International student loans: USD vs local currency and why you want to consider a loan in the currency of your university

Kashyap Matani

Apr 30, 2021

5k views

Hoping to study your masters overseas?

Great idea! The return on investment can be huge, both financially and personally. But first, you need to gather the funds for that investment. The costs of an international education often outstrip the resources you have at your disposal, which is why so many students take education loans.

And, with such high (and ever-increasing) demand, there are plenty of loan options to consider. That said, you can usually break education loans into a few categories:

Domestic options: These are loans available from banks or government programmes in your home country, usually disbursed in your home currency.
Host country options: While these almost always require a local co-signer, these loans may be disbursed to you or your university in their operating currency.
International options: Loans from these providers are typically offered in the currency of study and may not require any co-signer or collateral.

While there are many things to consider when choosing the loan provider you want to work with (not least of which is whether you qualify for or can afford the loan terms in the first place), you can bet the currency you choose will make a big difference to your future financial life.

And, while you may be tempted to stick with what you know and work with your domestic currency because it feels safer, it’s also worth it to look at the other side of the coin. There are definite benefits to borrowing in the currency of your education (some of which you may not have considered yet).

Why should you borrow in the currency of your education?

The golden rule for just about any loan is to go with the one that offers terms which best meet your needs and expectations while costing you as little as possible in fees and interest. And in many cases, a loan in the currency of your education fits the bill perfectly. This is why:

Avoid a forex (FX) crisis

As you well know (especially if you’ve been considering an international degree for some time), currencies are in a constant state of flux. They go up, and they go down, and there truly is no way to predict where they’ll end up tomorrow or in the middle of your studies.

The loan you apply for today may not even be enough by the time you get to campus; and what happens if the amount swings so sharply that you don’t have enough for the second year of study? You may be forced to abandon your studies before you finish your degree if you can’t come up with the rest.

Choosing a loan in the currency your university uses eliminates this stress. Plus, you don’t need to worry about the transfer times and regulations across borders.

Skip out on constant currency conversions

In addition forex stress (which is both real and unpredictable), it costs plenty to convert your home currency (whether it’s real, rupees, renminbi or any other) to dollars, pounds or euros. In fact, the cost of converting your cash is somewhere around 1% of the amount.

Now, sure, you can factor the cost of converting your loan to the currency of study into your budget, but, that’s one directional. You also need to look at what happens after graduation, when it’s time to repay your loan. If you choose to stay in your country of study for work experience (and perhaps even longer than that), you’ll need to pay for to convert your currency all over again - and this time in smaller amounts which usually don’t qualify for preferential rates. Ouch.

If you have any hope of remaining in your host country, even for a few years - such as with the OPT visa extension in the United States - it’s much easier to secure a loan in the currency of study (borrow in USD, pay in USD, earn in USD, repay in USD).

Often, borrowing in a currency other than your cost of education creates financial insecurity and emotional stress for you and your family. That doesn’t feel like it follows the golden rule, does it?

Can you get a loan in the currency of your education?

Yes, you can. International loan providers, such as Prodigy Finance, are there to help you meet your international education goals. And, with Prodigy Finance, there are plenty of benefits on top of a loan in the currency of your education (USD, GBP or EUR), including:

No need for a co-signer or collateral.
Loans disbursed directly to your school (no need to worry about those fees and dates at all).
No hidden charges, fees, or surprises (that means no FX conversion fees, margin money to make, or additional charges as long as your account remains in good standing).

Plus, you can apply for a loan in less than 30 minutes as long as you have internet and your figures in front of you; the entire process is done online and you’ll receive your offer within a week.

Ready to consider a loan in the currency of your education?

Prodigy Finance can help with that. We’ve already helped 13,600 students borrow approximately $628 million towards their education. You could be next.

Apply for a Prodigy Finance loan now

This article is a part of Prodigy Finance's FinLit series of webinars and blog articles. Read the rest of the articles here:

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