Guide to Study Abroad and Your Student Loan

Written by: Kristyn Pilgrim
Updated: 9/09/20

Studying abroad, whether for a short program or your entire undergraduate or graduate school experience, is something many students choose to do. If this is something you are considering, you are likely wondering how to afford it and how financial aid works.

In this article, we discuss the different types of study abroad programs and how the federal student aid program applies to each.

What Are Study Abroad Programs?

Study abroad programs are ways that U.S. college students can spend time away from their home university learning in a foreign country. These programs might be short (summer programs or programs shorter than eight weeks in length) or last a quarter, semester, or year.

Students from the U.S. also sometimes choose to do their entire postsecondary education overseas and may attend school abroad as an international student. How financial aid works in each case is a little different.

According to a recent report by the Institute of International Education (IIE), 10.9% of U.S. college students study abroad at some point during their undergraduate program. For bachelor’s degree students, it’s 16%. Top destinations include the United Kingdom, Italy, Spain, and France. About two-thirds of those who study abroad attend a short program, while the remainder study for a quarter or semester to a year.

These programs might be sponsored or run by your home university, college, or another institution or organization in the U.S. or abroad. If attending for a quarter, semester, or year, the credit you earn is transferred to your home school and counts toward your degree.

In 2017, there were 86,566 students from the U.S. attempting to earn their degrees abroad. This amounts to just under half a percentage of U.S. students choosing to earn degrees abroad.

Why Study Abroad?

There are many reasons why choosing to spend some time studying abroad can greatly contribute to your overall educational experience. Among reasons people decide to study abroad are:

  • To experience a different culture and understand it better
  • To practice foreign language skills in context
  • To experience learning in a different environment or from different teachers
  • To enhance their transcript and future resume with international experience
  • For life experience and personal development

Since many study abroad programs are easily woven into a standard degree program and credit transfers, it might be more difficult finding reasons to deny yourself the opportunity if you can afford it.

Short Study Abroad Programs

As mentioned earlier in this article, the majority of those who study abroad do so only for a short period, attending a summer program or one that only lasts a few weeks. These programs have become more common in recent years and are more attractive to those who do not want to miss a semester or more at their home institution. 

Financial aid works with short programs, but it is often very different from how it works for longer programs. Unless you can earn college credit during the short program, federal financial aid will not apply. You will need to pay out of pocket for these types of programs or obtain scholarships or grants to attend.

If you wish to attend such a program and need help with funding, contact the program organizer or your home school’s financial aid office to see what they might have to offer.

Semester or Year Abroad While Enrolled at a Home Institution

Many students opt to spend a quarter, semester, or year studying abroad at a college or university in another country. The way this typically works is via agreements with your home institution. 

You will typically pay the same tuition as you do at your home school and make that payment directly to your home school. They take care of paying the institution you plan to attend. Room and board, however, is often handled separately and paid directly to the host institution. 

Because of how these programs are set up, you usually qualify for the same financial aid as you would at your home school, and it can be applied to both your tuition and your room and board. 

Financial Aid Process When Spending a Semester or Year Abroad

The process for applying for financial aid when spending a semester or year abroad is the same as you complete every year, with perhaps a few additions.

As usual, you will fill out a Free Application for Federal Student Aid (FAFSA), although you may want to do so early to make sure you have time to get everything in order before going abroad.

Some schools ask that you complete budget worksheets or something similar where you account for all of the expenses you expect to incur as part of studying abroad. Aside from tuition, this would include room and board and travel expenses or school supplies needed. 

When determining your financial aid, your total expenses will be taken into consideration. Just as when you are studying at your home school, you should qualify for federal Direct student loans that you can take out to help fund your year abroad. You should also have access to all of the same grants and scholarships you did before.

Studying Abroad for Your Degree

If you would like to apply or transfer to a school abroad and earn your degree, the financial aid process is slightly different.

It is possible to qualify for federal student aid, including federal student loans, even if you go abroad for your entire education, provided you choose a school that participates in the U.S. federal student aid program. The student aid website has a link where you can download a list of international schools that participate in the federal student loan program.

When you download the list, you will see that on the far right column, it mentions whether each particular school is eligible for federal student aid, or whether you would only qualify for loan deferment when attending. This list includes hundreds of eligible schools all over the world, including institutions in Canada, England, Switzerland, South Africa, New Zealand, and Mexico.

If you are attending an eligible institution, then you can apply for federal aid by filling out the FAFSA just as you would in the U.S. You may want to start this process early, however, because there is more to do when preparing to attend school internationally, including applying for a visa, obtaining a passport, and so on.

While eligible international schools allow you to take out federal Direct loans just as you would in the U.S., you will not qualify for any of the U.S. Department of Education’s grant programs. Always check with the school you plan on attending if you need additional financial help.

Your federal student loan funds will be disbursed directly to the school you plan on attending. If funds are left over after tuition and expenses owed to the school are covered, the school will pay you the remainder, which you may use for travel, housing, and other related expenses.

Loan Deferment While Studying Abroad

Even if the school you plan to attend doesn’t participate in the U.S. financial aid program, you might be able to defer payment on existing federal student loans. On the same document that lists eligible international schools, you can find those that allow for loan deferment.

Studying Abroad for Medical School

Medical school is notoriously expensive. Because of this, some students opt to attend medical school abroad. The U.S. Department of Education has a list of international medical schools where U.S. students may attend and earn a medical degree valid in the U.S. 

The schools on this list participate in the federal student aid program, and you can take out federal student loans to attend. Make sure you double-check with the school to make sure its status has not changed. 

Plan for your College Expenses

The team at wants to help you stay informed so that you can plan and prepare for financing your dream education. Whether studying at home or abroad, you will want to make sure you understand the terms of any student loans you take out and that you stay abreast of any opportunities for grants and scholarships. Consider signing up for our newsletter to get updates in your inbox.