For many, the reason why international student loans may seem so daunting is because eventually, the loan needs to be repaid. Many international students not only have the huge change in studying abroad in the United States, but also the thought of possibly having debt post-graduation due to international student loan repayments. If you get approved for an international student loan, there are many different aspects to it for you to understand. However, arguably one of the most important aspects of the loan to understand is the repayment terms and how it affects the amount that you repay. By repayment terms, we mean:
- Repayment period,
- The amount of each payment installment,
- How long you can defer the payment.
In a previous blog, Repaying Your International Student Loan, we explained the general overview of loan repayment, here, we will explain in more detail the various options for repaying an international student loan and what some of the more technical terms mean. The goal is for you to understand how loan repayment might work if you are to receive a student loan. For more general information on international student loans, please follow this link.
Repayment Period
One of the first things you may want to know about your international student loan is how long you will have to make repayments on it for. Almost always, loans are not repaid at once in one lump sum. Instead, they are repaid over a period of time so that the payment is spread out and likely more affordable. However, the amount of time you have to repay the loan and when those payments start depend on the international student loan that you have been approved for.
Typically, the average range of time you will have to repay your international student loan varies, but the estimated average is between ten and fifteen years. When you have to start repaying also varies. Here are three likely periods of time when repayments start:
- Immediately: basically, once your international student loan has been disbursed, the payments (interest plus principal) begin right away;
- Interest Only: this lasts for the period of time you are in school. During this time, you would only have to pay the interest payments on your loan. Then, usually (but not always) you may be able to defer the full payments for up to either forty-five days after you graduate or when your course load drops to part-time;
- Full Deferral: this means that you won’t have to start making repayments on your international student loan for up to six months after graduation, as long as your status as a full-time student has been maintained. This means that you will not have to pay for up to the four years you are in school, plus up to six months after you graduate. However, this depends on the loan you have been accepted for.
Please remember that the three points listed above are very general explanations and are given to help illustrate various options that lenders may have available. In order to figure out when your repayments will start on your international student loan, please contact your lender.
Repayment Amount
Another very important aspect of your international student loan to understand is how long your (eventual) repayments will be. Please note that almost all international student loans are subject to interest rates. What that means is that your repayments will be made up of the principal amount plus the interest rate. Interest rates vary by loan and a number of other factors, so please contact your lender for what your specific interest rate will be.
There are a few options available when it comes to determining the repayment amount on your loan. Generally speaking, the longer your repayment period, the lower each payment will be, but the more money you will pay in interest. Inversely, the shorter your repayment period, each payment will be higher, but in the long term you will pay less money in interest. Here are a few examples of different repayment periods:
- Standard Repayment: this may be the most common. Generally, this a fixed monthly amount that can be repaid for a total of up to ten years. Sometimes, depending on the loan and other factors, the minimum amount paid per month can be as low as $50.
- Extended Repayment: similar to standard repayment, except for a longer period of time. Generally speaking, these can be repaid for between twelve to thirty years. It really depends overall on the amount of the international student loan you took. Again, since this period is longer, your payments may be less money but you will pay more in interest rates.
- Graduated Repayment: this one is pretty different from the above two. Basically, you start out with smaller monthly payments, and over time, those payments will increase. Typically, these repayment periods last for twelve to thirty years.
These are only a few of the basic options available. Again, please check with your lender to see what options will be available to you and which ones will best fit your situation. For more information on international student loans in general, please visit this link.
Nomad Credit Can Help You Find Education Loan Options
Understanding student loans (also known as education loans) can be tough, but getting an international student loan can be even tougher. Nomad Credit is happy to help you navigate the difficult process and help you search for student loan options.
Please visit us at www.nomadcredit.com to search for student loan (also known as education loan) options. Please don’t hesitate to email us at help@nomadcredit.com if you have any questions.
