Myths and Realities of Financing Study Abroad


Financing Study Abroad – Speaking the Truth in Simple English

Compiled by Subcommittee on Financial Aid and Resources for Study Abroad,
NAFSA: Association of International Educators
January 2006

As you consider your options abroad, be aware that there are some common misconceptions about what is and is not generally possible. Below you will find the realities that illuminate some of the myths associated with financing study abroad.

Myth: My financial aid office and counselor don’t understand study abroad.
Reality: In fact, financial aid counselors don’t necessarily need to understand study abroad, just study abroad budgets. It is just a matter of presenting as detailed a budget for your program as possible, and the financial aid counselor should be able to answer your questions. Don’t try to ask the financial aid counselor study abroad questions—that’s what your study abroad adviser is there for—but do ask finance questions.
Myth: I’ll change my status to be an "independent" student so that more aid money will be available to me.
Reality: There is a three-year waiting rule for students to be classified as an independent student for aid purposes. On an average only a small percentage of U.S.-based students qualify for this status.
Myth: Loans I expect to take out will cover all my costs.
Reality: Federal loans have limits on how much a student can borrow per year. For example, the maximum Stafford loan a student can borrow is $5,500. This amount may fall well short of the cost of your study abroad program costs. Even private bank loans may restrict the amount you are able to borrow, depending on your credit history and other factors (such as whether or not you have a cosigner). If you decide to use loans to finance your study abroad program, you need to carefully consider how the additional debt will affect your future plans.

You should also keep in mind that you will need a certain amount of money for “start-up costs” and other expenses not covered by loans, such as application fees, deposits, and personal travel.
Myth: I can't afford to study abroad because I'll lose my financial aid for the time I'm abroad.
Reality: Universities and colleges are required by federal law to continue to disburse funds to eligible students participating in approved programs. As in all regulations, there are some areas left open to interpretation, but the basic idea is that you should be able to use your federal aid. Be sure to ask your aid counselor about the rules and procedures of using your aid to study abroad and be sure to explain clearly in what type of program you will be participating.
Myth: I'll automatically get my regular aid for study abroad. I won't need to do any additional paperwork to receive my aid for study abroad, especially if it's a program sponsored by my own campus.
Reality: There is always more paperwork!
Make sure you understand two things:

a) Which part of the additional paperwork you are responsible for completing, and

b) How much of the paperwork (if any) your study abroad adviser and financial aid counselor will do on your behalf.

Pay attention to deadlines.
Myth: There isn't any additional money available to help students in the United States study abroad.
Reality: Yes, there is funding available, but you have to find it and plan far enough in advance to meet application deadlines. Ask for scholarship information at the following locations: your campus financial aid office, study abroad office, academic department, civic and religious organizations, campus clubs, companies for which you or your parents work, and national organizations such as NAFSA. Remember that scholarship money doesn’t always have to be exclusively for study abroad. You might find a scholarship for “a male from Texas, studying math” that could apply. Open your mind—don’t be limiting.

There is not an enormous amount of money available from one single source, but a focused effort can yield a substantial amount of funding to apply toward your program. Here are some Web sites for reference:

NAFSA: Association of International Educators
Fulbright Program
National Security Education Program

Remember: Last-minute “free” money doesn't exist—students with real financial need must start looking for funding at least 12 months in advance.
Myth: As long as I am enrolled as a student somewhere, I will not have to start repaying my student loans and will not be using up my grace period that precedes repayment.
Reality: If you are not enrolled in courses at a university approved by the U.S.  Department of Education, then you will be considered out of school and the clock on your grace period for loan repayment will begin ticking. Keep this in mind if you are considering a program offered by another university, especially if you will enroll directly in a university abroad. You can access a list of U.S. Department of Education–approved schools as part of the online Free Application for Federal Student Aid (FAFSA). If you are still enrolled at your home university or at any other university in the United States or abroad that is approved by the U.S. Department of Education for financial aid purposes, then your grace period will not be impacted.
Myth: Every scholarship I receive is additional money I do not have to pay out of my pocket.
Reality: In most cases, double dipping is not allowed. You can’t have both scholarships and the federal loan money. Expected loan amounts will more than likely be minus any scholarship monies received. In some cases, outside scholarships may replace grant money from your school. Make sure to understand your home institution's policies on outside scholarships before you apply!
Myth: I'll get all of my aid ahead of time so I can pay the deposits before I leave and other fees as soon as I start my study abroad program.
Reality: Federal laws will not allow loan monies to be released more than about 10 days before the academic program begins. Most universities use their own semester start dates, even if a student is studying abroad. For example, this means that for a summer program, you will not have your summer loan money in March or April to pay for program deposits and such. Your funds will most likely be disbursed to you near the beginning of your home university’s summer term.
Myth: My program is cheaper than being at my home school so my parents and I won’t have to pay anything—it will all be covered by financial aid.
Reality: Your parental and personal contribution is fixed by the analysis done on your Free Application for Federal Student Aid (FAFSA). You will still have to pay this same amount even if your academic program budget changes. Only the amounts and types of aid will change according to the actual costs of the program.

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