Studying abroad can be a life-changing opportunity that will enrich your college experience. But that enrichment can come with a strain on your bank account. If you’ve always wanted to head overseas, your college years are a great time to do it. But, can you afford it?
If you’re looking for how to get money to study abroad, there are a few different student loan options that may be worth exploring. Whether you’re about to head off to college, currently enrolled, or in graduate school, student loans may be available to help finance your trip. Read on to understand how student loans to study abroad work.
How to Pay for Study Abroad
Costs for studying abroad vary depending on where you go, what you study, and how long you stay, but average costs are around $18,000 per semester, according to GoAbroad.com .
To get federal financial aid—which includes grants and loans—you’ll need to complete the FAFSA® . Federal financial aid may cover some expenses for certain study abroad programs, but there might not be enough cash to cover the whole experience—so be sure to contact your school’s financial aid office. That’s where private student loans could come in handy.
There are a few things to keep in mind before taking out a private student loan for study abroad, including:
Interest rate: A high interest rate can cause you to pay significantly more than you expected. Also, see if you’re signing up for variable or fixed interest rate loans, as variable rates fluctuate up or down depending on the markets.
Repayment: Review loan terms to see when you will start paying back your student loans. Federal loans usually start student loan repayment six months after graduation (or whenever you drop out or drop below part-time hours), but private loans can vary in their repayment schedule. Some may require you to start repayment even while you’re in school. At the very least, consider looking for loans that don’t require repayment until after you’ve graduated.
When You Study Abroad May Determine Your Costs
If you’re in search of how to get money to study abroad, when you go can be just as important as where you go. Undergraduate degrees are usually less expensive than graduate ones, which means studying abroad during undergrad may also be less expensive. Graduate student loans are a bit different from undergrad ones in a few ways, including:
1. Higher interest rates, higher limits. Since graduate degrees are more expensive than undergraduate ones, you can borrow more money with graduate loans. Unfortunately, graduate loans also tend to have higher interest rates.
2. Unsubsidized loans. Undergraduate students get the benefit of Direct Subsidized Loans, or loans where the federal government pays your interest rate while you’re in school. Direct Unsubsidized Loans for graduate studies start accruing interest while you’re in school. This could be costly once you graduate.
Do your research on the different student loan options, and if you have flexibility in your timing, you may wish to consider going abroad sooner, as an undergraduate, rather than as a graduate student. You could save some money in the long run.
Refinancing Student Loans
If you are in graduate school, you might already be staring at a mountain of student loan debt. If you haven’t deferred your student loans, you may be able to refinance your student loans to lower your monthly payments or interest rate. If you qualify, you can free up some cash for your studying abroad adventure.
Refinancing and consolidation are similar, but they’re not quite the same. Consolidation is available for federal loans, while refinancing is available for both federal and private student loans.
Consolidation takes your federal student loans and combines them into one loan, averaging out your interest rates and rounding them up to the nearest one-eighth of a percent. Refinancing replaces your old loans with one new one, along with a new interest rate that’s hopefully lower than your old one.
Before you refinance your student loans, it’s a good idea check to see if it’s best for your financial situation—especially if you plan on using federal programs like income-based repayment plans, which you forfeit access to if you refinance your federal loans with a private lender. Here are some things to think about:
1. A low interest rate. SoFi offers refinancing options with both fixed and variable interest rates. The lower your interest, the less you would end up paying on top of your principal balance. If a new interest rate is less than your current interest rate, you may want to think about refinancing.
2. Check your terms. A longer term means smaller monthly payments. This is helpful if you’re struggling to make your full payment every month. Although longer terms could mean you pay more in interest over the life of the loan, your financial situation might dictate which terms are best for you right now.
3. See if you need a cosigner. Your credit score plays a significant part in your loan terms and interest rate. If your credit score is fairly low, you might need a cosigner for a SoFi loan. Student loan cosigners can be a determining factor in getting approved for a loan, but keep in mind that if you don’t pay your loan back, your cosigner is liable for it.
4. What you can afford. If you have a solid job and can afford monthly payments, refinancing might be a good idea. But if you have a lower-paying job and are having trouble making ends meet, make sure your loan terms reflect what you can pay each month (and consider skipping private refinancing for income-based repayment from the government, which may be a better option for you).
5. See if there are other ways to save. A solid credit score is the golden ticket to an affordable interest rate during refinancing. But there might be other ways to save if you refinance. See if you get a discount for enrolling in an AutoPay program, like the one SoFi offers.
If you’re looking for student loans to study abroad, you have some options. If you’re in grad school and need to tackle your debt before your big adventure, you can refinance your student loans with SoFi.
SoFi is a leader is the student loan space, offering both private student loans to help pay your way through school, or refinancing options to help you save on the loans you already have.
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.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.