Financial Aid Basics for Advising Undergraduate Study Abroad Students

March 31, 2009

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Financing study abroad has become one of the most important and time-consuming subjects on which international educators must advise their students. The evolution of financial aid advising for undergraduate study abroad can be partially attributed to greater accessibility to information via the Internet. Some institutions have created Web sites dedicated to financial aid issues for study abroad students. In addition, a broader variety of scholarship opportunities exist for underrepresented student populations. It also appears that many scholarship opportunities are emerging from private companies (as opposed to government sources).

Title IV of the Higher Education Act ensures that undergraduate students can apply federal aid to any approved study abroad program. Several elements are involved in determining approval of the program, including that the program is preapproved for credit at the home institution and that there is a consortial agreement detailing which institution will administer the aid. It is important to coordinate the approval process with your registrar and financial aid office and any other departments on your campus involved in academic credit approval.

It is also important to develop a working relationship with your institution's financial aid office. We hope you will find this resource useful in forging that relationship as well as in advising your students.

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Contents of Financial Aid Basics for Advising Undergraduate Study Abroad Students

Financial Aid Packaging

Before diving into advising students on financial aid options, it might be helpful to review some key terms, such as FAFSA (Free Application for Federal Student Aid), EFC (estimated family contribution), and COA (Cost of Attendance). If you are not familiar with these acronyms or other terms you see in the information that follows, consult the Glossary of Key Financial Aid Terms (52kb Icon PDF 16). This glossary is designed as a reference to help you become familiar with the language of financial aid. You may also want to review NAFSA's Financial Aid for Study Abroad: An Undergraduate Student's Resource.

Remember that some financial assistance awards are merit-based, some are need-based, and others consider both need and merit. Academic performance is not insignificant for a number of scholarship and grant options.

To assist students with federal and other aid where the EFC is a factor, bookmark the financial aid calculator on the FinAid Web site. The University of Minnesota offers samples of how to provide information to students.

The difference between the COA and the EFC is the student's financial need. This is used in determining the student's eligibility for need-based financial aid. Unusual financial circumstances (high medical expenses, loss of employment, or death of a parent) may affect the student's ability to pay for his/her education; at such times, the financial aid administrator can adjust the COA or EFC to compensate.

Note: Summer study abroad may operate differently on your campus. It is especially important to know whether summer is considered the first or last term of the academic year. Check with your financial aid office to determine what aid is available for summer study.

Funding Options for Undergraduate Study Abroad

Financial aid for undergraduate study abroad consists mainly of federal grants and federal and private loans. However, scholarship money is also available from organizations and sponsoring companies. And your institution may have funding available for your own students as well. Be aware that financial aid regulations and sources for study abroad differ for undergraduate and graduate students. This resource focuses on financial aid regulations and opportunities for undergraduate students.

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Federal Aid

The Higher Education Act of 1965 was amended in 1980 and again in 1992 to include study abroad program fees as eligible costs for federal aid coverage. For a student to be considered for any federal aid, he/she must complete the Free Application for Federal Student Aid (FAFSA). Other application paperwork may be required - please consult with your financial aid office.

Federal Grants

Federal Pell Grant
To qualify for this need-based grant, full-time undergraduate students must have an EFC of below the limit determined each year. Speak with your financial aid adviser for current information

Federal Supplemental Educational Opportunities Grant (SEOG)
This need-based grant is awarded to those students demonstrating the greatest financial need. Typically, students must qualify for the federal Pell Grant to receive an SEOG. Speak with your financial aid adviser for current information.

Federal Loans

The Federal Stafford Loan
Formerly called the Guaranteed Student Loan (GSL), the Stafford loan is in the student's name and is available to all students. There are two types of Stafford loans. Subsidized loans are need-based, while unsubsidized loans are not. If the loan is subsidized, the government will pay the interest while the student is in school. If the loan is unsubsidized, the student has the option of capitalizing the interest or of paying the interest quarterly during the in-school period. Payment of the principle itself (on both subsidized and unsubsidized loans) does not begin until six months after graduation, provided the student remains enrolled on at least a half-time basis. Note also that there are annual maximums and that interest rates are variable.

