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Financial Aid Basics for Advising Undergraduate International Students

NAFSA e-Publications are convenient Web-based resources available for today's international educator interested in ethical international student recruitment, financial aid advising, and student mental health issues.

Financial aid is perhaps the largest barrier students face when studying outside their home countries. This financial aid resource is designed to help international education professionals who advise students. This resource provides information primarily for nonimmigrant students (F-1, J-1, M-1, etc.). Information for permanent residents of the United States is also included.

The Institute for International Education (IIE) reports in Open Doors 2005 that of the paid tuition and fees to attend a U.S. undergraduate institution in the 2004-05 academic year, 80.9 percent of payments came from personal and family sources.

Minimal scholarship aid is available to international students, and most of it is reserved for graduate study. Generally, U.S. institutions offer little, if any, discount on tuition. Some public institutions will charge international students in-state tuition rather than charging out-of-state tuition and fees. Both private and public institutions may waive application fees in some situations.

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Contents of Financial Aid Basics for Advising Undergraduate International Students

Financial Aid Packaging
Cost of Attendance
Funding Options
Independent Sources of Aid
Personal Resources
Advising Timeline Considerations
Packaging Tools
Tax Credit Information
Citizenship Status
Additional Web Site Resources

Financial Aid Packaging

Before diving in to advising students on financial aid options, it might be helpful to review some key terms. EduPASS (The Smart Student Guide for Studying in the USA) offers a comprehensive glossary of terms relevant to student financial aid.

A number of financial resources are available to undergraduate international students. Many of them are compiled in NAFSA's Financial Aid for Undergraduate International Students.

When creating award packages for your undergraduate international students, consider the following factors: costs at your institution, cost of living for your region, student visa status, and aid available from your institution.

Cost of Attendance

The budgeted Cost of Attendance is a calculation of total cost by each institution that is used to determine a student's level of financial need. It is a total of tuition, mandatory fees, room, board (where applicable), and estimated cost of book and other living expenses (and sometimes travel) for students at the particular institution. Separate determinations can be made for students living at home or independently at the institution's discretion.

Part of the student visa process requires a prospective international student to prove that he or she has sufficient funding to cover living and educational costs. If the financial resources do not meet or exceed costs, the visa might not be issued. Keep this in mind as you put together the financial aid package. In the case of F-1 and M-1 students, the total costs and financial resources must be specified on the student's Form I-20.

Consider developing a budget worksheet with the expenses common to all (or most) students coming to your institution. Download a sample budget worksheet (19kb

) to track the expenses listed in NAFSA's Financial Aid for Undergraduate International Students resource. Some institutions assist students by defraying some of the costs involved in studying in the United States.

While there are not many ways to reduce the education costs for undergraduate international students, the U.S. State Department offers innovative ideas to help students defray some costs. As you consider these suggestions, it is important to remember the student in front of you. Some of these ideas are not feasible for every student.

Below are several additional ideas to consider:

Depending on the student's English language ability and cultural adjustment, completing the degree in less than four years (overloading during the semester, taking courses over summer) may be an option.
Some public institutions charge international students in-state tuition rather than out-of-state tuition.
International students may qualify to receive a tax refund on some of the aid they receive as part of their award package (see Tax Credit Information).

Funding Options for Undergraduate International Students

Institutional Aid

Some public and private universities offer financial incentives for students to attend their institution. Most of the institutional aid available to international students is reserved for graduate study in the form of assistantships and fellowships. Because it is uncommon for U.S. institutions to offer aid to undergraduate international students, such scholarships are often quite competitive.

Depending on state regulations, some public institutions may charge international students in-state tuition rather than out-of-state tuition. In the past, public universities have been limited in the amount of aid they can offer to international students primarily because public institutions are funded by U.S. taxpayers through federal and state monies. Both private and public institutions may waive application fees in some situations.

Merit-based scholarships are granted on the basis of special skills, talents, or abilities. Your institution may have scholarships based on TOEFL scores, academic record, artistic ability, musical ability, or athletic ability. Merit-based scholarships are usually highly competitive. To be considered, applicants must demonstrate exceptional ability in the area required.

Students who can demonstrate need at a predetermined level are eligible for need-based scholarships. Academic departments within the university may have funds allocated to assist international students with exceptional need and/or talent. Academic departments can be important allies in creating financial assistance for students.

It is important to remember that international students face additional hurdles when being considered for academic-based scholarships. International credentials require special evaluation to determine comparability to U.S. credentials, and the question of whether criteria have been met is not always clear cut.

Independent Sources of Aid

Scholarships, Grants, and Loans

Many scholarships for undergraduate study are available only to U.S. citizens and permanent residents. However, there are free scholarship databases as well as private, corporate, nonprofit, and government scholarship funds that serve undergraduate international students.

Students should be discouraged from using scholarship databases that charge fees for their services. There are many free resources that are equally comprehensive and convenient. Be mindful of the increasing presence of scholarship scams. The U.S. Department of Education and EduPASS offer tips and resources to protect students from dishonest organizations.

