship. 

Fortunately, some banks, credit unions, and online lenders offer private student loans to help make international education more attainable for foreign students. 

But what do you need to qualify for an international student loan

Let’s take a close look at the requirements for international students that most lenders have. 

Admission or Enrollment in Approved Schools

To qualify for an international student loan, most lenders will require you to obtain admission or enrollment in an approved school. For instance, Mpower Finance requires international students to gain admission in one of the 350+ supported schools in the United States and Canada.

As proof of admission, you will be required to submit a copy of your college acceptance letter.

What Is a College Acceptance Letter?

As the name suggests, a college acceptance letter shows that you’ve been accepted for the program you applied to at a specific university. Sometimes, it may be referred to as an “offer letter.”

Although “acceptance letter” and “offer letter” are often used interchangeably, there are vital distinctions between the two. Technically, an offer letter also outlines the financial aid package that the college is offering you. Some colleges may also call it an award letter, financial award letter, or financial aid offer. You will probably receive the offer letter at the same time as your acceptance letter or later. 

Here are two different kinds of college offer letters that international student loan lenders may request from you:

H4: A Conditional Offer Letter

This is the type of offer that comes with stipulations such as having specific grades or marks and proof of financial ability. 

A conditional offer is made while there are some documents you still have to submit. Such documents may include a copy of your passport, language proficiency test results, and your previous semester’s results. 

An Unconditional Offer Letter

This is the type of offer granted to students who have met all the university’s admission criteria and have been admitted as students in the university. 

An unconditional offer letter is issued after you’ve submitted all the necessary documents and paid the fees. 

Enrollment into Approved Programs

Other than being accepted or enrolled into an approved school, lenders may offer loans for students pursuing specific study levels, degree programs, and enrollment status.

  • Study Level: Some lenders may offer loans for both undergraduate and graduate studies while others only provide loans for graduate studies. Case in point, MPOWER Financing loans are only available to international undergraduate and graduate students within two years of graduating. That means undergraduate freshmen and sophomores do not qualify. 
  • Specific Subjects: Lenders may specify the subjects or programs they will provide loans for. Prodigy Finance, for instance, only provided loans to international students seeking a graduate degree in business, science, technology, engineering, math, law and public policy, or healthcare.
  • Enrollment Status: Lenders may specify whether they provide loans for either half-time or full-time studies or both. For instance, Earnest lends only to full-time undergraduate students. Graduate students and college seniors must be enrolled at least half-time to qualify for Earnest student loans.

Generally, full-time enrollment is when you’re taking at least 12 credits each semester, while half-time enrollment is 6-8 credits in a semester. Even so, the criteria for enrollment status can vary depending on your college or program. 

Demonstrate Financial Ability

As a prospective student, you’ll be required to demonstrate financial ability to acquire admission to an American university and a student visa. When applying for an international student loan, lenders who don’t require you to have a cosigner may also require you to demonstrate financial ability

Here are some ways that international students can prove financial ability to lenders, university admissions, and immigration departments:

  • Bank statements: You can use your bank statements to show that you have sufficient funds to make loan repayments. 
  • Employer letter: You can also use a letter from an employer with an official business letterhead showing your annual salary as evidence of financial ability.
  • Scholarship and financial aid letters: Do you have a partial scholarship or other financial aid? Use the offer letters to show lenders that you have some funds to cover your educational costs. 
  • Investments or other Assets: International students may be able to demonstrate financial ability to lenders through mutual funds and annuities, proof of property, or certain investments. The type of investments or assets accepted can vary widely depending on the lender.

US Social Security Number/Visa

Typically, lenders will require international students to have received their US student visas to finalize their loans. Others may also ask for a United States Social Security Number (SSN) to qualify for a loan as an international student. 

How to Apply for a US Student Visa

If you’re aiming to study in the US as an international student, you must obtain an American student visa. A student visa enables you to temporarily reside in the United States to complete your education.