The Federal Perkins Loan
The Perkins Loan is a low-interest loan (5 percent) awarded to those students demonstrating the greatest financial need. There are a limited number of Perkins loans available at each institution. Speak with your financial aid adviser for current information.

Parent Loans for Undergraduate Students (PLUS Loans)
These federal loans are available to parents of dependent undergraduate students. Parents may borrow up to the full cost of their children's education, less the amount of any other financial aid received. PLUS Loans may be used to pay the EFC. There is a minimal credit check required for the PLUS loan, so a good credit history is required.

Federal Scholarships

Each campus has a designated representative for these programs. Contact the scholarship program to find out who your campus representative is.

David L. Boren Undergraduate Scholarships for Study Abroad
The National Security Education Program (NSEP) provides scholarships to undergraduate students who wish to study languages and cultures considered to be important to U.S. national security. Students are not eligible to receive the Boren scholarship if they are studying in Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, or the United Kingdom.

Benjamin A. Gilman International Scholarship
Students must be receiving a Federal Pell Grant to qualify for a Gilman Scholarship.

Note: Funds received from these and other scholarships may replace other forms of aid. Students should consult with their financial aid counselor for specific information.

State Aid

States constitute an important source of financial aid. Programs vary from state to state, and may be need-based, merit-based, or a combination of the two. In most cases, state aid that is applicable at your institution will be available for approved study abroad from your institution. Consult with your campus financial aid office regarding the specifics of financial aid in your state. You may also wish to investigate aid programs for other states that are prominently represented at your institution.

Institutional Aid

Some institutions will allow students to apply all institutional aid when participating on an approved study abroad program. Most institutions will adjust the amount of aid a student receives based on the COA of the study abroad program. For instance, if the COA for the home institution is $25,000 per year and the COA for the host study abroad institution is $30,000, the home institution may adjust the COA and EFC based on the difference of $5,000. This means the student may be eligible for an additional amount of institutional aid that he/she ordinarily wouldn't receive were he/she to remain at the home institution. The reverse may also be true.

Other Scholarships

Study Abroad Scholarships

Some institutions offer study abroad scholarships for their own matriculated students. In most cases, students must attend an institution-determined approved program to qualify for a study abroad scholarship. Below are examples from several institutions that offer aid to matriculated and nonmatriculated students:

Third-party scholarships

Some program providers offer partial scholarships to students who attend their programs. Below are examples of these programs:

Disbursement of Funds

Once students have been awarded financial aid and scholarships to use toward their study abroad, advisers must be prepared to work with a variety of disbursement issues, including:

  • Is the student or the home institution responsible for the payments to the program provider?
  • If the student is responsible, will monies be disbursed in time to meet payment deadlines from the program provider?
  • Do you, as the adviser, have a way to assist the student in requesting a deferment of payment until her/his monies are disbursed?
  • If the student departs before the monies are disbursed, has the student arranged for the monies to be sent to the home address or deposited in a local bank account?

By developing a good relationship with your student accounts office, you can establish procedures to assist students in meeting payment obligations to program providers. Strong communication with the financial aid and student accounts offices helps to ensure a good institutional relationship with program providers.

Direct Billing Agreements

Some institutions will enter into a direct billing agreement with a sending institution so that either:

  • The student continues to pay home institution tuition, and the institution pays all fees to the study abroad sending institution on the student's behalf; or
  • The student pays the program fee to the home institution, and the program provider invoices the home institution.
Download Arcadia University's Sample Direct Bill Agreement (209kb Icon PDF 16) as an example.

Exchange Programs

Some institutions have established exchange programs with universities abroad so that students can attend a foreign university in exchange for hosting a student from the overseas institution. This option enables students to maintain the same financial aid package that they would receive on campus while they study abroad. Exchange programs, particularly those sponsored by state or public higher education institutions, can be a cost-effective option for students who cannot absorb additional expenses above their existing college costs.

Employment Abroad

Federal Work StudyStudents generally cannot apply work-study aid to the cost of their study abroad program. Students who receive work-study aid should talk with their financial aid adviser to discuss alternatives.

