Student loan gap financing is the amount of money that a student requires to fill in the funding gap left after obtaining scholarships, grants, and personal funding. For example, if the total cost of attending university X is 40,000 U.S. dollars and the student has raised a maximum of 30,000 U.S. dollars, the student loan gap financing is 10,000 U.S. dollars. This gap financing is commonly raised by taking a loan from private lenders.
When Should an International Student Seek Gap Financing?
Before you decide to seek funding from private lenders, you should consider the following:
- University scholarships – Conduct thorough research about the scholarships that are available to students in your university of interest. It is also helpful to get in touch with the financial aid office in your university and learn all about the funding opportunities that are available to you. Besides direct scholarships, the university may allow you to work a certain number of hours per week to earn money that can go towards your tuition and living expenses.
- External scholarships – These are the scholarships that are awarded by organizations that are not affiliated with your university. Normally, these scholarships target a specific group of students, for example students who are pursuing degree programs related to development. Examples of such scholarships include the Chevening scholarship, the Gates-Cambridge scholarship, etc.
- Personal funds – How much can you or your family contribute towards your tuition and living expenses? While it may seem like a good idea to take a loan instead of using personal funds, you have to keep in mind that loans come with a certain amount of interest. So consider the maximum amount of personal funds that you can realistically raise for your education and living expenses.
To learn more about the scholarship application process, check out our scholarship guide for African students as well as our extensive scholarship database. Once you have exhausted all scholarship options, you can then take the next step: seek funding from private lenders. Before you take this step, we highly recommend that you speak with your school to find out if they already have a relationship with private lenders.
How to Find a Private Lender for Student Gap Financing
There is a wide range of private lenders that give education loans to international students. Some examples of those private lenders include the following:
- MPOWER Financing – This is a private lender offering loans to international students without requiring a U.S. cosigner.
- College Ave – This is another popular lender based in the United States.
- Prodigy Finance – Prodigy offers loans to international students without requiring a U.S. based cosigner as other lenders typically do.
To learn more about private lenders and their terms, check out the comprehensive lender reviews on our blog. 8B has made the process of seeking loans smooth and painless. Find out how we do this by visiting our lending marketplace now.
Understanding the Terms of Student Loan Gap Financing
Before you settle on a specific lender, you need to thoroughly understand the terms of the loan that you will receive. What is the annual percentage rate? Do you require a cosigner who is a U.S. citizen? How much is the origination fee?
To learn what these terms mean and why they matter in the lending process, check out our detailed guide on what African students need to know about international student loans.
Advantages of Student Loan Gap Financing
Finding gap financing is critical because it enables students to pursue studies that they would otherwise have been forced to abandon due to absence of funding. This is particularly important for African students who usually lack the resources to pursue education in international universities.
Because of the work private lenders are doing, many African students have successfully gone on to receive the funds they needed to pay for their tuition fees and living expenses in foreign universities. To learn more about low-interest student loans for African students, check out our lending marketplace now.