A number of excellent Web resources are listed in NAFSA's Financial Aid for Undergraduate International Students resource:

Personal Resources

Family Contribution and Personal Income

According to Open Doors 2005, undergraduate international students must still rely heavily on personal and family sources of funding.

Employment Opportunities

International students are not eligible to be employed in federal work-study positions, and federal regulations governing the F, M, and J nonimmigrant categories strictly limit both the kind and the amount of other kinds of work that students can do in the United States. Working without authorization in the United States is a serious matter and is considered a violation of immigration status.

The rules concerning nonimmigrant student employment are complex (for example, the NAFSA Adviser's Manual dedicates more than 50 pages to F-1 employment rules alone) Encourage your students to thoroughly discuss questions about eligibility for any kind of employment before work begins.

It is also important for undergraduate international students to understand that working on or off campus cannot be their sole source of funding. Most jobs will provide spending money only for personal expenditures.

Advising Timeline Considerations

Be sure to consider the following deadlines:

On-campus housing assignments, which include assistance from residence life and enrollment management/admissions staff;
Academic registration, which involves coordinating the efforts of faculty members and department chairs;
Orientation programming, which requires coordination between your office and other on-campus offices such as student affairs, residence life, health and wellness services, and international student orientation leaders; and
Financial aid and independent scholarship award deadlines, which can be coordinated to ensure that international students have access to all possible funding options.

Calendar of Events and Deadlines

Overseas recruiting schedules can affect the number of international student applications any U.S. institution receives. On-campus, TOEFL, and visa application deadlines are some of the important considerations that institutions must make when scheduling recruiting events.

For example, the University at Buffalo State University of New York offers a recruiting schedule and orientation schedule for international student services.

Accessibility and Communication Issues

Internet access has revolutionized the manner in which international student services offices can disseminate information to prospective and current international students. It is the method by which most visa updates, university schedules, and application processes are communicated. Below are a few examples of Internet-based tools:

Online Registration Form for International Student Orientation (University at Buffalo - State University of New York)
International Student Listserv (Northwestern University)
Electronic Weekly Newsletters (University of Minnesota)
Online Newly Admitted International Student Newsletter (University of Missouri at Kansas City)

Packaging Tools

Each institution approaches financial assistance in its own way. Below are links to a number of U.S. universities and colleges that have included financial assistance information in their admissions and international student Web sites. As you review these sites, you will notice different models for addressing the financial issues that international students face when considering U.S. study.

Web Sites with Sample Information

International Admissions (Bucknell University)
Financial Aid FAQ for International Students (Colgate University)
Financial Aid Procedures for International Students (Cornell University)
Tuition and Scholarships for International Students (University of Miami)
Financial Aid Information for International Students (Williams College)
Financial Aid Information for International Students (Northwestern University)
International Student Community College Transfer Award (University of Missouri at Kansas City)
Downloadable Handbooks and Forms for International Students (University of Cincinnati)
International Student Financial Aid Application Sample (Cornell University)
International Student Handbook (University of Minnesota)
International Student and Scholar Handbook (University of Pittsburgh)

Tax Credit Information

Many financial resources available to undergraduate international students are deemed taxable. Here are some helpful ways to reduce the tax burden of the student and his/her family.

The Internal Revenue Service (IRS) publishes a list of international agreements that delineate the various tax treaties the United States maintains with other countries. In some cases, students may be exempt from paying taxes on certain forms of financial aid. These exemptions are contingent on visa type, duration of time in the United States, and the type of financial aid award.

If the student's home country maintains a tax treaty with the United States, he or she may qualify for a full refund of any taxes withheld from the financial aid award. The student must file a Non-Resident tax return (1040NR) with a letter indicating that his/her home country holds a tax treaty with the United States. Information on filing and the necessary forms is located on the IRS Web site.

According to EduPASS, undergraduate international students are more likely to gain tax exemption if their financial aid is designated as an educational award rather than a work-related award.

Citizenship Status

U.S. citizens and nationals, lawful permanent residents, and refugees and asylees qualify for federal financial aid in the form of loans, grants, or work-study opportunities. There are a few additional categories that may qualify as well. As a general rule, students in a nonimmigrant category are not eligible for such aid. The U.S. Department of Education publishes a handbook with information for financial aid professionals; chapter 2 addresses eligibility for international students and includes fairly detailed descriptions of the statuses that do and do not qualify for federal financial aid.

If a student is a permanent resident, he/she is encouraged to apply for federal financial aid by completing the Free Application for Federal Student Aid (FAFSA). As a permanent resident, a student qualifies for federal and state government aid, including the Stafford Loan, Perkins Loan, PLUS Loan, Pell Grant, SEOG Grant or Federal Work-Study. The FAFSA form also helps colleges and universities to determine whether a student qualifies for institutional aid.

In addition to federal financial aid considerations, an international student might be eligible for in-state tuition, but that varies greatly from state to state.