Student Loans for Study Abroad

Spending a semester or two studying abroad can be an enriching experience. Research suggests that it may even boost career readiness and hiring prospects after graduation.

While the experience itself can be rewarding, financing your overseas study can be a hassle. Fortunately, the federal government and private lenders offer student loans for studying abroad.

This guide offers a closer look at how to use student loans to fund your study abroad plans.

In this guide:

• Can student loans be used for studying abroad?
• Decide on a study abroad program (location, length)
• Federal student loans for study abroad programs
• Private student loans for study abroad programs
• More ways to finance study abroad 
• Can I use student loans to receive a degree from an international school?

Can student loans be used for studying abroad?

Both federal and private student loans can be used to pay for study abroad expenses. To use federal education loans to study abroad, the school you’re attending must be eligible to participate in the Direct Loan program. The office of Federal Student Aid maintains a database of eligible international schools.

Federal study abroad loans for U.S. students can be used to pay tuition and fees, room and board, and other eligible expenses. Any leftover funds are disbursed to you, which you could use for travel to your destination country or basic living expenses. However, federal loans may not cover all the costs of studying overseas.

If you max out the amount you can borrow in federal loans, you can turn to private student loans to finance the remaining costs. Approval for private student loans most often hinges on your credit history. You may be required to have a cosigner for approval if you haven’t established a credit history.

When considering study abroad loans, it’s important to understand what you can (or can’t) use the money for and how funds are disbursed (whether to you or the school). Talking to your school’s financial aid or study abroad offices can help you get specific answers to your borrowing questions.

Decide on a study abroad program (location, length)

Before exploring study abroad loans, determine where you plan to study. One of the best ways to save money is to opt for a less expensive program. Much of what you’ll pay to study abroad is determined by the programs with which your college partners.

There’s a difference in cost between direct enrollment, in which you enroll directly in a university abroad, or planning your study program through a third-party provider. Third-party providers typically include housing costs in their package fees.

For example, if you’d like to study in Japan, you might pay $1,500 to $2,500 per semester to enroll and another $1,500 to $2,200 per month to cover living expenses. Enrolling with a third-party provider, on the other hand, might cost $20,000 to $25,000 per semester, with housing included.

Study abroad costs can also vary by region. In Australia, the average cost of direct enrollment is $10,000 to $13,000 per semester, significantly higher than what you’d pay in Japan. But it’s possible to enroll at a school in Jordan for as little as $500 to $2,000 per semester.

How long you spend overseas can also influence the cost. For instance, you may choose a shorter summer program lasting just a few weeks, a fall or spring semester of study, or a full year of study.

The more semesters you study abroad, the more expensive it will be. Being mindful of these variables matters because the lower the cost, the less you will need to borrow and repay with interest.

Federal student loans for study abroad programs

When researching student loans to study abroad, the Department of Education is usually the best place to start. Federal loans offer some distinct advantages to borrowers, including:

• Low, fixed interest rates
• Easier approval (no credit scores or cosigners are required)
• In-school and post-graduation grace periods
• Forbearance and deferment options
• Income-driven repayment options
• Potential for student loan forgiveness

Exhausting federal student aid before seeking out private student loans could save borrowers money on interest and fees. Students who plan to pursue careers in public service may be able to get some of their federal loan debt forgiven, an option that isn’t available with private loans.

There are three types of federal loans borrowers may use to pay for international study. You’ll need to fill out the Free Application for Federal Student Aid (FAFSA) to apply, which you can do online. Federal study abroad loans include:

• Direct Subsidized Loans. Direct Subsidized Loans can be used to pay for undergraduate study, including study abroad. These loans are designed for students who have demonstrated financial need.
• Direct Unsubsidized Loans. Direct Unsubsidized Loans are not need-based and they’re available to both undergraduate and graduate students. Note that the government does not pay the interest on these loans for you during grace periods, deferments, or forbearance periods.
• Direct PLUS Loans. Parents can take out Direct PLUS loans to pay for study abroad on behalf of undergraduate students. These loans are also available to graduate students who plan to spend a semester overseas.

The annual limit for Direct Subsidized and Unsubsidized Loans varies from $5,500 to $20,500, depending on your year of enrollment and whether you’re a dependent or independent student. PLUS Loan amounts are determined by the cost of attendance at the school, less any other aid you’re receiving.

As long as the college you’re currently enrolled in, and the one you plan to enroll in are eligible to participate in federal student aid programs, you should be able to carry over aid from one school to the other. There is one exception: federal Pell Grants cannot be used to pay for study abroad expenses at international schools.

Private student loans for study abroad programs

Private student loans can help cover study abroad expenses not covered by federal loans. There are several differences between private and federal loans, including:

• Interest rates. Private student loans can have fixed or variable interest rates, which may be above or below the rates set for federal loans.
• Approval requirements. Private student loans typically involve a credit check. Less creditworthy borrowers may need a cosigner to qualify.
• Repayment terms. Private student loans may have shorter or longer repayment terms than federal loans. Lenders are not required to offer income-driven repayment for private loans.
• Loan fees. Lenders may charge fees, including origination fees, disbursement fees, and prepayment penalties.
• Loan limits. Depending on the lender, you may be able to borrow well into the six-figure range in private student loans. Lenders can also offer specialized loans for things like medical school and residency or law school.

Once you select a lender, you can apply online. The process is simple, though you’ll need some information from your cosigner, if applicable, to complete the application.

Here are four private lenders that offer student loans for studying abroad.

