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# Loans for US students studying abroad -- what exchange rate?

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Senior Manager
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25 Dec 2008, 03:39
Merry Christmas!

Trying to research the Federal and other private loans available for students at overseas institutions (LBS, INSEAD, etc.), but can't seem to get any answers on exchange rates. Basically, it appears that for federal loans, the amounts are disbursed no earlier than 30 days before the start of the school term. But my questions are:

1. Does the same apply to private loans as well -- or are they disbursed to the student soon after they are approved?

And more importantly:

2. What exchange rate is used? Is it done at time of disbursement to the school (<30 days before start), or at the time of approval, etc.?

With the way the USD/GBP rate is at the moment, I'm wondering if it may be preferred to have the exchange take place earlier rather than later next year...

Any advice would be appreciated! TIA!
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Re: Loans for US students studying abroad -- what exchange rate? [#permalink]

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30 Dec 2008, 03:54
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Look into a reputed currency broker like HiFX if you will be making substantial foreign exchange transfers regularly (i.e. tuition payments) and want to avoid the plethora of fees most retail banks will tack on to such transactions.

http://www.hifx.co.uk/personal/regular_payments/overview.aspx

If a school overseas is on the US Department of Education's list, then the lenders should already know where to send your federal Stafford/PLUS loan money. Not sure if the private lenders would disburse directly to a students account?
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Re: Loans for US students studying abroad -- what exchange rate? [#permalink]

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09 Jan 2009, 21:45
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I've been using www.oanda.com for all my currency swtiching. Switching between Yen, HKD and GBP, the best benefit is the spread rate at whcih the transfers are made, they are live rates, so you get a much more accurate rate, whereas retail banks have higher spreads which are fixed during the day to try to make extra profit and to cover currency volatility during a day.

Furthermore, if you are interested in currency trading, you can use it to hedge for/against the GBP/USD depending on what you are proposing to do to protect yourself.
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Re: Loans for US students studying abroad -- what exchange rate? [#permalink]

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26 Dec 2008, 19:07
I would expect they distribute in dollars and the rest is your problem. No evidence to suggest this, but it seems most likely (at which point find an FX broker).

If you find it is on an arbitrary rate and you want to hedge it, get some FX trading software that settles in sterling. May be difficult - I think they are more in dollars.
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Re: Loans for US students studying abroad -- what exchange rate? [#permalink]

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29 Dec 2008, 11:15
Thanks! I read some information (for IE at least) that the school has a holding account in the US, and funds are deposited from lenders into that account, then converted during the time of disbursement to local funds.

Not sure if the other schools are the same way (I'm not going to IE), but since I'll be going the private loan route anyway, perhaps some hedging can be done...
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Re: Loans for US students studying abroad -- what exchange rate? [#permalink]

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29 Dec 2008, 23:34
If you are happy with the rate of say today (and think that the US dollar will fall against pounds) - maybe look into buying GBP futures or options. Might cost you a couple of grand, but could save you tons in the long run.

prashok wrote:
Thanks! I read some information (for IE at least) that the school has a holding account in the US, and funds are deposited from lenders into that account, then converted during the time of disbursement to local funds.

Not sure if the other schools are the same way (I'm not going to IE), but since I'll be going the private loan route anyway, perhaps some hedging can be done...
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Re: Loans for US students studying abroad -- what exchange rate? [#permalink]

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03 Jan 2009, 20:44
Thanks guys -- it looks like some private lenders (like Discover) will disburse directly to students, though loan limits may be less as a result. I'll be sure to look at the currency options mentioned...
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Re: Loans for US students studying abroad -- what exchange rate? [#permalink]

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14 Jan 2009, 19:55
I know that US citizens can get up to \$20,500 / year through the Stafford loan at 6.80% fixed. Has anyone found any private loan sources that offer rates lower than 6.80%? Please share...
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Re: Loans for US students studying abroad -- what exchange rate? [#permalink]

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15 Jan 2009, 20:34
I think I read that Sallie Mae private loans were as low as 5-6%. I think I have a shot (my averaged FICO is just below 800), but I've heard that even with good credit, getting any credit through Sallie Mae has been difficult.

Worst case, it's going to be max of Stafford and the HSBC scheme for me.
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Re: Loans for US students studying abroad -- what exchange rate? [#permalink]

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15 Jan 2009, 20:36
togafoot wrote:
I've been using http://www.oanda.com for all my currency swtiching. Switching between Yen, HKD and GBP, the best benefit is the spread rate at whcih the transfers are made, they are live rates, so you get a much more accurate rate, whereas retail banks have higher spreads which are fixed during the day to try to make extra profit and to cover currency volatility during a day.

Furthermore, if you are interested in currency trading, you can use it to hedge for/against the GBP/USD depending on what you are proposing to do to protect yourself.

Thanks togafoot! That sounds like a pretty good option...
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Re: Loans for US students studying abroad -- what exchange rate? [#permalink]

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15 Jan 2009, 21:30
Stafford is the one that's fixed at 6.80%? Do Sallie Mae rates depend on your credit rating? That would help me, my credit is great.
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Re: Loans for US students studying abroad -- what exchange rate? [#permalink]

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16 Jan 2009, 05:24
Yep, Stafford is a fixed rate (but can be administered by Sallie Mae and others), and private loans (through Sallie Mae, Citibank or anyone else) are usually variable rates based on your credit.
Re: Loans for US students studying abroad -- what exchange rate?   [#permalink] 16 Jan 2009, 05:24
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