SoFi

A semester abroad. The phrase conjures images of books discussed over a Parisian breakfast or Argentine Alfajores. As romantic as that sounds, before you pack your bags you’ll want to do some research in order to weigh the pros and cons of studying abroad.

There are many advantages of studying overseas. You may pick up a new language or become fluent in one you already know. You’ll be exposed to a different culture, and immersed in new-to-you art, music, literature, and food. Broaden your horizons now and who knows where you’ll end up in ten years.

But most of all—more than any cooking technique or phrase—you’ll learn how to take care of yourself. Even if you speak the language, your safety net abroad is much more limited than if you’re in school in the U.S. You’re likely navigating an entirely new social system. That kind of chutzpah may come in handy later on in life.

One factor to think about when considering the pros and cons of studying abroad is how connected the program is to your university. If none of your study abroad classes will qualify for credit, it might not make sense financially.

Why not graduate a semester early and create your own study abroad program somewhere? You could create a travel itinerary all on your own, which may cost less than going on the abroad program through your school.

However, if you’ve already weighed the pros and cons of studying abroad, here are some tips regarding countries to consider, based on the languages you speak—or want to learn.

Spanish

If you speak or want to improve your Spanish, Latin America or South America are great options. Many students look at Mexico, Argentina, and Uruguay. One thing to consider is which dialect of Spanish you want to speak.

If you’re planning on using your Spanish extensively, and want to live in the Americas, Mexico is a great option as over 100 million people live there. Additionally, a lot of Spanish language entertainment comes from Mexico, so the Mexican dialect is widely known.

On the other hand, Argentina and Uruguay can be a great place to study abroad, but they speak a different dialect of Spanish, Castellano. If you’re considering living in South America long term, it could be worth it to study in Argentina or Uruguay instead.

If you’re more interested in Europe, Spain boasts a great university network that hosts many Americans. Again, the dialect there is different from Latin American and some parts of Spain speak Castilian Spanish, so if you’re planning on living in the Americas, it might make more sense to study in Latin America.

French

For those studying French, France is the obvious choice. But if Europe is less your speed, consider African countries like the Senegal or Morocco. Both countries have great French language university systems and are study abroad destinations, so there will likely be other international students there.

Chinese

For Chinese speakers, China is also the obvious choice. If your school doesn’t have a program there, many American universities are opening up satellite campuses, so that could be a good way to get to Shanghai or Beijing.

Hong Kong is also a good option, although they speak Cantonese there, rather than Mandarin, which tends to be the Chinese dialect that most Americans study. In Singapore, however, they speak both Mandarin and English.

English Language-Based Study Abroad Programs

If you don’t speak any foreign languages, don’t despair. Many universities offer study abroad programs that are not language-based or don’t require knowledge of a language before you apply.

Some good destinations for only-English language speakers are Germany, Israel, and Hong Kong. There are also obviously programs in English-speaking countries like England, Ireland, New Zealand, and Australia.

Studying Abroad Pros and Cons

Studying abroad is ultimately a big decision—and every big decision calls for a good ol’ pro-con list (preferably on a yellow legal pad). So let’s talk through a high-level look at some of the pros and cons of studying abroad.

Some Pros of Studying Abroad

Starting off with the pros—what are the benefits of studying abroad?

Perhaps it’s cliché to point out that studying abroad will expand your horizons—but it really might. Immersing yourself in a completely new culture can be a life-changing experience, whether it proves that you’re actually a Francophile, or whether it ends up revealing that you’re a homebody at heart.

This is also a great opportunity to make new friends from around the world that you may have never had the chance to meet. Meeting new people in new places, while experiencing new things sounds like a great adventure!

On a more practical note, grad school admissions may look fondly upon those who have studied abroad. This might be an opportunity to gain valuable workplace skills and real-world experience stores, which may help during an interview process!

Beyond that, it might enable you to look at your coursework in a whole new light. Also, studying abroad could be one of the only times in your life that you get to spend an extended amount of time in another country, which is a compelling pro.

Some Cons of Studying Abroad

And for the rebuttal—what are the negatives of studying abroad?

Studying abroad has the glamour that staying on campus, to put it simply, doesn’t. A certain amount of FOMO over your friends study abroad adventures might be inevitable if you stay behind. However, what those friends might not be telling you is that studying abroad isn’t without its challenges.

