What is student loan certification?

Many international students dream of attending a university in the United States for their post graduate studies, but making it a reality can be financially challenging. American universities don’t follow any standardised government fee system, meaning that tuition costs vary drastically from college to college. In general, public colleges tend to charge lower tuition rates, while private universities typically are more expensive.

Student loans play an important role in American higher education, for both local and international students as well as the wider economy in the United States. By making it easier for students to afford paying for college through student loans, education becomes accessible to a more diverse range of students and potentially secures better paying jobs for them in the future.

Many students are dependent on loans to cover their tuition, fees and even living expenses. And often, the only way to make their studying dreams come to life is to take out a student loan.

This guide will take you through:

• the available funding options
• the loan certification process, and
• the common challenges and ways to overcome them.

Financial aid available to international students

Although international students are not eligible to apply for US federal student aid like federal loans or work-study, there are still a number of options available to help pay for higher education. You may want to explore:

• Financial aid allocated for international students,
• Scholarships,
• Grants,
• Private scholarships, and even
• Private student loans.

Financial aid options

Financial aid options for international students are more limited than for US citizens. That said, it’s worth it to reach out to schools you are interested in to ask about your options. Take a look through these three financial aid options to find out more and if they are applicable to you.

The Free Application for Federal Student Aid (FAFSA)

While the Free Application for Federal Student Aid (FAFSA), a standard form used to determine eligibility for financial aid, including grants, work-study, and loans, isn’t open to international students (students on F1 and F2 student visas) and non-US citizens, some colleges use the FAFSA to work out what financial aid they can offer international students.

Check with your school's financial aid office to see if it uses the FAFSA for international students. As you won’t have a social security number because you are an international student, should you need to complete the FAFSA application, you will need to print it out, complete it and mail it to the Federal Student Aid office. It’s worth taking note that the earlier you fill out the form and send it, the better, as some types of aid have a limited pool of money and may be allocated according to which applications were made first.

International Student Financial Aid application (ISFAA)

Other colleges might ask you to complete the International Student Financial Aid application (ISFAA) to determine your aid eligibility, and you can find that app on individual schools' websites.

College Scholarship Service (CSS) profile

Lastly, some colleges might make use of the College Scholarship Service (CSS) profile, which will ask you to provide complete information about your family's income, assets, and expenses. You can input this information in your country's currency and the College Board will convert the currency for you.

It’s worth checking with the college or school you are interested in to find out if they offer any of the above types of financial aid.

Scholarships

Scholarships are a great way to source funding to study, and best of all, you don’t need to pay it back. There are quite a number of international student scholarships available - some private, institutional and even government-funded scholarships. Others might be for particular fields of study, sport, hobbies, volunteer projects and even heritage. While they are highly competitive, your chances of being awarded one is pretty good, especially if your achievements are impressive and you can confidently submit a good application.

To apply, you’ll generally be asked some personal questions, be required to write an essay or even create a video. While some of them are well worth the effort, others might only be for a small amount, useful to cover your book expenditure for a semester.

It’s worth taking the time to look through this portal of scholarships, listing:

• Over 1000 scholarships for Master’s degrees in the US,
• 700 scholarships for PhDs in the US
• And further listings managed by the US Department of Labor

Grants and institutional aid

If you’re considering attending a graduate school, you’ll be pleased to see that there are also organisations which offer grants or institutional aid to international students. Here are a few such programmes:

• The Fulbright Program for Foreign Students offers around 4000 grant scholarships each year to international students who want to study in the US. The grant covers almost all expenses associated with your course, including airfare from your home country to the US.
• Another opportunity is the AAUW International Fellowships, which awards grants to female international graduate students studying in the US.
• Wellesley College in Massachusetts
• Haverford College in Pennsylvania
• Washington and Lee University in Virginia
• Dartmouth College in New Hampshire
• Wesleyan University in Connecticut
• Stanford University in California
• Duke University in North Carolina

Some of the grants are awarded on merit, whilst others use needs-based criteria to determine the lucky few to receive grants. The eligibility criteria will depend on your country of origin, so read through the terms and conditions carefully.

Private scholarships

There are quite a few private organisations who offer scholarships, aimed at international students. Start researching early as deadlines for submissions will vary, and don’t forget to check the eligibility criteria.

Some of the popular private organisations who offer private scholarships are:

• United World Colleges (UWC) Scholarships include a group of 18 universities across the world, with over 10 000 students benefiting annually from this scholarship programme;
• Joint Japan World Bank Graduate Scholarships are open to students from developing countries who want to study a Master’s in a development-related subject in one of their 27 partner universities from the US, Europe, Africa, Oceania, and Japan.

Private or alternative student loans

Private student loans enable you to borrow money to pay for various college costs like tuition, books, living and travel expenses and even health insurance. When you apply to borrow the money, you agree to pay back the money, fees, and interest at an agreed rate over time.

While international students can apply for private student loans from banks, credit unions, and online lenders, they usually need a US citizen as a cosigner because most students often don't have much income and little credit history.

A cosigner can be a friend, family member, or someone with good credit who helps share the loan responsibility. Finding a US cosigner can be tricky for international students, so it’s best to approach trusted friends or university alumni who have a good credit history.

There are lenders - like Prodigy Finance - that do not require a cosigner or any collateral.

It’s a good idea to explore other options for funding your studies, like scholarships, grants, other financial aid options and money you have saved, to help pay for these costs before committing to a private student loan, given the high rate of interest that usually accompanies these types of loans.

