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Explore Loan Options for International Students

A few colleges and companies in the U.S. will lend to prospective and current international undergrads.

Experts say students should look into all other ways to pay for college before taking out loans.

Studying in the U.S. isn't cheap, and it's usually even more expensive if you're an international student.

Most international students, including F-1 visa holders, aren't eligible for student loans from the U.S. government. But there are a limited number of other loan options for prospective and current international undergraduates.

Some U.S. schools offer generous financial aid packages to international undergraduate students. Among the 50 colleges and universities that gave the most financial aid to international students for the 2015-2016 school year, the average award size was $51,164, according to U.S. News data.

But not every international student gets a sizable aid package. To help meet remaining financial need, some schools, such as St. Olaf College in Minnesota, offer loans.

"We have a small, fixed amount that we let international students borrow," says Carly Eichhorst, director of financial aid at the college. "We don’t let them borrow more than that."

St. Olaf's international undergrads can borrow up to $4,000 per year during their four years of study. The current interest rate is a fixed 5 percent and the repayment term is five years. A co-signer is not required, says Eichhorst. A co-signer is someone who agrees to take on the debt if the borrower doesn't pay it back.

For the 2016-2017 academic year, St. Olaf lent money to 111 students, or about half of its international student population, according to Eichhorst. The average amount borrowed was $3,185.

If a student's school doesn't offer loans, which may often be the case, there are a few other options. Some companies, such as Citizens Bank, will give student loans to non-U.S. citizens if they have a co-signer who is a U.S. citizen or permanent resident – a tough requirement for many foreign students.

International students might have siblings or cousins living in the U.S. who are willing to co-sign a student loan, says Eichhorst.

Some schools compile a list of recommended lenders as a resource for their international students, says David Sheridan, director of financial aid at Columbia University’s School of International and Public Affairs. The recommended lenders on Columbia's list for 2016-2017 for undergraduates all require co-signers.

There are a handful of companies that lend to international students and don't require a co-signer, such as MPOWER Financing. The District of Columbia-based company gives loans to both undergraduate and graduate students, though most borrowers are grad students.

Unlike many other lenders, MPOWER also considers a student's earning potential, as opposed to just credit history, when determining whether to approve a loan, says Manu Smadja, CEO and co-founder.

"We look at dozens of variables," Smadja says, "from the university the student is attending, to their test scores on the SAT or the GRE or the GMAT or the LSAT, so that we can provide a merit-based loan."

There are restrictions. Only undergrads with two years or less left in their degree program can borrow from MPOWER. Also, students must attend one of the 223 schools the company works with, as of June 2017.

The interest rates on MPOWER loans are fixed and range from 7.99-13.99 percent. These rates are higher than those for new federal student loans, which currently range from 4.45-7 percent.

The repayment term for MPOWER loans is 10 years, though there is a three-year option too.

However, financial aid experts say that before turning to loans, international students should look into all available scholarships and grants – both at home and in the U.S. – since these types of awards don't have to be paid back like loans do. One place to start is the EducationUSA website, which has a database of private and college-based financial aid opportunities.

For international students who are considering loans, here are some tips.

• Start researching early: Sheridan says students should begin looking into loan options even before they've even been admitted to a U.S. college or university, "just so they know what the realistic options for them would be."

• Ask lots of questions: Smadja suggests students look into things like whether a lender's interest rates are fixed or variable; the length of the repayment term; whether there is a penalty for prepayment, or paying back the loan early; and what happens if a student has trouble making a payment one month.

• Don't wait too long to apply for a loan after being admitted: Securing loan approval sooner rather than later will help students complete the I-20 process in a timely manner, says Sheridan. Students receive a Form I-20, which is needed to obtain a visa, from their college after proving they can afford to study in the U.S.

When it comes to loans for international students, "there are challenges," Sheridan says, "but there are possibilities.”

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