Fatima recently posted this question on our financial aid forum:
"Hey there! I am sooo desperate and I need your help! I just found out that I got admission for CSU East Bay! Unfortunately, I wanted to get a student loan over here in Germany, but they don't give it to students who want to study out of Germany when you are not German. I got so upset when I heard that. Anyway, then I looked for some student loans in the States, but all of them want a cosigner (somebody who is American or has American residence). I worked hard for that admission and I really want this, but I don't know how to get the money together. Fatima"
I wish I could report good news to Fatima and the millions of other non-U.S. citizens who need a loan to pay for an American college. But the sad truth is that there just aren't many loans out there for them. The cheapest student loans in the United States are backed by the federal government, which will lend to only a few kinds of noncitizens, such as refugees. And the credit crunch seems to have dried up the more expensive private loans made by banks.
I spent several days searching and couldn't find any company in the States that would make an unsecured loan this fall to a noncitizen without an American cosigner. The banks are afraid, basically, that students who return to their home countries will be tempted to stop making loan payments because it would be hard for American lenders to chase after them. American residents who sign agreements to repay loans, on the other hand, face dire consequences if they default, so they are more likely to make payments.
The only way overseas students can get educational loans to pay American tuition these days: Figure out a way to get over, or around, the new reality of tougher lending standards. There are currently four options for noncitizens to get student loans:
1) Home-country private lenders or government programs. It sounds like this option wasn't available to Fatima, but it is available to many other students. Unfortunately, I couldn't find any single site or information source that gives all the information you need. But here are a couple of places to start your search: Besides checking your home country's education agencies and banks, students can ask for advice at the EducationUSA advising centers in American embassies and consulates around the world. Be careful about those loans, however. Many charge very high interest rates, have too short a repayment period for students, and require your family to pledge assets such as a house.
2) U.S. colleges. Some American colleges are stepping into the breach by lending money directly to their students. I haven't been able to find any kind of comprehensive list of schools with such loan programs, but the Overseas Association for College Admission Counseling has this list of schools that offer the most financial aid to foreign students. Those are likely prospects. If your school isn't on this list, it's still worth asking your school's financial aid office to see what kind of loans they can help arrange for international students. Unfortunately for Fatima, California State University-East Bay says it cannot arrange loans for students who don't have American cosigners.
3) Friends and relatives. You could try the old-fashioned way of simply asking everyone you know for help. Or you could experiment with new, Web-based social lending options. Greennote.com and Fynanz.com, for example, offer students tools to persuade friends, relatives, and even strangers to lend them money.
4) U.S. banks and lending companies—if the student has an American cosigner. Naturally, it can be difficult for a student living overseas to find an American who would be willing to pay off her student loans if she defaults. So you might have to get creative to persuade a cosigner that they won't be left making your payments. Here's one twist that might help you persuade someone: Sallie Mae, one of the few lenders currently making any kind of loan to international students, will release the cosigner from their commitment if you build up a good credit history (by, for example, repaying other loans and getting a job), become a permanent resident, and make 24 on-time payments. This option isn't easy, because it requires you to win a green card for the United States, but at least it's possible.
If you've got a financial aid question, E-mail firstname.lastname@example.org.