[Editor’s Note: This is a guest post from Nathan Treadwell, VP of Business Development at Nomad Credit. Nomad Credit is committed to lowering the barriers to credit for international students and visa holders. Nomad Credit’s platform helps internationals search for loan options through its partnerships with U.S. and foreign lenders.]
There are almost 1.2 million international students currently studying in the United States. They hail from countries all over the world with almost a third – more than 360,000 – coming from China and just over 205,000 coming from India. South Korea and Saudi Arabia follow behind dropping down to just over 70,000 and 55,000, respectively. With education costs often approaching six figures and beyond, an international student loan ecosystem has emerged both in the U.S. and abroad to serve the educational funding needs of this demographic.
U.S. lenders have taken great interest in lending to international students studying in the U.S. as the high costs of education provides great demand for a private funding source. Challenges lenders face with international students are similar to U.S. students in that they typically do not have any credit history. However, lenders must consider the additional flight risk involved as many of these students will not stay in the United States after graduating. Thus, new challenges may arise as lenders seek to collect on loans internationally.
How to Mitigate Flight Risk
It is challenging to know just how great the flight risk is, as it is an emerging market. Lenders have found ways to mitigate this risk through school involvement, U.S. cosigners and program consideration.