While scholarships and grants are gifts, study abroad loans must be repaid with interest which often makes them a last resort when looking to fund your study abroad experience. Nevertheless, you may want to consider taking out a loan if necessary. Remember, just like your education at your home school is an investment, your study abroad experience is an investment in your future with many benefits.
Loans can be federal or private. Some federal loans, but not all, are need-based. Federal loans are either subsidized or unsubsidized. If you are interested in using federal loans to finance your semester or summer abroad, visit your school’s financial aid department as soon as possible.
You and your parents can also apply for a private loan for study abroad through banks and other organizations. Benefits of private loans include:
- Funds can pay for things like your airfare, the cost of living, and cultural excursions abroad.
- Interest from student loans is tax deductible.
With low interest rates and often no loan fees, private loans can be a good alternative to using high interest rate credit cards or home equity to pay for the cost of study abroad. Shop around for the best student loan deals.Must Ask Questions
Tips for searching for loans
- Is the loan private or federal? If it is federal, is it subsidized or unsubsidized?
- What is the interest rate?
- What are the eligibility requirements?
- Do I need a cosigner?
- Are there any restrictions on the funds? Can I use them for things like airfare?
- When do I start repaying my loans?
- Is there anything I need to do to defer payment of past loans while I’m abroad?
- Start your search early, at least six months in advance if possible.
- Shop around to get the best rates.
- While not all loans require a cosigner, it is a good idea to have one ready.