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

Planning to pursue your master's degree abroad?

That is a brilliant choice! The financial and personal returns can be substantial. However, you first need to secure the financing for this venture. The expenses associated with a global education frequently exceed your personal savings, which is why numerous students opt for study loans.

Given the high and continuously growing demand, there are multiple loan alternatives available. Generally speaking, education loans fall into a few primary categories:

• Domestic options: These are financing solutions provided by banks or government schemes within your home country, typically paid out in your local currency.
• Host country options: While these almost always demand a local co-signer, such loans may be disbursed directly to you or your university in the local operational currency.
• International options: Loans from these lenders are normally issued in the currency of your academic program and frequently do not demand any co-signer or collateral.

Although there are numerous factors to weigh when selecting a loan provider—not least of which is your eligibility or ability to manage the repayment terms—the currency you choose will significantly impact your future financial well-being.

While it might be tempting to stick with what is familiar and use your domestic currency because it feels more secure, it is equally important to examine the alternative. There are distinct advantages to borrowing in the currency of your educational institution, some of which you may not have previously considered.

Why should you choose to borrow in the currency of your school?

The fundamental rule for virtually any loan is to select the option that best fulfills your requirements and expectations while keeping interest and fees as low as possible. In many instances, a loan denominated in the currency of your studies fits this description entirely. Here is why:

Steer clear of foreign exchange volatility

As you are likely aware, especially if you have been exploring an international degree for some time, currency values fluctuate constantly. They rise and fall unpredictably, making it impossible to know where they will stand tomorrow or midway through your program.

The loan amount you apply for today might fall short by the time you arrive on campus, and what happens if exchange rates shift so drastically that you cannot afford your second year? You might be compelled to abandon your studies before graduation if you cannot gather the remaining funds.

Opting for a loan in the currency utilized by your university removes this pressure entirely. Furthermore, you will not need to stress over cross-border transfer regulations and timelines.

Avoid ongoing currency conversions

Beyond the stress of exchange rate fluctuations, which are both real and unpredictable, converting your home currency (whether it is reals, rupees, renminbi, or another tender) into dollars, pounds, or euros is expensive. In fact, conversion costs typically hover around 1% of the total amount.

While you can certainly factor the cost of converting your loan into your initial budget, that is only a one-way street. You must also consider what happens after graduation when loan repayment begins. If you decide to remain in your host country for work experience, or for an extended period, you will need to pay for currency conversions all over again—often in smaller increments that do not qualify for preferential rates. Ouch.

If you plan to stay in your host nation for even a few years, such as through the OPT visa extension in the United States, obtaining a loan in the local currency is much more practical: you borrow in USD, earn in USD, and repay in USD.

Frequently, borrowing in a currency different from your educational expenses causes financial strain and emotional anxiety for both you and your family. That hardly aligns with the golden rule, does it?

Is it possible to secure a loan in the currency of your academic institution?

Indeed, you can. Cross-border loan providers, such as Prodigy Finance, exist to help you achieve your international study objectives. Partnering with Prodigy Finance offers numerous advantages alongside a loan issued in your study currency (USD, GBP, or EUR), including:

• No requirement for a co-signer or collateral.
• Funds transferred directly to your educational institution, eliminating worries about transfer dates and fees.
• No hidden costs, fees, or unexpected expenses, meaning zero foreign exchange conversion charges, margin money requirements, or extra fees as long as your account remains in good standing.

Additionally, you can submit a loan application in under 30 minutes provided you have internet access and your financial details ready. The entire procedure is conducted online, and you will receive your sanction offer within a week.

Prepared to explore a loan in your study currency?

Prodigy Finance can assist with that. We have already supported 13,600 students in securing roughly $628 million for their higher education. You could be next.

Submit your application for a Prodigy Finance loan today

This piece forms part of the FinLit collection of webinars and blog posts from Prodigy Finance. Explore the remaining articles here:

1. Prodigy Finance Answers your Top 10 Education-Loan Questions
2. Education loan 101: Understanding International Loan Terms
3. What's Annual Percentage Rate for Education Loan & 9 other FAQs
4. True cost of an Education Loan
5. The 7 stages of your International education loan
6. Applying for MS? Understand your education loan options...before you even apply to your school

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