Student Loans for International Schools: What U.S. Students Should Know

Interested in going to college in another country? Attending school outside the U.S. can be a great way to expand your horizons and immerse yourself in another culture, and countries such as Germany and Norway offer free tuition at public colleges — even for U.S. students.

However, if you’re an American student planning to earn a degree abroad, you won’t be eligible for federal grant aid such as the Pell Grant. And even if the school is significantly cheaper than options you weighed in the U.S. or you don’t have to pay tuition, you’ll likely have fees as well as expenses such as travel and visa costs and room and board.

Whether you’re looking to earn an international undergraduate or graduate degree, here are some answers to questions you may have about using federal student loans to help pay for college abroad.

[Read: A Checklist for Earning a Degree Abroad.]

Can I Borrow Federal Student Loans to Attend an International School?

Many international schools participate in the U.S. federal student aid program. This means that, depending on which school you attend, you may be able to borrow federal student loans to help cover your college costs. The U.S. Department of Education maintains a list of international schools that participate, which is updated quarterly. As of the most recent update on July 6, 2021, more than 760 foreign colleges and universities were listed as participants.

If your school is on the list, you can apply for federal student loans by completing the Free Application for Federal Student Aid, or FAFSA. The form is the same regardless of where you’re attending school; there is no separate FAFSA for international schools.

Once you’ve filed the FAFSA, you’ll hear directly from your school about next steps: how and when your loans will be disbursed; how to cover other costs; and key deadlines and paperwork requirements.

According to the Department of Education’s Federal Student Aid office, your loan funds will be electronically sent directly from the U.S. government to your school’s designated bank. The school will then put the money toward what you owe in terms of expenses like tuition and fees, and then refund any leftover money directly to you. It’s important to stay organized and keep close track of your communications throughout this process.

What Types of Student Loans Could I Be Eligible For?

At participating schools around the world, you may be eligible to borrow federal direct loans as an undergraduate. Depending on your financial circumstances, you’ll be eligible for either a direct subsidized loan and/or a direct unsubsidized loan.

If you’re an undergraduate student eligible for a subsidized loan, which is need-based, the U.S. government covers interest payments while you’re enrolled at least half time and in some other cases. This means that your student loan does not accumulate interest during those times and your loan balance doesn’t grow while you’re in school. The government also pays the interest on subsidized loans while borrowers are enrolled in certain repayment plans.

[Read: Understanding the Types of Federal Student Loans Available.]

Unsubsidized loans are available to students regardless of financial need. Interest accumulates on these loans while you’re in school. In addition, parents may be eligible to take out a federal Parent PLUS loan to help you pay for school.

If you’re a graduate student at a participating school, you may qualify to borrow a direct unsubsidized loan and/or a Grad PLUS loan.

The maximum borrowing limits in subsidized and unsubsidized loans can range from $5,500 to $20,500 a year per student based on several factors, such as whether you’re a dependent or independent student and your year in college. Grad PLUS and Parent PLUS loans may allow borrowing up to a student’s full cost of attendance minus all other financial aid received.

Other Considerations for Earning a Degree Abroad

Keep in mind that by choosing to earn a degree abroad, that means you won’t be eligible to participate in the federal work-study program, which allows some students in the U.S. to reduce their reliance on student loans. You could also miss out on state grant aid and many scholarships, and you may be restricted from working, depending on the country and its visa requirements.

If you’re unable to borrow federal student loans or you need additional funds to pay for a degree at a college abroad, you can look at private student loans. However, they should be your last resort. Besides a credit card, private loans are one of the riskiest ways to cover college costs because they typically don’t include the same benefits and protections as federal student loans.

[Read: Know Your Student Loan Consumer Rights.]

While there are many advantages to earning a degree abroad, you should do your research and make sure the school you’re attending has good outcomes and will enable you to pursue your career goals without taking on insurmountable debt.

For example, before choosing to attend an international medical school because of lower tuition or less-stringent admissions criteria, ensure the institution has an acceptable medical licensing exam pass rate for graduates.

As with all major life decisions, if you’re thinking of earning a degree abroad, it’s important to do your research, seek out expert advice and plan ahead.

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