The Ultimate Guide to International Student Loans in 2024

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Prodigy Finance - May, 29 2024

7 min read

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At Prodigy Finance, we're committed to helping international talent to achieve their education dreams. We offer international student loans to qualified individuals attending top master's programmes in the US.

  • An international education can be a transformative experience, opening doors to new careers, cultures, and perspectives

  • Students may take out an international student loan to finance their higher studies at a foreign university

  • Apply for your education loan well in advance of your study abroad program to secure funding before your visa application

Whether you're dreaming of studying in a foreign country or already preparing for your international journey, understanding international student loans can help you make an informed decision.

Here, we will get into everything you need to know about international student loans: what they are, how they work, and the key factors to consider before borrowing.

Understanding International Student Loans

An international student loan is a type of financial aid specifically designed for students who plan to study outside of their home country. They help cover the costs associated with pursuing higher education in a foreign country. This includes tuition fees, mandatory student fees, books and course materials, and can even include your living expenses like rent, groceries, and transportation. They're different from federal student loans, which are only available to U.S. citizens and permanent residents.

So, when might you need an international student loan? If your program costs exceed your personal savings and you're short on funding even after receiving scholarships and grants, an international student loan could be a solution. Taking out an education loan can help you turn your dream of studying abroad into a reality.

They are different from domestic student loans, which are typically offered by the government or local financial institutions. International student loans are often provided by specialised lenders or banks that cater to the unique needs of students studying abroad.

Types of International Student Loans

Not all international student loans are created equal. We'll explore the two main types to help you choose the right one for your situation. Student loans can generally be split into bank loans and loans from private lenders.

Bank Loans: Many public and private banks in a student's home country may offer international education loans alongside their other financial services. The upside? Potentially lower interest rates and the convenience of having your loan and banking all in one place. But there's a catch: bank loans often require a cosigner, someone with good credit who guarantees they'll repay the loan if you can't. Also, there is a limit on how much you can borrow. Usually, bank loans do not provide complete coverage for the total cost of attendance.

Private Lenders: These are specialised financial institutions that cater specifically to international students. They might be more flexible on cosigner requirements and offer a range of other benefits. This can be helpful if you don't have someone to cosign for you. Private education loan providers like Prodigy Finance are popular among international students due to their ability to assess creditworthiness based on future earning potential rather than relying on just your credit score.

How do I qualify for an international student loan?

Each education loan lender has its own eligibility criteria. It's important to research and compare different loan options to find the one that best suits your needs and financial situation. Mainly, it requires you to attend an eligible school and meet specific enrollment criteria. You may need to fill out your personal information, proof of enrollment, and possibly a cosigner's details for the application. Once you submit these documents, the approval process begins. Initial approval often comes within weeks, and the total process, including fund disbursement, may take up additional time as per the lender criteria.

Receiving and using the funds

The funds are usually sent directly to your school to cover your tuition and fees. Any remaining funds may be disbursed to you by the lender to use for other educational expenses, like accommodation, books, and living costs. If the complete amount is sent to the educational institute, they will then transfer living expense funds to you directly after deducting the tuition fees.

How to apply? Application Process & Documents

If you are planning on securing a student loan for international studies, the most important step would be to research your options at reputable lenders. The application process can vary by lender, but here's a general roadmap:

  • Gather your documents: Prepare your acceptance letter, transcripts, financial statements, and passport. If required, have your cosigner's documents ready too.

  • Complete the application: Fill out the application form (online or paper) accurately and submit it with all the required documents.

  • Wait for approval: Your application will be put up for review. They will notify you once a decision is made. This can take a few weeks.

  • Review and sign loan agreement: Once approved, carefully review the loan terms (interest rate, repayment plan) before signing the agreement.

Here’s a general set of documents that you can expect while going to a private lender:

  • Valid Passport: A valid passport with an expiry date beyond the intended stay in the foreign country.

  • Enrollment Status: You must be enrolled as a full-time undergraduate or graduate student at an eligible university abroad. The lender will likely have a list of approved institutions.

  • Academic Record: Strong academic performance in your previous studies can significantly improve your chances of getting a loan and potentially qualify you for better interest rates.

  • Financial Need: You'll need to demonstrate a financial need for the loan by providing documentation of your expected educational costs and any other sources of funding (scholarships, grants, etc.).

  • Cosigner Requirements: For cosigner-required loans, you'll need a cosigner who is a U.S. citizen (if applying for a U.S. university) or permanent resident with a good credit history. This can be a challenge for some international students, especially from emerging economies.

