Many students go abroad with aspirations of higher education, higher income, and a better lifestyle. But in this journey, they are intangible by what all the students struggle with and that is student loans. The education costs are so high that you cannot afford it without loans unless you are a big shot. Once you take out student loans, repaying them becomes a lifetime burden.
Fortunately, there are certain alternatives to solve this student loan repayment trouble offered by the private banks, such as deferment, refinance and so on. Even though you are a non-resident you are still eligible for these benefits.
Though it is very difficult to get your student loans refinanced it is not impossible. You have to meet some qualifications to be accepted by the private lenders. But to meet those qualifications is another big task.
Table of Contents
- Eligibility criteria for Refinancing Without the U.S Citizenship
- Applying for Refinancing as a Noncitizen
- Benefits of Refinancing International Student Loans
- Why difficult for International students to get Refinanced
- Choose the bank best suitable for you
- Final words
Let us read more about what an international student has to do to qualify for refinancing his student loans under private financial institutions.
Eligibility criteria for Refinancing Without the U.S Citizenship
The three basic requirements to be fulfilled to be eligible for refinancing without the U.S citizenship or U.S Nationality are-
Employment and job offer
Build a good U.S credit history
Must have an eligible co-signer
Apply for loans that are meant for international working graduates
1. Visa Approval
For any non-resident individual, the most important document is a visa. The moment you approach a bank you will be asked about ypur visa. Therefore it is very important to have an approved visa as it gives the lender an idea of his residential status in the country and that he won’t be running with the money.
The first step towards refinancing is having an approved visa.
Note- if you an OPT of 12 months with a non-STEM major, you have to promise your lender that you will be getting your H1-B visa.
2. Employment and Job Offers
Apart from visa, another important factor that you need to show as proof to get approved is a job or a job offer. You having a job is an assurance for the lenders. Apart from assurance, being employed also affects your interest rate, higher the income lower the interest rate.
In case you aren't employed, you must at least have a job offer at your hand. It must include the joining date and your salary package. Apart from this having a stable income is also equally important.
3. Build A Good U.S Credit Score
The U.S credit bureaus do not consider your credit history from other countries, consequently, you have to build a new credit history for the U.S to be eligible for refinancing. But it is also beneficial in the long term perspective.
How do you create a U.S credit history?
As an international student, you will have to start from scratch. As a college student, you must be repaying the private student loans which has already started giving you some credit background, to begin with. You can compute your credit history for free by referring to one of the credit reporting bureaus - TransUnion, Experian or Equifax.
The other option for building credit is by applying for a credit card. To be eligible for a credit card you will have to gove information like permanent address, a taxpayer ID number, income, and a bank account.
How Can you Improve Your Credit Score?
After you have begun creating your credit history you must take care that you maintain it well. By maintaining it well means by making timely payments moreover by having a high income you will build a good credit background profiting you with a good credit score, which will enable you for a lower interest rate and also help you in the long term in many aspects of finance.
4. Must have An Eligible Co-signer
If you don't have a good credit history you can still avail of refinance with a working visa. To be eligible for refinance you must have a co-signer who is a U.S. citizen or permanent resident. He must meet the required refinancing criteria such as a good credit history, high income and so on.
5. Apply for loans that are meant for international working graduates
When you unable to perform the above two requirements you're only last option is to pick a bank that does not require a credit history or a cosigner. One of the bank that accepts you for not having a credit history and cosigner is Prodigy Finance. However, you have to meet their criteria to be accepted for refinancing. They accept only those international students who have a graduate degree and income of $139,140.
Now that you know how you can be eligible for refinancing, next you need to know how can you apply and what are the documents that you need to produce to your lender.
How to Apply for Refinancing as a Noncitizen?
Generally, most of the banks have their own application process which differs from bank to bank. Here is a general guideline on how to apply.
Here, are the general guidelines that you have to follow. Before you start, here is a tip.
Before you begin applying, research which are the banks available for you and whose eligibility criteria suits you. Apply to a number of lenders.
The eligibility determinants that will be generally required by the lenders before they accept you are-
Employment or job offers
U.S bank account
U.S. personal phone number
Your residential address proof in the U.S
Before you start applying make sure you have the basic documents that are generally mandatory such as valid visas, employment permits, bank details, co-signer details, and other such documents.
It is always good to inquire the lender what are the additional documents required. This will help you to prepare and makes the application process easy.