Being in a new place—especially where you don’t speak the language—can feel isolating. It can also make it challenging to keep up with relationships back at school or with coursework necessary for graduation. Many degree programs require students to fulfill a certain number of credit hours, and studying abroad may make it more difficult to get everything done in the allotted time frame.

Of course, it might go without saying that the finances of studying abroad can also be a con. It could be costly to study abroad with certain programs. And it’s not just tuition dollars—cost-of-living could be higher in your chosen study abroad home than it is back at school. For example, off-campus housing in Pennsylvania could be significantly less expensive than off-campus housing in Paris.

Financing Your Study Abroad Experience

You may be able to receive federal aid for your study abroad program. There is eligibility criteria , of course, and you’ll need to fill out your annual FAFSA® form as per usual, but the government recommends filling it out as soon as possible, since you’ll need to make sure it applies for both your American school and your program abroad.

There are also a number of study abroad scholarships and grants available to American students. For more information, you can check out this list as a starting point of your research.

After exhausting all of those options, you may also consider taking out a loan with a private lender. Private student loans from SoFi offer flexible repayment options and absolutely no fees. Get a low-rate in-school loan that works for you, so you can focus on your studies—both at home and abroad.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

SOSL18230

Ever have a friend complain about how the payments they’re making towards their loans aren’t actually going to pay off…well, the freakin’ loans? Your friend is onto something.

At the beginning stages of a loan, a big proportion of the loan payments that a borrower makes are applied towards the loan’s interest as opposed to the principal balance. Especially if the loan is spread out over a long time-frame such as many years, most early payments are applied almost totally to interest.

Due to a method of calculation called amortization, loan payments are split between interest and principal, heavy on the interest in the beginning stages. Towards the end, the effect usually reverses. When an amortization calculation is displayed visually, it is called an amortization schedule and graph.

We’re going to get into some of the nitty-gritty amortization info, but before we go there, we just want to be straight with you: This is an incredibly complex topic. We’re going to try to break it down the best we can, but please understand that this info is general in nature and does not take into account your specific objectives, financial situation, and needs; it should not be considered advice. SoFi always recommends that you speak to a professional about your unique situation. Okay, and we’re back in.

Amortization is calculated on all installment loans, which are loans that have regular, predetermined monthly payments, such as mortgages and student loans. Below, we will discuss how amortization is calculated, take a closer look at student loan amortization and a student loan amortization schedule, and explore some ideas for borrowers who want to lessen the amount they’ll pay in interest over time.

Understanding Amortization

Before we dive into a student loan amortization calculation and schedule, it is helpful to first understand the basics of calculating the cost of a loan. You’ll need to know these three variables:

1. The value of the loan, also known as the principal
2. The interest rate on the loan (and whether it is fixed or variable)
3. The duration, or length, of the loan (usually given in months or years)

With this information, it is possible to determine both the monthly payment on the loan and the total interest paid during the life of the loan, assuming all payments are made. Although the math itself is difficult, it is easy to plug the information into an online student loan interest calculator.

The next step is to determine how much of each monthly payment is going towards both interest and principal. This is where the amortization calculation and the amortization schedule come in. As mentioned, amortization happens only on “installment” loans, and all student loans are installment loans.

There are two types of loans: installment loans and revolving credit. A mortgage, student loan, or car loan are all examples of installment loans. With an installment loan, the borrower is loaned an amount of money (called the principal) to be paid back over a designated amount of time, with interest.

Revolving credit, on the other hand, is not a loan disbursed in one lump sum, but is a certain amount of credit to be used as the borrower pleases, up to a designated limit. A credit card and a line of credit are forms of revolving credit.

A borrower’s monthly payment on revolving credit is determined by how much of the available credit they are using at any given time; therefore, minimum payments change from month to month.

Student Loan Amortization Examples

Because student loans are a form of installment loan—a specific amount of money is disbursed to the borrower—student loans are amortized. Parts of each payment are spent on both the loan’s principal and its interest.

At the front-end of the loan, a much larger proportion will be allocated to interest. Due to the way compounding returns work, the effect is more dramatic the longer the length of the loan.

