A Guide To Refinance International Student Loans
A guide to help you navigate your finances
You can benefit from lower interest rates and a more extended repayment period by having a private lender refinance your student loans. Borrowers can help in numerous ways, from refinancing their student loans.
In the first place, you might perhaps get a better deal by negotiating a lower interest rate or shorter repayment period. If you want to prolong the length of your loan's repayment period to reduce your monthly payment, you can do so through several available refinancing alternatives.
Student loan refinancing has several advantages, but one major drawback is that many institutions only work with U.S. citizens. This prerequisite can make it harder for non-permanent resident alien borrowers to refinance their school loans (green card holders).
However, refinancing an overseas student debt is doable. You might be amazed at how many loan companies are open to working with you. Here we will discuss the best refinancing alternatives and how to get started for overseas students.
Reasons why it's so hard for overseas students to refinance their student loans
As was previously indicated, many U.S. banks and lenders restrict their services to legal U.S. residents only, excluding many international students and non-U.S. residents. This can look like a tough hurdle, but there are two main reasons banks don't typically lend to international students.
There is a greater danger of students leaving the United States for good if they study abroad
U.S. banks are wary of making student loans to international students with temporary visas. Borrowers of international student loans may hold the following temporary visa types:
E-2
E-3
F-1
H-1B
J-1
L-1
O-1
OPT
TN
The F-1 and J-1 are the most frequent student visas, while some students may transition to work visas after finishing their studies.
Lenders view borrowers holding any of these visa categories as higher risk because there is no assurance that they will eventually become permanent U.S. residents. If the borrower willingly leaves (or is forcibly removed from) the United States, collecting any outstanding student loans becomes tough.
Students studying abroad are more likely to have restricted credit histories in the United States
Non-citizens have more difficulty obtaining approval for credit cards and other lines of credit because they lack social security numbers. Because of this, potential lenders may see international students as having a limited credit history.
Refinancing at the best rates is more challenging for people of any nationality or residency status if their credit reports are thin. A borrower's credit history and score are still crucial considerations for most lenders when making loan offers. They review credit reports and often have a minimum score required to qualify.
However, not every foreign student has trouble with English. A select few credit card offers exist with new Americans in mind. Credit reports also reflect your on-time payment history for loans like student ones.
How international students can refinance their existing student loans
Many students from other countries who go to the United States to attend college on a student visa pursue careers in highly competitive sectors such as medicine, engineering, and other technical fields that require a significant financial investment. After finishing their degrees, many debtors may intend to stay in the U.S. labor force.
However, many international students have difficulty refinancing their existing U.S. student loans since they do not meet U.S. residency requirements.
International borrowers may face difficulty securing finance, even when embarking on lucrative careers that would ordinarily qualify them for preferential interest rates. Nevertheless, there are methods to overcome these challenges and qualify for international student loan refinancing with U.S. institutions.
To accomplish this, please follow these two directions:
Have a reliable American cosigner join your application.
One of the simplest ways to get approved for a new loan at competitive rates is to find a creditworthy U.S. citizen to cosign your refinance loan. Foreign students generally cannot obtain federal student loans. It's safe to assume that your loans are private and not government-backed if you're not a U.S. citizen yet have U.S.-based student debt. Although some financial organizations could be willing to give loans to international students without requiring a cosigner, this is still more of an exception than the norm.
As a result, many international students taking out loans in the United States may already have a U.S. cosigner. If this describes your situation, you could ask your current cosigner if they would be willing to cosign a new refinance loan with you.
Your cosigner is likely to be willing to cosign your refinance loan. After all, they're already out the money if you can't pay back your current student loans. They owe it to you to assist you in negotiating a lower interest rate because doing so will lower your monthly payment and increase the likelihood that you will pay off your debts on time.
Shop around for loan providers with lenient eligibility criteria
If you'd instead submit your own refinancing application, you'll need to find a bank or other lending institution willing to work with non-U.S. citizens. Banks like Citizens Financial Group and FinTech startups like SoFi are two such examples.
Stilt is a specialized private student loan provider for international students. It does not offer very competitive rates or terms, nevertheless.
There is no universal set of requirements that all lenders adhere to. However, in most cases, students holding the following visas can refinance their student loans:
H-1B
J-1
L-1
E-2
E-3
If you're still in a student visa status (F-1 or OPT), finding a lender who would work with you may be challenging. Stilt, however, does not limit any sort of visa.
How to get a refinancing of an international student loan without a cosigner
Make sure your temporary visas aren't about to expire if you want to refinance your overseas student loans without a cosigner.
Next, have a look at your credit rating. If your score is "poor" or "fair," you may not qualify for a lower interest rate by refinancing. But if you have good to exceptional credit, you have a better chance of getting a better rate.
Last but not least, many lenders require proof of steady income. It shows them that you have the financial means to make your monthly installments.
Is it a good idea to refinance international student loans?
Foreign student loan refinancing is an option, but you should consider the pros and cons before making a final decision. If you cannot raise your credit score or find a creditworthy cosigner, keeping your present loans may be more beneficial.
On the other hand, most overseas students do not take out federal student loans. Thus they are not at risk of losing eligibility for federal programs like income-driven repayment (IDR) or student loan forgiveness if they choose to refinance. That simplifies the benefit-risk analysis of consolidating student debt.