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Wednesday, November 5, 2014

How to Defer Student Loans When Studying Abroad

If, like me, you are an American that made the exciting decision to get your graduate or post-graduate degree overseas, then you are probably worrying about what to do with those pesky student loans back in the U.S.


When graduating with a Bachelor's degree in the U.S., the average student has approximately $30,000 in student loan debt. I can regretfully say that I am this average American undergrad, which is part of the reason why I decided to get my graduate degree in Germany: German universities are free (even for foreigners).

And although I was able to immediately land a part-time job in Germany, I knew this wouldn't be enough to make regular payments on my student loan in the U.S. while also paying for my rent, health insurance, and other necessities in Germany.

So, I began looking into deferment.

deferment: a period during which repayment of a loan's principal and interest is temporarily delayed

It is fairly easy to put student loans from the government into deferment for reasons such as unemployment or economic hardship. As long as you are studying at a school that is recognized by the Federal Student Aid Office, however, then you are qualified for an in-school deferment.

This type of deferment is very important because as long as your loans are subsidized by the government, then you will not collect any interest while you are studying.


How to defer your student loans while studying abroad:
  1. Call your student loan provider to find out if your university is eligible for in-school deferment
  2. Download the In-School Deferment Request
  3. Fill out Sections 1-3 of the In-School Deferment Request
  4. Find an authorized official at your university to fill out Section 4 of the In-School Deferment Request
  5. Send a copy of the In-School Deferment Request to your student loan providers (by mail, fax, email). 
  6. Wait until your request is accepted.

Lucky for me, about 75% of my student loans are subsidized, so I became very excited at the possibility of not collecting interest on these loans for the next two years.

But how can you know if your school is recognized by the Federal Student Aid Office?

Good question.

I am getting my Master's from quite a small school in Germany. In trying to figure out if my school is recognized, I tried searching for it in the FAFSA database, but my school was not in the system. In fact, there are quite a few official online databases of eligible schools, but I could never find my university.

Finally, I decided to call one of my student loan providers to ask. Amazingly, she was able to find my school within a few minutes, and said deferring would be no problem.

Once you know your school is eligible, all you need to do is provide your loan provider(s) with an "In School Deferment Request."

You can find this document here:
http://www.studentloannetwork.com/downloads/pdf/DLP_In_School_Deferment.pdf

After filling out sections 1-3 by yourself, you will have to find someone at your university to fill out Section 4.

Since foreign universities do not really understand how ridiculous the tuition/student loan situation is in the U.S., do not be surprised if the workers at your university do not really want to sign their name on this document. After being thrown around from one office to another at my university, the head secretary of my program finally agreed to do it (although she kept copies of it for my student file...).

Next, I simply scanned the forms, sent electronic copies to my student loan providers, and waited.

My first deferment was accepted within one week. The second provider rejected the request after 2 weeks. Note, the provider that rejected it was the same one that I called earlier to ensure that my school is eligible.

So, imagine my shock when I call them to ask why my request was denied and they tell me, "Your university is not eligible." I told her to look again, and after 5 minutes on hold, she told me it is eligible, and that someone must have made a mistake. This is what you get when you go to a school with a non-English character in the name (ü).

Although the whole process did take about one month, I am now in deferment until September 2016. In total, this has saved me at least $2,000, and I can still make payments on the principal whenever I want to (we'll see if that actually happens...).

If you are looking to go through the same process, I wish you luck!

25 comments:

  1. Very good info! Thank you for sharing :)

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  2. Thanks for sharing!!! This is going to become soooo helpful in a few months!

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  3. Awesome! I am happy it could help someone out!

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  4. Vielen Dank for this! I'm also doing an MA in Germany and didn't even think deferment was a possibility. I wish I would have known about this 4 months ago!

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  5. Thanks for sharing!! I've been browsing the internet for exactly this!

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  7. Thank you so much for this information! Where you able to afford living in Germany as a student easily on your part time job? Is it possible to find a loan to get you through graduate school?

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  8. I am able to afford living in Germany with my part-time job. You will have to work about 15-20 hours/week, which is a lot while studying, but it's better than graduating with $100,000 of grad school loans! For more on the cost of living in Germany, Alex Butts wrote a really nice post about how her monthly spending:

    http://www.speaking-denglish.com/2014/05/my-cost-of-living-as-an-expat-in-germany/

    I do not have any loans right now. If you are American, you will probably have to look for one from the U.S., as the standard German loans for students (bafög) are not for foreigners. But I do not have any experience in that.

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  9. Are you able to through fafsa?

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  10. If your German university is recognized, yes.You can find a list of foreign universities that qualify on their website.

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  11. I read so many courses are taught in English it's possible to get through with very limited German. Do you know If this is true?

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  12. If you are doing a program that is completely in English, yes. Anyways, every university will offer its international students German classes, so you can improve while you are studying.

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  13. What about health insurance?

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  14. All students qualify for publich health insurance, which costs 78 Euro per month right now. If you make over 450 Euro per month, however, then it is calculated as a percentage of your income (which means it will be more than 78 EUR).

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  15. Hello, Courtney Martin, i hope that you are fine
    I was looking for this information and I got it, next month i am also going to abroad to study.
    Thanks for sharing

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  17. hi thank you so much for writing this article. I am currently looking at schools in China and Taiwan and neither of these are accredited. what would you suggest for me? thank you so much :)

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  18. I think you have to call your loan provider and ask them. My school was not on the accredited list according to Fafsa either, but when I talked to my loan providers, they said it was on their list. So there is still a chance. Otherwise, you will have to ask them what your other options are.

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  20. Hi Courtney, your article was very encouraging. I am attending uni-Hamburg to get my masters and when I contacted my loan provider they just said I have to find out if it is an "eligible school" from the university. I've tried to contact some people at the University, but they are, as I expected, pretty unfamiliar with the process of student loans. You mentioned something about the FAFSA, is there a way to determine if University of Hamburg is eligibale through FAFSA? thanks for all the help

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  21. Yeah, foreign universities will definitely know nothing about this (and why should they?).


    FAFSA has an online database of eligible and deferment-only schools here: https://fafsa.ed.gov/FAFSA/app/schoolSearch?locale=en_EN (use "foreign country" as state). HOWEVER, my university is not listed in there, but when I talked to my student loan provider (Navient), they were able to find my school in their database. So, do not lose hope if you can't find it on the FAFSA site. Maybe you just need to try calling your loan provider again and hope you get a more competent person. If they still don't know if your school is eligible, then maybe you should just fill out the deferment form, have someone at your university sign it, and send it in.

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  22. thanks for the help! Yea the people at my student loan provider have been exceedingly unhelpful, so I think I'm just going to fill out the form and get someone to sign it to hopefully just blow past all of the red tape.

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  23. My university was also kind of reluctant to sign it, but I finally got the secretary of the head of my program to sign it and put a stamp on it :) Good luck!

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