Private student loan certification

The loan certification process for international students studying in the US (whether through a federal or private loan) typically follows these steps:

1. Apply for a loan: International students must first apply for an education loan from a private lender or financial institution that offers loans to international students. These lenders may have specific eligibility criteria, interest rates, and terms, so it's important to research and compare the different loan options available.
2. Provide required documentation: lenders will typically require certain documentation, which may include proof of enrollment at an eligible US educational institution, proof of your visa status, a cosigner's information (if required), and financial documents to demonstrate your ability to repay the loan. This documentation may vary from lender to lender.
3. Select a cosigner: many international student loans require a creditworthy US citizen or permanent resident cosigner. The cosigner you choose will be legally responsible for the loan if you fail to make payments. Finding a cosigner can be one of the most challenging steps for international students.
4. Loan application review: the lender reviews the loan application, including the documentation provided by you. They assess your creditworthiness and financial situation to determine your loan approval and terms.
5. Loan approval: if the application is approved, the lender will send a loan approval disclosure that outlines the loan terms, including the interest rate, fees, and repayment options.
6. School certification: once you have received your loan approval disclosure, you need to work closely with the US college’s financial aid office to complete the school certification process. This process will verify your enrollment, confirm the loan amount needed, and ensure compliance with the school policies.
7. Disbursement: once the loan is certified by the school, the lender disburses the loan funds directly to the school to cover your tuition and other educational expenses. Any remaining funds are usually returned to you, the borrower, to cover your living expenses.
8. Repayment: repaying your loan typically begins once you graduate, leave school or stop studying before the half-time enrollment at the college. Repayment terms and conditions will depend on the loan lender and type of loan you have taken out.

It's important for you to research your loan options carefully, understand the terms and conditions, and work closely with your chosen college’s financial aid office to navigate the loan certification process. Additionally, building a strong credit history and finding a creditworthy cosigner can be crucial to get a loan approved.

Tips for a smooth certification process

Practical tips and advice

Here are some practical tips and advice for students navigating the certification process of a student loan and maintaining good financial habits during college:

Before taking a loan:

• Explore all options: before applying for a private student loan, do your research on other financial aid options and investigate if you can apply for scholarships, grants, work-study programs, and part-time jobs to reduce the need to take out loans.

• Understand different loans: do your research on the different types of loans available

  Borrow Only What You Need: Borrow the minimum amount required to cover your education costs. Avoid taking out more than necessary.

During loan certification:

• Complete the FAFSA: complete the Free Application for Federal Student Aid (FAFSA) to determine your eligibility for financial aid, if the college you’re applying to requires this.
• Read and understand the terms: carefully read and understand the terms of the loan, including interest rates, repayment options, and grace periods.
• Ask questions: make sure you ask questions if anything is unclear.
• Keep track of borrowed amounts: keep records of the loans you've taken out, including amounts, interest rates, and loan servicer information.
• Work hard: maintain satisfactory academic progress and meet other eligibility criteria set by your school.

Maintain good financial habits

• Create a budget: develop a budget that outlines your income and expenses and stick to it.
• Minimise your expenses: reduce the non-essential expenses like dining out, entertainment, and shopping.
• Use campus resources: take advantage of free or low-cost resources on campus, like gym facilities and academic tutoring services.
• Part-time work: consider part-time work or internships to help cover living expenses and get experience.
• Avoid credit card debt: use credit cards responsibly and pay off balances each month to avoid high-interest charges.
• Save for emergencies: Save into an emergency fund for unexpected expenses, and reduce your need to borrow more
• Graduate on time: complete your degree on time to limit accumulating more debt.

Resources and tools available

Remember that good financial habits during college can help minimise the impact of your student loan after graduation. Here are some tools that can help you keep track of your loans and stay organised:

Common challenges and how to overcome them

Here are some common challenges that you may come across during the loan certification process, along with solutions and strategies for overcoming them:

• Lack of financial literacy: many students may not fully understand loan terms, interest rates, or repayment options. It’s important to educate yourself about loans, seek guidance from financial aid counsellors, and attend financial literacy workshops so that you can fully understand your loan agreement.
• Cosigner requirements: as an international student, you may struggle to find a US citizen cosigner for your private loan. Look for lenders that offer loans to non-US citizens or explore loan options in your home country if available. Prodigy Finance loans do not require a cosigner.
• Loan eligibility: some students may not meet the eligibility criteria for certain loans, due to factors like immigration status or academic progress. It's important to explore alternative financing options, such as scholarships or on-campus employment before taking out a private student loan.
• High debt accumulation: it's easy to borrow more than you actually need, leading to high debt accumulation. Carefully assess your educational expenses and borrow only what's necessary to cover these costs. Seek out grants, scholarships, and part-time jobs to reduce the loan amount.
• Repayment concerns: many students worry about how they'll repay their loans after graduation. Remember to explore income-driven repayment plans that adjust monthly payments based on your income.
• Loan servicer confusion: after borrowing, some students might find it challenging to navigate the loan servicing process. To avoid this, create a document with all loan details, including the loan servicer's contact information, and ask questions or seek guidance when needed.
• Unexpected financial hardships: unforeseen financial challenges, like medical expenses or job loss, can make repaying your loan difficult. To counter this, save towards an emergency fund during college to provide a financial safety net for yourself.
• Graduate on time: some students accumulate more debt because they don't graduate on time. Create a clear academic plan to stay on track and utilise campus resources, like academic advisors, to ensure you meet graduation requirements.

It is important to understand the student loan process fully and explore other financial aid options so that you, as a student, and your family, can make choices that align with your financial goals and ultimately, contribute towards your long-term financial well-being.

By being proactive, seeking financial guidance, and being mindful of your borrowing and spending, you can navigate the loan certification process more effectively and reduce the challenges you encounter with student loans.