Have you already heard that many students receive higher education in the USA on credit, and then pay off the debt from their salaries? At first glance, it sounds intimidating, but for many, this is the only opportunity to study in America.

In this article we will talk about the student loan system and whether a foreigner can get a loan to study in the USA.

What is a student loan in the USA?

A student loan is a loan that a student can take out to pay for university education in America.

Due to the high cost of education in the US, student loans are very popular. According to Forbes, the total student loan debt in the country currently stands at $1.75 trillion.

According to statistics, up to 55% of students at public universities and up to 57% of students at private universities apply for student loans in the United States.

The cost of living in America is also quite high for both foreigners and local students, who often go to other cities and states to study.

All this forces students to apply for loans that help them cover expenses while studying. The providers of such loans are the federal government and private companies.

Although for many students this is the only way to pay for education in the US, it is worth noting that student loans often have high-interest rates and repayment terms. Therefore, when receiving a loan, a student must be prepared to repay the debt within several years after graduation.

Types of student loans in the USA

There are two main types of student loans in the United States: federal loans and private loans.

Federal loans are issued by the US government. The different types of such loans are listed below. Compared to private loans, federal loans typically offer lower interest rates and more flexible payment terms.

  • Direct Subsidized Loan

Available to undergraduate students. The university determines the loan amount, which cannot exceed a certain amount.

If approved, the US Department of Education will make payments during your studies and for 6 months after graduation. Only after this, the student begins to repay the loan with interest.

  • Direct Unsubsidized Loan

Available to undergraduate and graduate students without the need to demonstrate financial need. The university determines the loan amount in accordance with the cost of education and the sources of financial support that the student has (for example, a scholarship or grant).

The student is responsible for paying interest from the outset. If you do not pay interest while you are studying, the amount will accumulate and be added to the loan amount.

  • Direct PLUS Loan

Available to master’s students and parents of undergraduate students. The university determines the loan amount in accordance with the cost of education and the sources of financial support that the student has (for example, a scholarship or grant).

Private student loans are issued by banks, non-profit organizations, universities, and various financial institutions. Private loans typically have higher interest rates and fewer repayment options, but are the best option for students who can’t get a federal loan.

The loan agreement always specifies what the loan can and cannot be used for. The student must read all terms and conditions carefully before signing. If they are violated, the creditor may terminate the contract and demand immediate payment of the entire amount.

Can an international student get a loan in the USA?

Yes maybe. However, the process for applying for and receiving a loan will be different from that of local residents.

Americans apply for student loans through the Free Application for Federal Student Aid (FAFSA). Foreigners cannot use this system.

As an international student in the United States, you can complete the International Student Financial Aid Application (ISFAA) from your university or the online College Scholarship Service Profile (CSS Profile) from the nonprofit College Board.

In both cases, the application must contain information about the financial situation, income, and expenses of you and your family. Based on this information, a decision is made to issue a loan.

By Admin

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