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How to refinance an international student loan and save plenty of money

Prodigy Finance - June 19, 2019

How to refinance an international student loan and save plenty of money

Congratulations! Not only have you made it through your international master’s degree, but you managed to fund your studies in the first place.

It’s a big accomplishment.

And, if you’re wondering how you can save money on student loans now that you’ve graduated, you’re setting yourself up to succeed in the next stage of your life too. (Give yourself another pat on the back.)

Can you save money on your student loan?

Anyone with a student loan wants to save money on it - whether it’s a monthly savings or a savings off the total cost of the loan. (Or, let’s face it, both when it’s possible.)

What is the best way to save money on student loans?

We’ll get right to it. The best way to save money on student loans is to pay as much as you can, as often as you can, as early as you can.

In addition, you can take steps to reduce your interest rate. Why not? Now you’ve got your degree and a great job (or you’re about to get both) and you qualify for lower interest rates. The answer lies in refinancing your education loan.

Tips for saving money on your loan

  • If you were lucky enough to get a signing bonus that covers more than it costs you to get set up in your post-graduation life, putting it towards your international student loans will make an immediate dent in the overall cost of your loans.
  • And, if you can afford more than the minimum monthly payment - whether it’s once or repeatedly - pay it.

Both of these methods will make a dent in the amount of interest as well as your principal balance, thereby lowering the overall cost of your loan and giving you an opportunity to finish repaying your loan earlier.

Be sure to check that your loan allows for early repayment. Many do, but not all. Prodigy Finance loans never have fees or penalties for early repayment.

How to save money on student loan payments

How to save money on student loan payments is a different question.

Rather than looking for ways to save off the total cost of the loan, it’s asking how to save on the amount you pay every month.

But, the answer to both questions can be the same: refinancing.

Refinancing can:

  • Save you money on the total cost of your loan.
  • Reduce the cost of your monthly payments.
  • Give you a choice of repayment term (such as 10, 15 or 20 years)

Refinancing your student loan allows you to save money on your loan, even if you can’t afford to make extra lump-sum or monthly payments. You’ll save even more if you refinance your international student loan and you make extra payments.

As a bonus, refinancing loans from your home currency into the one you’re earning now can save the time and money spent on currency conversion and transfer fees

What does refinancing mean?

When you refinance a student loan, you accept a new loan to pay off your existing loan (or loans). Here’s what that process looks like:

  1. You have an existing loan you would like to improve in some way - whether that’s rates or duration.
  2. You find a lender with better loan terms, and you apply for the new loan.
  3. The new loan pays off the existing debt completely.
  4. You make payments on the new loan until you pay it off or refinance it.

Why should you refinance your student loan? 

1. Save money

A new loan means new rates, and because you’ve changed your financial profile for the better that means lower rates. You’ll be spending less of your hard-earned money on your education loan - every month and overall.

2. Build local credit

In addition, refinancing your loan will help you build your credit in your new country. No matter how long you’re planning to stay, your credit score and history is matters.

By looking into refinancing, you’re simply giving yourself the freedom to make an informed decision about your finances now and in the future. 

Of course, there are several other benefits when you refinance your loan, such as:

  • Choosing a new loan provider
  • Consolidating multiple student loans
  • Releasing your cosigners

Want to learn more about refinancing benefits? Jump to this section.

How does refinance save money off the total cost of your loan?

When you refinance a loan, you’re accepting a new loan to pay off the existing one. And, because you’ll have completed your degree and accepted a job offer, you’ll qualify for better interest rates. Those reduced rates equal big savings.

With refinancing, you also have the opportunity to change your loan repayment term, paying it off over a shorter period which also saves on the interest you’ll pay. 

Getting a degree and taking full-time employment are positive improvements to your credit profile. The better your profile, the better the rate lenders can offer.

And, lower interest rates equal lower loan costs. 

What kind of student loans can be refinanced?

In principle, you can refinance any private student loan, in any currency, from just about anywhere.

But, not every lender is willing to assist with any loan. Many banks and financial institutions don’t have the capacity to refinance loans in another currency from another country. Prodigy Finance is one of the few refinancing providers able to assist as we already work with international students to achieve their goals through international study loans. 

In the US, federal loans can be consolidated, not refinanced. While there is significant overlap, these are the same, as you can see here.

When should you refinance student loans? 

You can start investigating refinancing as soon as you have a student loan, though most students begin looking at their options a few months before graduation so they know which one to accept before repayments begin.

Of course, you can refinance your student loan at just about any point before it’s fully repaid. You might be prompted by an increase in interest rates or a pinch in your budget. Most people with student loans choose to refinance them when they’ve seen a change in their financial profile - whether that’s a master’s degree or a new job.

The point is that it’s never too late and hardly ever too early. 

Who should refinance their student loans?

If you have a private student loan and you’ve graduate, you should look into refinancing. That’s true for all working graduates - international or otherwise.

