While you’ll spend a lot of your pre-study time preparing your applications, it’s never too early to cast an eye on your finances. They’re a big part of international study and it’s easy to become confused or – even or worse – backed into a corner you don’t want to be in.
A little time spent now will help you avoid these top four mistakes.
Mistake #1: Confusing APR and the interest rate on international student loans
Obviously, you want the best loan for your unique situation. This might mean pursuing the one with the lowest total cost or perhaps one that disburses the funds directly to your university. The choice is yours, of course, but you’ll need to know what your metrics are before comparing loans with one another.
But, one thing you don’t want to do is compare offers based on interest rates alone; these figures don’t account for the full cost of your loan – interest rates totally ignore the associated fees. The offer with the better interest rate may end up more expensive when you factor in fees.
It’s best to use the Annual Percentage Rate (APR) of a loan as this figure includes the fees as well as the interest rate. Understanding the APR may be second nature for students from some countries as it’s legally mandated as a means of protecting borrowers, but if you’re unsure of what APR is or how to calculate it, take a moment to educate yourself before making a costly mistake.
Mistake #2: Under-budgeting or only using the school’s CoA to develop your budget
Universities are keen to attract international talent, and they’ll certainly do what they can to assist you in developing a budget and finding the financing to get a visa and attend their programme. In fact, it’s a legal requirement for universities in the United States to provide a Cost of Attendance (CoA). And, these figures are a great start when creating your budget.
But, you shouldn’t adopt the university’s CoA without doing some research on your own. Often, their figures are the bare minimum, and it’s tough to find the lowest rates on everything, all the time, without sacrificing your international and education experiences.
Spend time thinking about how you would like to live and find accurate figures to reflect your lifestyle. That might include the type of accommodation, the transportation available, and how many times you can afford to eat out during a week, month, or year.
It’s a mistake only to find the minimum funds needed to secure your visa as you’ll end up paying for it later when you need to borrow extra money or forego the experiences you were most looking forward to.
Mistake #3: Forgetting about the hassle of transfer times and fees
There is nothing worse than missing a payment date and being charged extra for it – especially when the delay wasn’t your fault; but it’s still your responsibility.
If you accept a student loan, whether it’s from a bank in your home country, one in your host country, or from an international student loan provider like Prodigy Finance, you need to know precisely where the money is going to and when it will be there. If you receive a range rather than a date, you’ll need to account for this and finalise your loan early enough to avoid late fees.
Keep in mind that receiving money from your home country (whether it’s from the bank, your employer, or your parents) will also have transfer times. Often, the easiest is a local deposit in your home country that you can withdraw through your credit/debit card in your host country.
No matter where it’s coming from and where it’s going to, you should expect some fees, and you’ll need to understand them and budget for them. It’s one of the simplest ways to stay on budget during your studies.
Mistake #4: Waiting too long to apply for international student loans
Visas take time – sometimes much longer than you think.
To get a student visa to the UK, for example, you’ll need to have the funds you need in your account for 28 consecutive days in the 31 days before you apply for your visa. That’s time you’ll spend waiting.
In the US, you need to prove to your school that you have the financing you need before they issue you with the paperwork you need before you can apply for your student visa. And, of course, visa processing itself requires time.
One of the reasons students wait to apply for loans is that they’re waiting to hear about scholarships and other sources of funding. And, this is a mistake as it can throw off timings.
It’s often better to secure the financing needed first; if scholarships come in later, you can use the extra money to make a repayment towards your loan. Or, if you choose a Prodigy Finance loan, you can reduce your loan amount before its disbursement to your school (which occurs according to its deadlines).
Either way, you don’t want to wait to get your finances in order – and while GMAT or GRE prep may be taking up a lot of time now, you don’t want to put the money off for too long.
Want to know more about Prodigy Finance? Learn more on their website here.
Not sure how you’ll gather the funds to pay for your international education? Attend our upcoming webinar, How Will You Fund Your International Graduate Degree, presented by the experts over at Prodigy Finance, to learn the steps you need to take to make your graduate dreams financially feasible. Reserve your spot and mark your calendars for Wednesday, October 24 at 10AM PT / 1PM ET. Register now!
Katie studied human rights and graduated with a Bachelor’s degree from Kent State University while working with NGOs in Geneva, Switzerland. Although she has since settled in South Africa, with work towards a Masters in Forced Migration through the University of the Witswatersrand, nothing stops her from being a proud American. Although writing is often solitary work, Katie has been part of the Prodigy Finance Team as the Content Specialist since 2013. She also loves rugby, sloppy Mexican food and Tudor history which means you could find her in any section of a bookstore.
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* This blog post is sponsored by our friends at Prodigy Finance