The 411 on Student Loans for Study Abroad

by Elizabeth Kotz

The cost of college can really add up when you attend a school within the United States, and expenses can grow even more if you make the choice to study abroad. But can you really put a price on the wide-ranging benefits of international education programs? For students who study abroad, the opportunities to grow both personally and professionally as an international student are as invaluable as they are endless. So, how can you balance your need for affordability with your desire to take advantage of all the world has to offer?

Thankfully, there are number of financial aid options available for students who want to study abroad at some point in their academic career, including student loans for study abroad (yes, there really is such a thing!). While the prospect of taking out more student loans or expanding your current financial aid options may seem daunting at first, remember that the rewards of study abroad are worth any extra time and effort.

Person writing notes on a piece of paper
The cost of college really adds up, so you might think you can’t afford to study abroad, but that’s not the case! 

Read on to get the real 411 on student loans for study abroad, so you can hurry up and get out the door and ready for the educational experience of a lifetime. 

Is Study Abroad Worth the Financial Risk?

Taking the plunge to pack up and study abroad is a decision that will continue to pay dividends long after you return to your home country. In a survey conducted by IES Abroad, alumni study abroad students strongly believe that their experiences abroad led them on a path of self-discovery and continued to impact them long after their program concluded. This is far from the only key finding of the survey, however; other important findings include:

  • Personal Development – Ninety-seven percent said getting an international education was a catalyst for maturity, 96 percent said it increased their confidence, and 95 percent said it had a lasting affect on their view of the world.
  • Intercultural Development – Eighty-two percent responded that studying abroad helped them develop a more sophisticated perception of the world, and 98 percent said it helped them understand their own cultural biases and values.
  • Academic Pursuits – Eighty-seven percent said their international program influenced their educational experiences that followed and 63 percent said it contributed to their decision to pursue different majors.
  • Career Pursuits – Seventy-five percent said they gained skills overseas that influenced their careers and 62 percent said international study influenced the interest in their current careers.

The benefits of studying abroad extend far beyond academic success and marketable professional skills. While living as an international student, you will gain intangible knowledge and experience that will carry through to all aspects of your life. Living in another country gives you the opportunity to develop your independence and self-confidence, while providing the distance and perspective necessary to better comprehend your own culture and place in the world. Studying abroad just might help you decide what to do with your life too!

How to Have Financial Success as a Study Abroad Student

Always do your research early on to determine the necessary steps you need to take to properly finance your study abroad experience. Factor in the money you’ve saved, the money you will need for tuition, and the inevitable extra costs associated with additional travel and personal daily expenses. Living in another country requires you to prepare for the unexpected, and the unexpected can get expensive! Make sure you gather your existing funds and know how much you’ll need to spend on a daily basis before you even consider study abroad loans.

Girl walking across a busy street at night
It might seem daunting to take out another student loan or to apply current financial aid packages to your study abroad program.

After you’ve pooled your funds and looked at your expected budget, there are plenty of student loans for study abroad for you to explore, provided you do your homework ahead of time (there are application deadlines for student loans!). Study abroad loans will help you put some extra breathing room in your budget. There are all sorts of student loans for study abroad, and each one has its own payment plan, interest rate, and financing options. For example, federal financial aid, which many students use of while attending university in their home country, consist of loans, grants, scholarships, and work-study funding (read more below).

Research each loan option you come across to you to find the best study abroad loan for your financial and personal needs.

If using student loans for study abroad scares the crap out of you, keep in mind that it isn’t the only way to take care of the sometimes high costs of life as an international student. You can always check out scholarships for study abroad to get your feet wet in the pool of funding options. Scholarships are an ideal option for students with more wanderlust than spare cash (or a good credit score). Think about this as free money since you don’t have to pay it back. A few well-written essays can go far!

Once you’ve determined which student loans are best suited for your personal financial needs and your specific study abroad program, it’s time to get down to the business of applying.

What Types of Student Loans are Available?

The federal government offers several financial aid programs through the U.S. Department of Education, which provides more than 15 million students with about $150 billion per year in low-interest student loans, grants, and work-study funds. These funds cover educational expenses such as books and supplies, room and board, fees and tuition, and even transportation. They may also be used to pay for education-related costs, such as dependent care or necessary technology (i.e. a laptop).

Thousands of academic institutions across the United States offer students the opportunity to participate in Federal Financial Aid programs. And thousands of students are eligible to utilize this funding to pay for education-related expenses abroad. Here is an overview of the four direct loans for study abroad offered by the federal government through this program:

  • Direct subsidized loans - for undergraduates who have financial need
  • Direct unsubsidized loans - for graduates, professionals, and undergraduates who don't have financial need
  • Direct PLUS loans - for graduates, professionals, and parents of dependent undergraduates to help pay for expenses that other financial aid doesn't cover
  • Direct consolidation loans - for those who qualify for multiple federal student loans.

Additionally, state and local government agencies, universities and colleges, private companies, and nonprofit organizations can all help students fund study abroad through student loans. Private student loans are available whether you study abroad for part or all of your degree. You may apply for a private student loan through a bank, credit union, your school or a state agency.

It’s VERY important to remember that you’ll be responsible for paying back not only the amount you borrowed, but also an additional interest rate (your cost of borrowing). You will need to plan ahead so that you get the best student loan rate.

Library with wall to wall bookshelves
You can study abroad for a summer, semester, or year, OR you could just go for the whole enchilada and get your degree abroad. 