Working in the Host Country
While some countries will allow U.S. students to work while they attend a host institution, it is important to advise students that money earned while working abroad will by no means constitute a major funding source. At best, it will contribute to their personal expenses. Program providers can advise students on any opportunities they might provide.

Advising Timeline Considerations

Every campus is different, so the appropriate timeline may vary somewhat by campus and term (especially academic year vs. summer). It is important for students to begin planning early. Remember that on most campuses, the summer application process is different from that of the academic year, both for aid and for study abroad approval. Advisers and students must be aware of the differences on their campus, and investigate specific summer timelines (if applicable). For example, some schools have a summer aid application to be completed in February in addition to the already-filed FAFSA.

It is important to remember - and remind the student - that notification of a financial aid award is not the end of the process. Encourage students to deal promptly with communications (mail and e-mail) related to financial aid, signing and returning forms quickly. Students should ensure that the school's database contains their most current address so that mail from the financial aid office arrives without delay. offers a detailed financial aid calendar.

Below is a suggestion for creating an advising timeline for students interested in going abroad their junior year:

Sophomore Year, Fall Term
Student reviews available study abroad options with study abroad adviser:
  • Begins to identify personal and academic goals for study abroad;
  • Understands academic and other requirements for each option being considered.
Student meets with academic adviser regarding course requirements:
  • Determines what courses must be taken at home;
  • Identifies courses that can be taken abroad;
  • Assesses required academic background for preferred study abroad program.
Student meets with study abroad adviser after meeting with academic adviser:
  • Narrows down options;
  • Discusses costs and funding options.
Student meets with financial aid officer or study abroad adviser on financial aid process:
  • What is the process for awarding and applying financial aid to study abroad?
  • Are students able to use all forms of aid (loans, grants, etc.) abroad?
  • Are students able to use campus grants abroad?
  • Is aid applicable only to certain types of programs?
  • Will a student's family contribution be evaluated differently?
  • Is there a special application process for aid pertaining to study abroad (earlier application dates, special forms, additional forms, etc.)?
  • Are there special scholarships or grants for study abroad?
Sophomore Year, Spring Term
Student completes all necessary financial aid applications by the deadlines indicated by the home school (or institution to which the student is applying). Students applying for outside scholarships should follow the directions for each scholarship application carefully, checking with the home school financial aid office to determine how scholarships might affect a financial aid package.

Timing of On-campus Study Abroad Fairs and Visits
Consider timing visits and fairs to correspond with study abroad application deadlines (i.e., scheduling a fair in September may be too late for students who want to study abroad the next spring term).

Third-party and Host Institution Application Deadlines
In general, application deadlines tend to be in April for fall/year programs and in October for spring programs. Check specific programs and institutions for exact deadlines and plan accordingly.

Internal Deadlines
Advisers must liaise with many campus offices, such as student affairs, residence life, registrar, and financial aid to coordinate study abroad orientation programs, housing allocation deadlines, institutional aid award deadlines, and academic advising and registration for students who are seeking approval from faculty/departments to study abroad. On some campuses, certain departments require students to obtain approval to study abroad one year before they plan to participate.

Working with Your Financial Aid Office

It is important to develop a working relationship with your institution's financial aid office. As you develop tools to help you and your students, consider making an appointment with your school's financial aid staff to talk about financial aid and study abroad. As you share your knowledge and resources with each other, you will find ways to collaborate, discover challenges to working together, and ensure a better understanding of what each office needs to facilitate your students' education abroad experiences.

Working with Your Student Accounts Office

By developing a good relationship with your student accounts office, you can establish procedures to assist students in meeting payment obligations. Strong institutional communication better ensures a good experience for you, your students, parents, and program providers.

Additional Web Site Resources

U.S. Study Abroad Scholarships and Grants List : A sampling of Web sites with information and resources on multiple scholarships and grants for study abroad from the United States. These links provide a starting point for research on the many study abroad scholarship opportunities available.

IIEPassport Study Abroad Funding: A funding resource that allows users to search by country or subject to find study abroad funding information. The comprehensive database includes study abroad scholarships, fellowships, and grants.

Commonly Used Forms

Sample Documents and Templates

Other Resources

This list of resources is not exhaustive. If you feel that any resources are missing or incorrect, please e-mail to let us know.