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What is an International Student Loan

Federal student loans are popular with US students studying in the US, but they are not available to international students.

Instead, international students are eligible for international student loans, specialized private education loans available to international students studying in the US.

International Student Loans are now a very realistic way to finance your education in the US. Loans are very flexible, and can offer loan amounts high enough to pay for your entire education, but with extended repayment terms and reasonable interest rates, so you can afford the repayment after you graduate.

Co-Signers
All international students applying for loans must have a US co-signer in order to apply. A co-signer is legally obligated to repay the loan if the borrower fails to pay. The co-signer must be a permanent US resident with good credit who has lived in the US for the past two years. The co-signer is often a close friend or relative who can assist in getting credit, since most international students cannot receive credit on their own.

Interest
Interest is the amount charged by the lender in addition to the amount of money that you borrowed. The interest rate is calculated based on an index plus a margin that will add an additional percentage interest rate depending on your co-signer’s creditworthiness. The two most common indexes used for international students are the Prime Rate and LIBOR Rate.

Prime Interest Rate – This index is determined by the federal funds rate which is set by the US Federal Reserve.
LIBOR – The LIBOR (London Interbank Offered Rate) is based on the British Bankers’ Association and is used on the London interbank market. The rate is an average of the world’s most creditworthy bank’s interbank deposit rates for overnight and one year terms.
When evaluating the loan, the lender will clarify which index the plan uses. Then, there will be an additional margin that will be added based on the borrower’s individual criteria, including the co-signer’s credit history. Based on their creditworthiness, an additional interest rate will be added to the index. This will be the total interest you owe. When your application is approved, your specific margin will be disclosed to you, at which point you can accept or refuse the loan.

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