Here are 10 simple steps to apply for a US student visa:

  1. Apply and get accepted to a US school
  2. Receive form I-20 or DS-2019 from your school
  3. Pay the I-901 SEVIS fee
  4. Apply at your nearest US embassy or consulate
  5. Complete Form DS-160 online
  6. Schedule your visa interview
  7. Pay your visa application fee
  8. Attend your visa interview
  9. Pay the visa issuance fee (if required)
  10. Receive your US student visa

How to Get a US Social Security Number as an International Student

With an F-1 or M-1 visa, international students are eligible for a US Social Security Number. However, you’ll need to also have a job to qualify—even if it’s just part-time work at your university. 

When you’ve secured a job, take all the documents to prove your identity, immigration status, and work eligibility to your local Social Security Administration and file your application for an SSN card. The documents you may need for this process include:

  • Passport
  • Form I-20
  • Form I-94
  • Student ID Card
  • Birth Certificate (if your passport is less than a year old)
  • Letter verifying the job offer, signed by both the employer and the Human Resources Office.
  • Letter from the International Student Center signed by the Designated School Official.
  • Proof of residency (such as mail that has been sent to you at your current address) 
  • Student visa

US Citizen or Resident Cosigner

Most international students lack the credit history and credit score that many lenders require from borrowers. Due to that fact, many lenders require international students to have a US citizen or resident cosigner. The lender will evaluate your cosigner’s creditworthiness—which shows their ability to pay for the loan in case you’re unable to do so. 

Requirements for Cosigners

To qualify for an international student loan, your cosigner must meet the following common requirements:

  • Be a US citizen or permanent resident
  • Have a good credit score and credit history
  • Have a stable source of income
  • Be willing to cosign the international student loan on your behalf

Having a cosigner with a good credit score may lead to lower interest rates on your international student loan. 

Expert tip: Some lenders provide cosigner release, which lets your cosigner off the hook for your student loan once you prove you’re capable of making payments on your own. 

How Can I Find a Cosigner for My International Student Loan?

Finding a suitable cosigner for your international student loan can be challenging. Here are some tips:

  • Request family and friends: Most international students rely on family and close friends living in the US to cosign their loans. Do you have a family member or friend living in the US? Ask if they may be willing to cosign your loan. 
  • Check with your university: Some colleges have established programs to help international students find suitable cosigners. Alumni may offer to cosign loans for promising international students. Check if your university offers any such assistance. 

Your Creditworthiness

Lenders have to establish your ability to pay your loan aka your creditworthiness. One of the ways to do so is by looking at your credit score. A credit score is a numerical rating—between 300 and 850—that indicates your creditworthiness. Your credit score sums up how much of a financial risk you would be if you were to be loaned money.

When you apply for an international student loan, a lender may look at your credit score to establish whether you’re eligible. The higher the score, the better you look to lenders. Unfortunately, most international students have limited or no financial information to review in the US. For that reason, many lenders require international students to have either a US citizen or resident to cosign their loans. 

However, it’s still helpful for international students to start building their credit history—and thus, a credit score in the US. Having a credit history and a good credit score in the US can save you money on the total cost of your international student loan. It also comes in handy when you want to rent an apartment, buy a car—and in some cases, even get your dream job after graduation. 

Building Your US Credit Score as an International Student 

To start building your credit history in the US, follow the following simplified steps:

  1. Get a Social Security Number/Taxpayer ID
  2. Open a US bank account or credit card 
  3. Set up direct debits from the account/ credit card to pay your bills on time
  4. Use credit monitoring services to create a profile of your credit score

Now You Know How to Qualify for an International Student Loan

International student loans have made it easier for foreign students to study abroad. Whether you’re a prospective international student or you’re already enrolled in a US university, international student loans can help fill your educational funding gap. 

Before you begin the loan application process, read the eligibility requirements keenly. Each lender has specific requirements for international student borrowers.

Bear in mind that eligibility for any type of loan is largely contingent on your ability to repay. That is why having a qualified cosigner, proof of creditworthiness, and demonstrating financial ability are crucial parts of the process. 

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