Isn't college all about broadening your horizons? Studying abroad not only offers a cultural experience, but also an opportunity to take specialized courses not available elsewhere, to go deeper in your language studies, to build your resume, and to grow your network.
The good news: You can use your regular financial aid to help fund your study-abroad program. You may also be able to use funds from private student loans, but you'll need to work with your U.S.-based school to do so.
More than 300,000 students study abroad each year. The cost of study-abroad programs varies widely by your university, your chosen location, and the aid available to you.
While financial aid can cover the cost of studying abroad, in some cases you may also need to fund your program with private loans. Thankfully, some lenders do allow you to use funds from private loan to cover your costs.
Here's what you should know about using federal and private loans to pay for study abroad.
Can you use FAFSA to study abroad?
Yes, you can use financial aid to cover the cost of studying abroad, thanks to the Higher Education Act of 1992. This piece of legislation allows a student to receive and use federal grants, loans, and work assistance for a study-abroad program approved by the U.S.-based university that the student is already enrolled in. And this is true regardless of whether your degree plan requires study abroad.
Among the types of aid that can be applied to study abroad are:
- Direct Subsidized Loans
- Direct Unsubsidized Loans
- Direct PLUS Loans
- Federal Pell Grants
- Federal Supplemental Educational Grants (FSEOG)
- Department of Education-funded programs designed for study abroad, like the Benjamin A. Gilman Scholarship Program, which is open to Pell Grant recipients, and the Foreign Language & Area Studies Fellowship program, which funds study-abroad experiences for both undergraduate and graduate students pursuing foreign language and area studies, and
- Institutional aid, which is often based on need.
Once you apply to a specific study abroad program, you'll need to work with your school's financial aid office to determine:
- How much aid you're eligible to receive
- How much can be applied to your study abroad program, and
- How much you're expected to pay out-of-pocket.
Keep in mind that sometimes your study-abroad program may be more expensive than the cost of attending your home school. Make sure to have a solid understanding of the numbers before you buy your plan ticket.
Private student loans for studying abroad
If you don’t qualify for federal aid for study abroad or if you need to fill a financial gap, you might need to look to private student loans.
It's important to note that most student loan lenders will not directly finance study-abroad programs. That is, they generally won't disburse funds directly to a foreign university. However, many lenders will allow funds that were disbursed to a U.S.-based school to be applied to study-abroad programs. In other words, your lender pays your home school and your home school applies the funds to your study-abroad school.
If you'd like to take out a private loan to fund a study-abroad program, be sure to do the following two things:
1. Talk to you financial aid office to ensure that they're able to apply funds from private loans toward your study-abroad program. They most likely can, but there may be certain procedures that you need to follow.
2. Call or online-chat with customer service for any lenders that you're considering applying with. Important: DO NOT ask if they have loans for studying abroad. DO ask if the funds from your student loan can be applied to a study-abroad program through your college or university.
What to consider before taking out a private loan
Sure, you're excited to sign the documents necessary to finance your trip and education abroad. But there are a few considerations.
First of all, have you exhausted all sources before turning to private loans? For instance, look for scholarships designed to help fund study-abroad opportunities.
See also: Nitro's College Scholarship Guide
If scholarships, financial aid and income generated from jobs aren't enough to cover the expenses, then it's time to look at private loans. Here are a few tips to remember about private loans:
- Never take out a loan for more than what you need.
- The interest on these private loans will accrue while you're still in college. If you're not making at least interest-only payments on your loan, your balance at graduation time will be far higher than what you originally took out.
- Not all private student loans or personal loans offer a grace period like federal loans do. So you may have to start paying your loan right after you graduate, or even before. Be sure to understand the payment terms before you sign on the dotted line.
Want to check out current loan rates and terms? See our picks for the best deals on private student loans.