When you're applying, the approval process may take a few days, with funds generally disbursed within a couple of weeks. As you weigh your options, it's critical to consider interest rates, fees, repayment terms, and borrower protections. Don't overlook the possibility of scholarships, which can reduce your reliance on loans and should be explored with the assistance of financial aid administrators at universities.

Repaying an International Student Loan

The repayment installments typically begin after the student has completed their studies or left the educational institution. Some lenders may allow for a grace period to allow for the students to become more financially stable. All the repayment terms and conditions should be thoroughly checked before accepting the loan.

Repayment PlanDescriptionProsCons
Repayment Plan

Standard Repayment


Fixed monthly payments over a set term (7-20 years)


Consistent payments, pays off loan faster, minimises interest


Higher initial payments

Repayment Plan

Graduated Repayment


Lower monthly payments, gradually increase over time


Good for those with rising income


Pay more interest overall compared to standard plan

Repayment Plan

Income-Driven Repayment (IDR) (if available)


Monthly payments based on your income


Lower payments if you have a lower starting salary


Extends loan term, potentially leading to more interest paid

Students are advised to develop a plan for making timely payments to avoid defaulting. This may cause penalties and even negatively impact their credit score.

Key Considerations Before Borrowing

It's crucial to thoroughly review and understand the terms of the education loan before signing any agreements. Go through the fine print, and do not hesitate to ask for clarification where necessary. Each step taken in this process shapes not just your academic path but also your financial future. Here are some things to keep in mind for first-time borrowers:

1. True cost of borrowing

Your interest rate will affect your total loan repayment amount. Usually, student loan interest accrues daily. This means that interest accumulates every day on the outstanding balance of your loan. In some cases, interest may be capitalised. This means the accrued interest is added to your loan balance at regular intervals (often monthly or quarterly). This increases your loan balance and, as a result, increases the amount of future interest you'll pay (interest on interest). Make sure to include any processing fees charged by the lender in the total amount.

2. Leverage scholarships and grants

Even if the scholarship amount or the grant received does not completely cover your cost of attendance, they can be accounted for while calculating your financial needs. International student loans can bridge the gap between scholarship/grant awards and your total education expenses.

3. Managing and repaying international student loans

As most of the loan repayments start after the classes have ended, you would want to revisit the loan agreement to review the loan terms. Now would be the time to create a realistic budget while keeping your income, essential expenses (rent, food, utilities), and loan repayments at the centre. Set up automatic payments to make sure you never miss a due date, even accidentally.

Wrapping up

Studying abroad can be a transformative experience. It brings along bright future perspectives and lets you explore new cultures. Consider an international student loan as an investment in your future. Prodigy Finance provides loans to international students aspiring to pursue their masters at selected top schools across the globe. However, it's crucial to practise responsible borrowing by only taking out what you need and understanding the terms and conditions of your loan. Researching lenders thoroughly allows you to find the best options for your financial situation.


Can these loans be used to cover travel expenses?

Some international student loan lenders may provide coverage for travel expenses to and from the host country. It would be considered under the total cost of attendance. However, it's important to check with your lender for specific details or any restrictions.

Why can’t international students get federal financial aid?

Federal loans are reserved for U.S. citizens and select eligible noncitizens. Students from other countries can explore scholarships, grants, and private loans to fund their education, though.

Are there any penalties for early repayment of an international student loan?

This is subject to each lenders’ policies. Some may charge a prepayment penalty, while others may allow early repayment without any restrictions. Prodigy Finance does not charge any early repayment fees. While early repayment can save you money on interest charges, it's important to review the terms of your loan agreement or contact your lender for exact details.

Prodigy Finance Ltd is authorised and regulated by the Financial Conduct Authority in the United Kingdom. Prodigy Finance loans are offered to eligible borrowers and these loans are governed by English law.

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© Prodigy Finance Limited 2007 - 2024. All Rights Reserved. Prodigy Finance Limited is incorporated in the United Kingdom (Company Number 05912562) with its registered address at 85 Great Portland Street, London, W1W 7LT and registered with the Office of the Information Commissioner (Reg. No. Z9851854). Prodigy Finance is authorised and regulated by the Financial Conduct Authority (firm registration number 709641) for certain consumer credit activities. Prodigy Finance loans are offered to eligible borrowers and these loans are governed by English law. Prodigy Finance Servicing, LLC is incorporated in the state of Delaware, USA, is an affiliate of Prodigy Finance Limited and conducts the business of servicing of loans for residents of certain US states. NMLS # 2155440 (Prodigy Finance Servicing, LLC) and NMLS #1611590 (Prodigy Finance Limited) ( View Prodigy Finance's lending, servicing and collection licenses.