Study Abroad Loans and What You Need to Know

 April 23, 2021
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As long as you’re attending an eligible program, you can use your federal student loans for studying abroad. However, federal loans might not cover all your expenses, meaning you may need to find other sources of funding, such as income from a part-time job, scholarships or a private student loan.

Consider your full cost of attendance of a study abroad program, including tuition, lodging, extracurricular activities or travel during the semester. By taking your total cost into account, you can make an informed decision about whether to borrow additional study abroad loans.

For a closer look at study abroad loans, let’s consider the following:

The cost of going abroad with study abroad loans

Over 347,000 students from the U.S. studied abroad in the 2018-19 year, according to a report from NAFSA, a nonprofit dedicated to international education and exchange. Although studying abroad can be an amazing learning experience, it can also come with a high price tag.

According to, the overall cost of studying abroad can be about $18,000 or more per semester, depending on your school and location. Either way, it can get expensive, especially if you plan on taking two semesters of classes.

Your expenses will also vary depending on where you choose to study abroad, as some places have much higher costs of living than others.

Using your federal student loans for studying abroad

When planning your study abroad experience, find out if your program meets the criteria for using federal student loans. Not every study abroad program is eligible for federal aid, like those that are just a few weeks long.

The good news? There are international colleges and universities that allow students to take out a federal direct student loan or your parents to take out a direct PLUS loan to pay for your studies abroad.

The Department of Education provides a list of which international schools participate in these federal loan programs.

If you don’t qualify for federal student loans for studying abroad, private student loans might be your only option. There are alternative lenders who specifically work with students planning on studying overseas, but these study abroad loans may not fit a traditional aid package.

What to consider before taking out a loan

When you decide to go overseas, it’s easy to get excited about thoughts of seeing Paris or Rome. Although that’s natural, the excitement could lead you to overlook important details like interest rates on your loans.

Making that mistake can cost you. For example, imagine you take out a loan with a 6.60% interest rate; that means a balance of $8,000 may turn into nearly $11,000 over 10 years of repayment. When you take out private student loans for studying abroad, this interest accrues during school and deferring payments does little to ease the costs.

Estimate how much interest you will pay on your private loan by using this calculator:

Student Loan Payment Calculator

Total interest paid

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To avoid that situation yourself, consider the following factors before taking out a loan:

  • Interest rate: Know the interest rate and whether it’s variable or fixed. If the rate is high, you could end up paying much more on the loan.
  • Payment due date: With federal loans, you usually have six months after graduation before you have to start making payments. Private loans might not offer the same grace period. In fact, some could require you to make payments right away, even if you’re still in school.
  • Repayment plans: Private loans aren’t eligible for federal benefits like Public Service Loan Forgiveness (PSLF) or income-driven repayment (IDR) plans. However, some lenders will allow you to temporarily pause payments if you’re in financial trouble. Check the lender’s policies ahead of time so you know your options.
  • Term: Many federal student loans have a 10-year repayment term, but private loans can be much different. Some have repayment periods as short as five years, which means you’ll have a higher monthly payment. That can make it difficult to stay current on your debt when you’re just starting out.

How to repay study abroad loans

Dealing with high-interest loans can be intimidating, but here are four options to help you repay them:

1. Refinance private loans
2. Set up a payment plan
3. Check out repayment assistance programs
4. Pick up a side hustle

1. Refinance private loans

If your interest rate or monthly payment is too high, you can refinance your loan and could qualify and be approved for a new rate or a lower monthly payment. Under this option, you apply for a new private loan from a different company.

Your new loan is used to pay off your old debt and comes with completely different terms. Securing a lower interest rate or smaller monthly payment can help you save money, pay the debt off sooner or get more breathing room in your budget.

2. Set up a payment plan

If you can’t afford your payments, contact your lender right away. While private loans don’t have access to federal benefits like forgiveness programs or IDR plans, some lenders do offer options for those struggling to make ends meet.

You might be able to temporarily put payments on hold. Or, you could be eligible for interest-only payments for a set period while you get back on your feet.

3. Check out repayment assistance programs

Although your private loan isn’t eligible for PSLF, you can find other repayment assistance programs. Many of them provide financial help with private loans as well as federal ones. You could qualify for repayment assistance based on your occupation and location.

4. Pick up a side hustle

If you’re short on cash or want to pay off your debt sooner, increasing your income is key. If getting a raise isn’t an option, launching a side hustle could get you the money you need. You can turn your interests and talents into a source of income.

You could do anything from walking dogs to delivering packages. Side hustles are usually flexible, so you can work when you want. Your extra earnings can make a significant dent in your loan balance.

When planning how to repay your study abroad loans, remember to research all of your options. If you do some digging and get creative, you can enjoy the rewards of studying in a new country without going broke.

Rebecca Safier and Maya Dollarhide contributed to this report.

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