Is It Possible To Refinance International Student Loans As A Transnational Student?
Despite the difficulties, refinancing an overseas student loan is achievable. "Many of the challenges for student borrowers can be minimized when borrowers learn more about how their alternatives work," says David Green, CEO of Earnest. This internet lender provides private student loans and student loan refinancing.
Learn how to evaluate your options for refinancing your international student loans.
As an international student, should I refinance my loan?
Director of outreach and advocacy at ScholarshipOwl, Jennifer Finetti, suggests the following questions to examine when contemplating a refinancing.
Would it be less than what you're paying now if you switched interest rates?
If you switched to a different monthly payment plan, would it be less expensive?
In case you have a co-signer, would they be able to be released through a refinancing?
Finetti suggests considering a refinancing application "if the answer to one or more of these questions is affirmative."
Why Is It Difficult to Refinance a Student Loan as an International Student?
According to Green, lenders have no recourse if a foreign borrower leaves the United States. Due to the inherent danger, very few private companies will work with foreign students.
Some lenders will only work with domestic students. In contrast, others will only work with overseas students if they have a U.S. citizen or permanent resident co-signer or meet other restrictions.
Your refinancing options may also be affected by the type of degree you hold. Green argues that because these degrees typically lead to well-paying, secure jobs, lenders see graduates of these programs more favorably when refinancing. A more significant number of these programs are available to international students.
He also notes that different lenders have varying residency requirements, such as the institution's physical location.
Additionally, it may be more challenging for international students to establish creditworthiness. Generally speaking, "most international students have not yet had the time and opportunity to develop their credit," as Finetti puts it.
Refinancing Your Overseas Student Loans: What You Need to Know
If you want to refinance your international student loans, improving your credit score will increase your chances of being approved. According to Finetti, a secured credit card is a viable option.
She explains that a secured credit card works in the same way as a conventional credit card but requires a cash deposit to open. Your credit card deposit will most likely serve as your spending cap. Therefore, if you load $500 onto your card, you can make purchases of up to that amount.
It's true that "when you make timely payments on your card, you'll be able to build your credit," as Finetti puts it. You shouldn't use more than 30% of your limit, just like a standard credit card.
Your work may also influence whether or not you are accepted. If you can show that you have a stable job with a reputable company, Finetti says, "The likelihood of approval from lenders will increase." Your chances of approval will increase if you work for a larger, more established company rather than a startup.
You may get a better interest rate on your loan if you can keep your co-signer or get a creditworthy family member or friend who is a U.S. citizen or permanent resident to co-sign for you.
Tips for International Students Seeking to Refinance Their Student Loans
To refinance a student loan as an international student, follow these steps:
Investigate your visa situation
Finetti explains that some lenders require a borrower's visa to have at least two years left on it. We recommend that if your current status has been in place for less than two years, you should apply to extend it before submitting a refinancing application. You should be ready to produce proof of your visa status to your lender.
See if your salary and credit score are adequate
Student debt refinancing requires a strong credit score and proof of sufficient income, according to Finetti. Find a job, preferably at a larger, more stable organization, and use the secured credit card to build your credit history while you're there.
Collect the necessary paperwork
Loan providers will also require evidence of your income, assets, and immigration status. Finetti says that this could include: recent bank statements from a U.S. bank; proof of employment and pay information in the form of a letter from your company; proof of scholarships or financial aid from your college; financial statements from investments or other assets.
Think about getting someone to co-sign the loan with you
If you can locate a lender who does not demand a co-signer, having one can increase your approval odds. To co-sign a loan, "your co-signer will need to be a U.S. citizen or permanent resident," Finetti explains. You need a reliable co-signer who can verify their income and assets.
Check out the offerings of different financial institutions
Standards for eligibility are not standardized and can differ significantly amongst lenders. The lender's website is a wonderful place to start looking for eligibility requirements, but it never hurts to give them a call just to make sure. Most U.S. lenders won't look at your overseas credit score, but Green says international students should look for new products when their studies start and conclude.
Don't hesitate to apply!
Once you've settled on a lender and acquired the appropriate documentation, all that's left to do is to put in an application.
There are several points for international students to keep in mind when considering student loan refinancing. Although the path is not clear-cut, it is possible. While it may take some research and extra effort, taking those steps can save you a lot of money in interest and give you greater flexibility in your study schedule.
Table of contents