Are You Eligible for Student Loans for Study Abroad?

The type of financial aid that you are eligible for depends on how you intend to study abroad, what degree level the courses you will be taking fall under, and how long you plan on studying abroad, so don’t stop reading just yet!

Studying Abroad for Part of Your Degree

When you choose to study abroad for part of your degree, you’ll likely remain enrolled in a U.S. college or university, but you will attend an academic institution abroad for a semester or a full year. This is the most common route students choose and it is a great way to get both a U.S.-approved education and international experience at the same time. If this is the route you choose for your study abroad experience, your home institution will process your financial aid and student loans, which may include federal loans, state and local funding, and grants.

Always remember that you can talk to your financial aid office to determine what types of student loans for study abroad you are eligible for and learn how to apply in time for your program. After you determine which study abroad loans to take advantage of, you home institution will work with your host institution abroad to coordinate financing and secure the transfer of your course credits. Keep in mind that both institutions must have an agreement to make academic credits transferrable, so double (and triple) check with your advisor that your program is eligible before you apply.

Studying Abroad to Earn a Full Degree

You might decide to directly enroll in a foreign university because it has a prestigious reputation in your field or because it is cheaper than getting the same degree in the United States, or perhaps, you just want to immerse yourself in the culture of another country while pursuing higher education. No matter the reason, you may be eligible for federal student loans for study abroad if the school you plan to attend is located in a country that participates in the U.S. federal student loan program. Some eligible countries include Australia, Canada, New Zealand, and the United Kingdom, but check out the Free Application for Federal Student Aid, known as FAFSA, to review the full list of participating countries and schools. If you directly enroll in a foreign school to obtain your full degree abroad, you may qualify for a Direct PLUS loan.

Even if you are eligible for study abroad loans, there are several factors to consider when planning your budget. The biggest factor is the exchange rate. U.S. student loans are written in U.S. dollars, so you need to make sure that you'll have enough money after it's converted into the foreign currency of your host country to cover your expenses and financial needs. The cost of living in a foreign country is also a major factor. While tuition may be cheaper, living expenses may be higher. Additionally, take into consideration the cost of travel between different countries, particularly if you plan to return home for the holidays.

Additional Eligibility Requirements

To be eligible for federal study abroad loans, you must meet the following requirements:

  • Be considered at least a half-time student
  • Be a citizen of the United States, or an eligible noncitizen
  • Be accepted or enrolled in a qualifying certificate or degree program
  • Demonstrate that you have sufficient financial need (Hint: student loans are awarded when your expected family contribution won't cover the cost of attending your institution)
  • Demonstrate that you are qualified to pursue your selected program
  • Have a valid Social Security number
  • If you're a male between 18 and 25, you must be registered with the Selective Service System
  • Maintain satisfactory grades

Also keep in mind that policies and deadlines vary. It’s important to start early and check in often with study abroad advisors and financial aid administrators to ensure all forms are filled out correctly and on-time.

Using federal student loans for study abroad is a great way to make international education programs more affordable.

*Warning* No matter the types of loans you're eligible for, only agree to a student loan repayment schedule that you can stick to! Don’t forget that your repayment of a student loan can have a lasting impact on your credit, retirement, and overall wealth.

People filling in an application at at a coffee shop
The key to getting financial aid is to start the application process early! The early bird gets the worm, after all.

How to Apply for Student Loans for Study Abroad

The key to applying for student loans is to start early, so you don’t have to stress at the last minute and risk missing out on study abroad! The application periods and deadlines for different study abroad loans vary, but students often start the applying for loans up to one year before their study abroad program is set to begin. Along with starting the application process early, you need to stay organized. Research the colleges or universities in which you're interested and keep a to-do list to stay on track with your paperwork. When applying for student loans, you’ll need to keep the following documents handy: 

  • Transcripts (or certificates of completion)
  • Exam scores
  • Letters of recommendation
  • Application forms

Since you’ll be using your loans for study abroad, you'll need to prepare additional documentation to travel internationally, such as the following:

  • Vaccination and immunization records or certificates
  • Passport
  • Student visa

Final Study Abroad Loan FAQs

Should I apply for federal or private student loans?

Always apply for as much as possible in federal loans because they're a better deal than private loans. Federal student loans have low, fixed interest rates and are more easily available. Private loans often have higher, variable rates, which cost more in the long run.

Can I still get a loan if my university isn't an eligible institution?

In general, no. The vast majority of lenders require that your school qualify for federal student aid participation and be accredited by an agency that the U.S. Secretary of Education recognizes. Ask your school for information on eligible loans for study abroad students.

What's the difference between financial aid and loans?

A student loan is a specific type of financial aid available to post-secondary school students and requires repayment. Financial aid also encompasses grants, scholarships, and work-study programs. Check out this article on Funding Study Abroad for American studnets for a breakdown of these different types of financial aid options.

Who's my best resource on campus for talking about student loans?

The staff in your financial aid office are the best people to talk to about student loans. Even if they don't know much about study abroad loans specifically, they can help you manage your budget and answer your finance-related questions.

There you have it!

Don't let the fear of not being able to afford studying abroad on your own make you miss out on the benefits of an international education! Travel smart, make the most of your study abroad trip and compare loans today. See the many benefits student loans can offer and how they can help you make the most of your study abroad experience. You can find the financial aid you need through federal, state, local, and private organizations. Investing today in the opportunity to acquire invaluable global skills will continue to transform your life for years to come.