Student loans are usually large sums of money and any time you can save on the total cost, it simply makes financial sense to do so. Refinancing cuts your interest rate (among other benefits), allowing for a large savings. 

Want to learn more about the benefits of refinancing? Jump to this section.

What is education loan consolidation? 

Education loan consolidation combines multiple education loans into a single loan so you can make a single payment. It’s done when you accept a new loan and the lender pays off all your existing loans, offering some convenience on the admin side.

The process is the same for refinancing; you take a new loan while the provider pays off your existing education loans.

Because the process is the same, it can be confusing. So let’s break it down:

Consolidation

Refinancing

Can you combine loans?

yes

yes

Does it allow you to make one monthly payment?

yes

yes

Can it be used for US federal student loans?

yes

sometimes

Can it be used for private student loans?

no

yes

Can it be used for international student loans ?

no

yes, with Prodigy Finance

As you can see, consolidation (as it’s known in US financial aid circles) only applies to students with US federal student loans, which is how the majority of American citizens and permanent residents fund their master’s education. (This is why student loan consolidation information is aimed at domestic students.)

Refinancing, on the other hand allows you to consolidate private student loans. And, with Prodigy Finance, it’s also possible to refinance international student loans.

And there is another, incredible, benefit that comes with refinancing that you can’t get with consolidation:

Consolidation

Refinancing

Is it possible to get a lower interest rate?

no

yes

That’s right, when you refinance student loans (rather than simply consolidating them), you have the option of saving money on your international student loans.

With refinancing, you might save $20,000 on the total cost of your student loan. And, depending on how you refinance your loans, you might even save more. 

How can I consolidate international student loans?

US citizens and permanent residents can consolidate their student loans, but they’re also able to refinance them through a variety of lenders if they want to reduce their interest rates.

By refinancing your education loans, you’ll be automatically consolidating them - and enjoying the additional benefits as well.

Why don't most providers refinance international education loans?

The same banks offering refinancing to locals usually can’t provide refinancing to international graduates. It’s not that they don’t want to; it’s that their hands are tied. They can only offer loan terms as long as the stamp in your visa - and most student loans require more time to repay than most visas offer.

Your intention may be to stay, you may have even applied for your green card already, but banks need the proof before they can extend loan and refinancing offers. That, along with your limited credit history make it challenging for traditional financial institutions to extend loan or refinancing offers. 

Is it possible for international students to get their loan refinanced?

Yes! But, keep in mind that banks are bound to the stamp in your passport. If you’re on the OPT extension of your F-1 visa or on an H-1B visa, there is a time limitation based on visa expiry. That’s why you won’t find many local providers offering refinancing to international graduates working in the US.

The good news? International lenders like Prodigy Finance can help regardless of your visa status.

Where can you refinance international student loans?

As an international graduate living and working in the US or the UK, you’ll need to look at companies like Prodigy Finance which have structures in place to work with international students and have the capacity to work with graduates living and working outside their home country. You’ll get all the benefits of refinancing whatever visa you’re on. 

How to apply for international student loan refinancing

It’s worthwhile for anyone with private student loans to investigate refinancing. It simply never hurts to know how much you could save, whether you want to reduce your loan term or just your interest rate. Luckily, applying for international student loan refinancing - at least with Prodigy Finance - is super easy.

And, it’s fast too. It only takes 10 minutes to submit a commitment-free loan application with Prodigy Finance. Not only that, but the process is entirely online, so you can do it from anywhere.

All you need to do is provide your existing loan and degree information along with your supporting documents and we’ll get back to you as soon as we can with an offer.

It’s really that easy, but we understand if you still have questions. That’s why we have answers: 

How to restructure your loan terms when refinancing your student loans

You have the possibility of structuring your refinancing in the way that best matches your budget.

  • If you want to pay off your student loan debt as fast as possible, you can opt for the shortest possible loan term. This will also save you the most amount of money off the total cost of your loan.
  • If you prefer to make the lowest monthly payments while you build your career from the ground up, you can choose a longer loan term.
  • If you keep your loan term or monthly payments the same, you’ll still save with those lower interest rates.

Take a look: 

What are the benefits of refinancing your international student loan with Prodigy Finance?

The biggest benefit of refinancing is the money you’ll save. Reduced interest rates based on the positive changes you’ve made to your credit profile since taking your initial loans will always reduce the total cost of your loan.

You’ll save in other ways too.

For example, if you have loans in another currency, but you’re earning US dollars, you can save on transfer and currency conversion fees by making payments in USD.

You can also expect: 

Refinance icon

Get rates from 4% + LIBOR

Flexible loan terms

Choose flexible loan terms 

Refinance release co-signer

Release your co-signer

Refinance pre-payment

Make early repayments without fees

Ready to start your future off on the right foot?

It may just be time to look at refinancing your international student loan with Prodigy Finance. Funding international grad students is what we do – during and after their studies. And that means we totally understand your situation and we’re happy to help you succeed.


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