Although refinancing an international student loan can be difficult, it is not impossible. “A lot of the barriers for student borrowers can be alleviated when borrowers learn more about how their options work,” says David Green, CEO of Earnest, an online lender that offers private student loans and loan refinances. students.
Here’s how to refinance international student loans and determine if it’s the right decision for you.
Should I refinance my student loan as an international student?
If you’re considering refinancing, Jennifer Finetti, Director of Outreach and Advocacy for ScholarshipOwl, advises you to ask yourself the following questions:
- Would your new interest rate be lower than your current interest rate?
- Would your new monthly payment be lower than what you are currently paying?
- Would refinancing allow you to remove a co-signer, if you have one?
“If the answer to one or more of these questions is yes, then it would be worth applying to refinance your student loan,” says Finetti.
Why is it more difficult to refinance a student loan as an international student?
If an international borrower leaves the United States, lenders are unable to enforce payment, Green says. This risk means that few private organizations do business with international students.
Lenders working with international students often require borrowers to have a cosigner who is a U.S. citizen or permanent resident, or meet other requirements that do not apply to domestic students.
Your type of degree could also affect your ability to refinance. “Some college programs are more refinance-friendly and offer more options for international students because degrees lead to stable, reliable careers that lenders trust to support repayment,” Green said.
Lenders also have different residency requirements, such as the school being located in a certain state, he says.
International students may also find it harder to prove their creditworthiness. “Most international students haven’t had the time or opportunity to accumulate credits yet,” says Finetti.
How to Qualify for International Student Loan Refinance
To improve your chances of qualifying for international student loan refinancing, try to establish your credit history before applying. One way to do this is to use a secured credit card, Finetti says.
“A secured credit card requires you to provide a cash deposit to initiate the card, and then you can use that card like a regular credit card,” she says. Your spending limit will generally be equal to your cash deposit. So if you deposit $500, you put up to $500 worth of purchases on your card.
“By making timely payments to your card, you’ll be able to boost your credit,” says Finetti. “As with a regular credit card, it is recommended that you try not to use more than 30% of your available credit.”
Certain types of jobs can also increase your chances of being eligible. “Lenders will be more likely to approve your application if you can demonstrate that you work for a well-established company,” says Finetti. “As such, working for a larger, more stable company will increase your chances of being approved compared to working for a smaller company.”
Keeping your cosigner or adding a creditworthy relative or friend who is a U.S. citizen or permanent resident to cosign your loan could also help.
How to refinance a student loan as an international student
Here are the steps you can take to refinance a student loan as an international student:
- Check your visa status. Some lenders require borrowers to have at least two years remaining on their visa, Finetti says. “If you have less than two years on your status, ask to extend your status before applying for refinancing.” You should also be prepared to show proof of your visa status to your lender.
- Make sure you meet credit score and income requirements. “When applying to refinance your student loan, lenders will want to see that you have a credit score in the 600s and will want proof that you have enough income to make timely payments on your refinanced loan,” says Finetti. You can improve your credit history with a secured credit card and increase your income by finding a job, ideally with a large, well-established company.
- Gather the documents. In addition to proof of your visa status, lenders will need to see documents showing your income and assets. “This may include recent bank statements from a financial institution in the United States, a letter from your employer certifying your current employee status and information about your salary or wages, proof of scholarships or financial aid from your university, (and) financial statements of investments or other assets,” says Finetti.
- Consider a co-signer. Even if you find a lender that doesn’t require a co-signer, having one can improve your chances of acceptance. “Your co-signer will need to be a U.S. citizen or permanent resident, and will need to show proof of that,” Finetti says. “Your co-signer will also need to have a good credit rating and be able to prove income and assets.”
- Compare lenders. Qualification standards vary by lender. You can check the requirements on the lender’s website, but it may also be a good idea to call the lender for more information. Although most U.S. lenders don’t consider foreign credit scores, Green says the products lenders offer international students are changing, so keep an eye out for new options as you begin and end of your graduate studies.
- Submit an application Once you’ve chosen a lender and gathered the necessary information, all you have to do is submit an application.