Take, for example, a $30,000 loan at 7% fixed interest rate amortized over a 10-year repayment period. The borrower’s monthly payment is $348.33 total (rounded down to $348 for simplicity in the grid below). Each year, the hypothetical borrower will pay $4,180 total towards their loan.

This never changes, although the proportion that is paid both towards principal and interest will. Here’s how that hypothetical borrower’s hypothetical loan amortization might look. (All examples calculated using this student loan interest calculator, by Bankrate .)

Amortization Schedule Student Loan $30,000, 7% interest over 10 years starting January 2019

So, during the first year, the example borrower’s monthly payments are made up of about half interest and half principal. At the end of that first year, the borrower has paid $4,180 total towards their student loan. $2,032 of that went to interest, while $2,148 went to paying down the principal.

At the end of the first year, the loan is not reduced by the total amount the borrower had paid, but only the amount paid towards the principal—the $2,148. The $30,000 loan is therefore valued at $27,852 at the end of the year.

That’s the whole thing with amortization—because only a small proportion of payments is applied to the loan’s principal at the early stages, the interest rate charges continue to be calculated off a relatively high loan balance figure. Eventually, this swings in the other direction as the loan’s principal is reduced.

With each passing month and year paying down debt, more of each payment is allocated towards the principal. By the ninth and final year, the borrower pays only $154 to interest and $4,026 to principal.

Let’s look at another example of a hypothetical student loan amortization schedule, but along a longer timeline, such as twenty years. It should be noted that a twenty-year payback period isn’t “standard” for federal student loans, but the important takeaway here is the impact of time on amortization calculations.

Here’s a table with the results of a hypothetical $60,000 student loan at a 7% fixed rate, paid back over 20 years.

Amortization Schedule Student Loan $60,000, 7% interest over 20 years:

In this example, each monthly payment for the 20-year duration is $465.18 (again, rounded down to $465 for simplicity’s sake above). In January 2019, the first month of the first year of the loan, $350 is paid towards interest, and just $115 is paid towards the principal. That’s less than 25% of the total payment, compared to 50% in the previous example.

By the end of the hypothetical loan, hardly any of the payment is allocated towards interest, and the majority is applied to the principal. In the very last monthly payment in the last year, only $3 goes towards interest and $462 to principal. In the last year, only $206 total goes towards interest versus $4,155 in the first year.

To calculate your student loan amortization schedule, you too can use an online calculator . It can also be really helpful to see the numbers in graph form, and to see each amortized payment listed out—so you know how much of your money is going to both interest and principal in each monthly payment.

Can You Pay Less Interest on Your Loans?

If amortized payments are frustrating to you, you’re not alone. One way to possibly alleviate the pain is to pay your loan back faster than the stated term. Especially at the beginning of the loan’s repayment term, making additional payments towards the principal might lower what you’ll owe in interest.

If you go this route, consider letting your lender know that the additional payment is to be applied to the principal of the loan, not the interest. If you are mailing a check, you could include a note. If you’re making a payment online, you may want to call your loan servicer to make sure that they apply the money correctly.

For borrowers with multiple loans that want to expedite their debt payment, it’s hard to know where to start. If your goal is really to nip loan amortization in the bud, you might want to consider the “debt avalanche” method of debt repayment.

Using this method, you would choose the source of debt with the highest interest rate and work on “attacking” it first, while making the minimum payment on all other loans. After the highest interest rate loan is paid off, you would move to the next highest interest rate loan, and so on.

Graduates can also consider refinancing their student loans. When you refinance, you’re essentially paying off your old loan or loans with a new loan from a private lender, like SoFi. Ideally, you refinance in order to get a lower rate on your loans than you currently have.

No matter your current financial standing, it’s usually worth checking to see if you qualify for a lower rate than you’re currently paying. With refinancing, you’re also usually able to adjust other terms to your loans, such as the repayment schedule. You can extend it, if you’re looking for lower monthly payments, or shorten it, if you want to pay less in interest—and outsmart amortization—on your loan.

Borrowers shouldn’t refinance their loans if they’re currently using one of the special federal loan repayment plans such as income-driven repayment or Public Service Loan Forgiveness. When you refinance, you will lose access to these programs. Otherwise, it’s usually worth looking into.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.