3. Final call
After you have applied for a number of lenders, the ones that have approved you will send you a final offer. Read the terms and conditions of every bank approved, compare them, evaluate them and select the best suitable for you.
Before you make a final decision make sure you contact the selected bank and understand their rules, regulations and other related information.
After you have chosen a final lender and completed the required procedure, the funds will be disbursed. The funds may be disbursed to your account or paid directly to the existing debts as per your agreement. The timing of granting the finds depends on the lender and the agreement you have signed. Generally, it can happen from a few days to a month.
Benefits of Refinancing your International Student Loans?
Refinancing for Visa Holders comes with short-term as well as long-term benefits to the students. The following are the benefits-
1. Lower Interest Rates
High-interest rate is one of the major obstacles for repayment difficulty. Higher the interest rate higher the amount. Refinancing your international loan offers you lower interest rates reducing your monthly payments. But this is possible only when you have a good credit history by repaying your current student debts timely. In addition, if you have a higher and stable income this will contribute you to have a lower interest rate.
Hence having a lower interest rate helps you in cutting down your loan payments and adding up to your savings.
2. Simpler Monthly Payment
In order to cover the high expenses of the college, you may have taken out multiple private student loans from multiple lenders. These multiple student loans have to be repaid on different dates with different amounts. It is troublesome to keep track of all these loans at the same time.
You can solve this problem by refinancing these loans under a single loan provider. Refinancing not only offers you a lower rate but also helps you keep track of your loan by clubbing all your private student loans into one private loan. This enables you to make simpler and single monthly payments at lower rates.
3. Affordable Monthly Payments
Lower interest rate offers you lower monthly payments. This low rate is provided by loan provider for refinancing your student loans. Make sure that when you refinance you are offered lower rates. Allowing you to make affordable payments.
In case you make lower monthly payments at comparatively high rates then you are repaying for a longer-term. Making you pay more interest over the life of the loan. Hence you have to be careful before choosing a lender and compare the interest rates offered by the various lenders.
4. Lender of Your Choice
For an international student, it is difficult to choose a lender for refinancing of his choice due to limited access to loan providers. But if you meet some requirements such as a good credit history, high income and so on you may get an option to choose a better lender of your choice.
Hence you don't have to settle for the lender that you don’t want.
5. Better Customer Service
If you have a good credit background you have a wider choice of lenders. You must choose the one with better customer service. You no more are in a position that you have limited choice of lenders and hence your lenders must offer you better customer services and do their best to win you.
Why is it difficult getting loans refinanced for international students?
The answer is in the question itself! Being an international student furthermore, a non-resident itself is the main reason for you to face the difficulty.
1. The U.S Government grants most of the student loans
As the government has started granting the student loans themselves, there are a number of financial institutions that are not permitted to finance student loans.
2. What if a student with debt runs away?
No student loan is discharged in the case of bankruptcy. Even though your student loan is certified by an accredited university it won’t be discharged. In simple words, you have to repay these loans throughout your life.
If a student with debt to deal with leaves the country there is no other alternative left with the bank other than bearing the expenses.
To eliminate this problem most of the financial institutions avoid as much as possible granting loans to H-1B and F-1/OPT visa holders.
3. Short visas and huge loans
Generally, the students have large loans and a shorter visa which makes it more risker to grant them refinancing. To repay the loan it will take many years which is not possible with a short visa duration.
Why Are International Students Given Higher Interest Rates on Student Refinancing Loans?
They are considered risky and maybe a burden if they run away without repaying the loan. Apart from that, the other reasons are-
Having short-duration visa
During the recession, International students may be forced to leave the US
International students can escape easily by leaving the country leaving the lenders bear the debt expense.
How to choose a bank to refinance best suitable for you?
Following is the list of the banks that provide refinancing for international students-
Citizen one bank
The following table gives details of the interest rates, credit score and the official link of various banks.
|Citizen one||3.45-9.49%||2.34-9.33%||Not disclosed|
|First Republic||1.95-4.45%||N/A||Not disclosed|
As shown in the table the banks are well differentiated by the amount of variable or fixed interest offered. It is crucial to have an in-depth knowledge of the various interest rates associated with student loans.
It is difficult to get approved for refinancing but not impossible. To avoid facing rejections, prepare a strong eligibility base that will not only be advantageous for refinancing but also for the long term in case you decide to settle down in the U.S.
Make sure you choose the bank that best suits your preferences.