Using FAFSA and Federal Student Loans at Foreign Universities

How federal loans work at foreign schools

The Higher Education Act lets US students borrow federal loans at foreign universities the Department of Education has approved, through the Direct Loan Program. This guide covers which loans travel, how much you qualify for, and what changed under the 2025 reconciliation law. A foreign school qualifies if it is comparable to an eligible US institution and meets Title IV participation rules, per the Federal Student Aid foreign school FAQ . Students abroad receive Direct Subsidized and Unsubsidized loans plus PLUS loans, never the Federal Pell Grant or TEACH Grant, which stay US only.

Filing the FAFSA for a school abroad

You file the FAFSA the same way you would for a US school. The difference is your school code. Foreign institutions appear in the FAFSA school search under their country rather than a US state, and the tool marks each one Eligible, meaning new loans open at that school, or Deferment Only, meaning you only pause payment on loans you already hold from earlier study. Add the school's code to your FAFSA form so your loan funds route to the right institution.

How much you borrow

Loan limits at eligible foreign schools match the limits at US schools. For 2025-26, per the Federal Student Aid Handbook :

Grad PLUS loans covered this gap until July 1 2026. That option ended for new borrowers on that date under the 2025 reconciliation law, per a university financial aid office summary of the change. Since that date, new graduate borrowers get a $20,500 annual, $100,000 aggregate limit for most programs, or $50,000 annual, $200,000 aggregate for professional programs such as medicine, law, dentistry and pharmacy, and those totals exclude undergraduate loans. Borrowers who already held Grad PLUS loans before July 1 2026 keep access to new Grad PLUS loans through a 3-year transition window.

Steps to set up your loans

1. Confirm your school shows Eligible in the FAFSA foreign school search.

2. File the FAFSA and list the school's federal code.

3. Complete entrance counseling and sign a Master Promissory Note at studentaid.gov, same as a domestic borrower.

4. Ask your school's financial aid or international office how it certifies enrollment and disburses funds, since foreign schools handle this differently than US ones.

5. Track your balance and repayment plan choices at studentaid.gov once loans disburse.

What federal aid does not cover abroad

State grant programs, the Pell Grant and TEACH Grant stay within the US, so plan for lost grant aid when you compare abroad options. Work study funding is not available overseas either. If a target school is Deferment Only rather than Eligible, no new loans open there, only payment pauses on loans you already hold, so check status before you apply.

Why so few foreign schools qualify

A foreign school has to prove it is comparable to an eligible US institution and pass Department of Education review before it accepts Direct Loan funds, which keeps the eligible list short next to the thousands of universities worldwide. Search for your target school by name before you apply, since admission to a program does not guarantee federal loan eligibility.

Repayment changed too

The 2025 reconciliation law replaced the SAVE repayment plan with a new Repayment Assistance Plan for loans taken out after July 1 2026, and consolidated several older income driven plans into fewer options. Confirm your repayment choices directly at studentaid.gov before you borrow, since the rules that applied to earlier graduates no longer match what a 2026 or later borrower gets.

Budgeting beyond loan limits

Federal loan limits often fall short of a foreign university's full cost of attendance, especially once you add flights, visa fees and a stronger local currency. Compare your loan total against the school's published cost of attendance early, then plan for the gap through savings, a private loan, or a part time work option allowed under your student visa.

Currency and disbursement timing

Foreign schools rarely bill in US dollars, so your loan disbursement converts at whatever exchange rate applies on the transfer date. Ask your school's international office how and when it receives federal disbursements, since some foreign schools request funds through a US based partner office rather than directly from the Department of Education, which adds processing time.

Before you commit to a foreign school with loans

• Confirm Eligible status in the FAFSA foreign school search, not admission alone.

• Calculate your loan total against the full cost of attendance, not tuition alone.

• Ask whether the school certifies enrollment directly with the Department of Education or through a partner office.

• Check current repayment plan options at studentaid.gov before your first payment comes due.