While international student loan refinancing can be challenging, it’s not impossible. “Many of the hurdles for student borrowers can be mitigated when borrowers learn more about how their options work,” says David Green, CEO at Earnest, an online lender that provides private student loans and student loan refinancing.
Here’s how to refinance international student loans and determine if doing so is the right move for you.
Should I Refinance My Student Loan as an International Student?
If you are considering refinancing, Jennifer Finetti, director of outreach and advocacy for ScholarshipOwl, says 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 paying now?
— 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 applying to refinance your student loan would be worthwhile,” Finetti says.
[Read: Best Private Student Loans.]
Why Is It Harder to Refinance a Student Loan as an International Student?
If an international borrower leaves the U.S., lenders aren’t able to enforce payment, Green says. This risk means few private organizations do business with international students.
Lenders that do work with international students often require borrowers to have a co-signer who is a U.S. citizen or permanent resident, or meet other conditions that don’t apply to domestic students.
Your degree type could also affect your ability to refinance. “Some academic programs are more favorable for refinancing and have more options for international students because the degrees lead to reliably stable careers that lenders trust to support repayment,” Green says.
Lenders have different residency requirements as well, 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 have not yet had the time and opportunity to build their credit,” Finetti says.
How to Qualify for International Student Loan Refinancing
To improve your chances of qualifying for international student loan refinancing, try to build up your credit history before applying. One way to do this is with 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 just like a regular credit card,” she says. Your spending limit will usually equal your cash deposit. So if you deposit $500, you put up to $500 worth of purchases on your card.
“As you make timely payments on your card, you’ll be able to build your credit,” Finetti says. “Just like a regular credit card, it is recommended that you try to not use more than 30% of your available credit.”
Certain kinds of employment can also boost your odds of qualifying. “Lenders will be more apt to approve your application if you can demonstrate that you are employed with a well-established company,” Finetti says. “As such, working for a larger, more stable company will boost your chances of getting approved versus working for a small business.”
Keeping your co-signer or adding a creditworthy relative or friend who is a U.S. citizen or permanent resident to co-sign for your loan could help, too.
How to Refinance a Student Loan as an International Student
Here are 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, apply to extend your status before applying to refinance.” 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 high 600s and will want to have evidence that you have enough income to make timely payments on your refinanced loan,” Finetti says. You can improve your credit history with a secured credit card and increase your income by finding a job — ideally at a larger, well-established company.
— Gather documents. In addition to proof of your visa status, lenders will need to see documents demonstrating your income and assets. “This might include recent bank statements from a financial institution in the U.S., a letter from your employer certifying your current employed status and wage or salary information, proof of scholarships or financial aid from your college, (and) financial statements from investments or other assets,” Finetti says.
— 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 strong credit score, and must be able to prove their income and assets.”
— Compare lenders. Qualification standards vary by lender. You can check for requirements on the lender’s website, but it can also be a good idea to call the lender to get more information. While most U.S. lenders won’t consider foreign credit scores, Green says the products lenders offer to international students are evolving, so keep an eye out for new options at the beginning and end of your higher education.
— Submit an application Once you’ve chosen a lender and gathered the necessary information, all that’s left to do is submit an application.
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Can You Refinance Student Loans as an International Student? originally appeared on usnews.com