College Ave

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• Covers up to 100% of your cost of attendance
• Choose your repayment term
• Get a credit decision in just 3 minutes

College Ave offers private student loans for undergraduates, graduates, parents, and those pursuing special careers. The Wilmington, Delaware-based company was founded by former Sallie Mae execs intent on offering an easier path to student loan financing.

Private loans are available with fixed and variable rates, with repayment terms of five to 15 years. Most borrowers will likely need a cosigner to qualify for the lowest rates. There are no origination fees, and the online application takes less than five minutes to complete.

Does College Ave offer loans for study abroad programs?

College Ave does grant private loans for study abroad. Any student who’s enrolled in an accredited institution in the U.S. that offers a study abroad program can include the cost of the program in their cost of attendance when applying for undergraduate or graduate loans.

Sallie Mae

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• Lower your interest rate when you choose in-school repayment
• Get 4 free months of Chegg®
• No prepayment or origination fees

Sallie Mae originated as a federal student loan servicer in 1972. Today, student loan servicing is handled by offshoot company Navient, while Sallie Mae is a private student loan originator.

Students can apply for undergraduate and graduate loans through Sallie Mae. Applicants who need a cosigner for approval may be able to secure cosigner release after 12 on-time payments. Sallie Mae offers both fixed and variable rate loans.

Does Sallie Mae offer loans for study abroad programs?

Sallie Mae loans can be used to fund study abroad, up to the cost of attendance less any other aid received. There are no specific perks or benefits available to study abroad students, though all borrowers are eligible to receive a 0.25% rate discount when they enroll in autopay.

Ascent 

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• Customize your repayment terms
• Receive 1% cash back upon graduation
• Check your rate without impacting your credit

Ascent offers both cosigned and non-cosigned loans to undergraduate and graduate students. The company’s mission is to make student loan funding accessible to a wider range of students, including those who lack a traditional credit history.

In addition to undergraduate and graduate loans, Ascent offers loans to international students and students with Deferred Action for Childhood Arrivals (DACA) status. Loans can have fixed or variable rates and having a cosigner could help you qualify for the lowest rate.

Does Ascent offer loans for study abroad programs?

Ascent loans can be used to pay for study abroad costs. International students who are coming to the U.S to study can also apply for Ascent loans to cover education costs.

Discover

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• Receive a cash reward for good grades
• No fees
• It’s Multi-Year Option can help eligible borrowers receive loans in the future, hassle-free

Discover is often associated with credit cards and banking, but you can also find private student loans here. Borrowing options include undergraduate and graduate loans, with or without a cosigner, and student loan refinancing.

Cosigners are recommended for getting the lowest interest rates. It’s important to note that Discover doesn’t offer cosigner release the way other private lenders might.

Does Discover offer loans for study abroad programs? 

Discover student loans can be used to pay for study abroad. There are two caveats: Discover must have a lending relationship with your school, and the main campus must be based in the U.S.

More ways to finance study abroad

Study abroad student loans can be convenient, but they aren’t the only way to pay for your education. Here are other ways to cover study abroad costs without creating a debt obligation.

529 college savings plan distributions

A 529 college savings plan is a tax-advantaged plan that can be used to pay for higher education expenses, including costs associated with study abroad. Contributions to a 529 savings account grow tax-deferred. As long as withdrawals are used to pay for qualified higher education expenses, they’re always tax-free.

Parents can set up a 529 plan for their children, but you can also create a 529 plan for yourself if you’re 18 or older. You’d name yourself as the beneficiary, then contribute money on your behalf. That money can be invested in mutual funds or other investments inside the plan, growing until you need it to pay for study abroad.

Setting up a 529 savings account could be a good idea if you have some time to save before you plan to study abroad. Depending on how you invest it, you could get a much better rate of return than you would by parking your money in a high yield savings account or certificate of deposit (CD) account.

Scholarships for study abroad

Scholarships are a great option to consider for study abroad since, in most cases, this is money that doesn’t have to be repaid. Scholarships can be need-based or merit-based; some are based on your area of study, while others are diversity-based.

If you’re interested in finding study abroad scholarships, start with your school’s financial aid office. You can also research scholarship options through the study abroad office at your school and online.

Here are some of the most noteworthy scholarship options for study abroad:

• U.S. Department of State Benjamin A. Gilman International Scholarship Program. The State Department offers this scholarship for students with limited financial means who are interested in studying abroad or completing an internship overseas.
• Fund for Education Abroad Award. The Fund for Education Abroad Award provides up to $5,000 in funding for students who are underrepresented in the U.S. study abroad population, including students of color and first-generation college enrollees.
• Boren Language Scholarship. The Boren Language Scholarship is designed for U.S. undergraduates who plan to study abroad in critical areas, including countries outside of Western Europe, Canada, Australia or New Zealand.
• Rotary International Scholarship. The Rotary Club funds scholarships of $25,000 to students serving as Cultural Ambassadors while studying abroad.

Can I use student loans to receive a degree from an international school?

The Department of Education allows the use of federal loans to obtain a degree from an international school. The same stipulations apply if you were only studying for a semester or a year or abroad. Namely, the school must be eligible to participate in federal student aid programs.

Again, you can check the Department of Education’s list of international schools to make sure the program you’re planning to enroll in is eligible. The biggest consideration, aside from eligibility, is whether the federal loans you qualify for will be enough to pay the full cost of earning a degree internationally.

If not, then you can look to private study abroad loans but keep in mind that lenders may have their own rules. As noted with Discover, there must be a lending relationship with the school before you can borrow. Comparing private student loan terms and requirements can help you find the lender that matches your needs.

Learn more about the different uses for student loans.