Getting to the United States as a refugee when you have practically nothing, can be a daunting endeavor. As a result, the International Organization for Migration (IOM) offers travel loans designed to defray the cost of plane tickets and other transportation costs.
Because these are refugee travel loans and not a free gift, those coming to the United States are expected to begin repaying the loans soon after they arrive. Here’s what you need to know about getting and repaying a refugee travel loan.
Refugee travel loans: The good and the bad
So, how does someone without credit or income get a loan? Loans are funded by the State Department and administered through the International Organization for Migration (IOM). There is no credit check. All that happens is that, when someone is cleared for resettlement in the United States, the IOM approaches them and begins the process with paperwork.
“Getting the travel loan is simpler because it’s done overseas,” says Zeze Rwasama, the director of the Refugee Center located at the College of Southern Idaho (CSI), in Twin Falls, Idaho. “American requirements don’t apply.”
Rwasama points out that the refugees sign a promissory note that details the repayment schedule for the loan. “They have to begin repaying the loan within six months. Hopefully by then they have a job.”
Travel loans can range between three and nine years, depending on how much is borrowed. Just the cost of plane tickets can be more than $1,000 and if a family is coming over together, it’s not uncommon to have bigger loans. The average note, according to the State Department, is about $2,740.
What happens when you can’t repay a refugee travel loan
Most refugee travel loans are eventually repaid. The State Department reports that 75.4% of IOM travel loan amounts are repaid within 15 years. Rwasama says that, for refugees coming through his resettlement center, the default rate is extremely low.
However, the fact that most refugee travel loans are ultimately repaid doesn’t mean that some people don’t have problems. The average monthly repayment amount is $84. That might not seem like a lot to average Americans, but to refugees struggling to start over again, that can seem like more than they can handle.
Refugees who come to the U.S. basically have a blank slate. Each time you make a move with a loan or other type of credit, it’s recorded in your credit history. The items in your credit history are used to create a credit score, which is checked when you want to move into a new home, get insurance, buy a car or even purchase a new smartphone.
Loans made through the IOM aren’t subject to the same credit requirements, but once you have the loan and are settled in the United States, the story changes. Rwasama warns that, even though you don’t need credit to get a refugee travel loan, your payment history will be reported to the credit bureaus in the United States. “Missing payments can lead to credit problems and cause more challenges for refugees,” he says. Not paying on the travel loan immediately results in lower credit scores, making it difficult to access other financial resources later.
On the flip side, though, the travel loan provides a way for refugees to establish a credit history. As you make your loan payments, you start building a good credit history, resulting in a higher score that can be beneficial later. Rwasama points out that in the United States, it’s practically impossible to advance financially without a credit history. “When you make your loan payments, you can begin building credit so you can buy other things,” he says.
How to deal with a travel loan you can’t repay
When you can’t make your loan payments, you do have options. First of all, says Rwasama, it’s possible to get an extension on loan repayment. Some of the factors that allow for a deferral or restructuring of terms include:
- Temporary medical disability
- Full-time school attendance
If you meet the requirements, you might receive more time to start repaying your loan, rather than being forced to begin making payments right at six months, according to Rwasama. Additionally, if something comes up after you’ve started repayment, you can stop payments for a while or have the repayment schedule changed.
On top of that, there are times the IOM is willing to cancel your refugee travel loan, including bankruptcy, permanent disability or to care for an orphaned child. Additionally, if you’re repatriated to your home country, the IOM might cancel your debt. Finally, the IOM can cancel the loan if you die so that your heirs aren’t saddled with the debt.
No matter your situation, though, Rwasama points out that it’s vital to remain in contact with your resettlement agency. You shouldn’t just stop making payments because you can’t. Talking with a contact at the agency can help you understand your options and reduce the negative impact on your credit history.
“All refugees are assigned to a resettlement agency, and it’s important to check in,” says Rwasama. “They can help you navigate all of these issues and help you get an extension if you need it.”
Other struggles refugees face after migrating
It’s not just the money, though. While repaying a refugee travel loan provides challenges on its own, refugees are dealing with a number of other hurdles.
“The biggest challenge is the language,” says Rwasama. “Many refugees don’t speak English, and many have no schooling. How can you have school when you’ve been in a refugee camp for 15 years or more?”
Rwasama points out that his refugee center focuses a great deal on helping those who come through learn the language. “Without knowing the language, it’s hard to get a job,” he says.
Because a job is key to self-sufficiency, that’s one of the main focuses refugee centers have. Rwasama says the CSI Refugee Center provides a number of services designed to help refugees get a solid start. Basic but necessary lifestyle activities and tasks can present difficulties to refugees, Rwasama points out, including:
- Transportation: Getting to work or to the grocery store can be difficult without transportation. The CSI Refugee Center provides transportation for a limited number of months, until refugees can get their own car or become proficient at public transit.
- Financial system: It can be confusing to learn the banking system in the U.S. Navigating account setup, understanding how it works and then using it to one’s advantage can be frustrating. It’s easy to make mistakes when paying off debt because of the complexity of the system.
- Grocery shopping: It’s not just the language that makes this difficult, Rwasama points out. The concept of shopping in large supermarkets with check out lanes and using a debit card to pay is different than what many refugees are used to.
Even understanding the postal system can be a challenge. “We have to teach them everything,” says Rwasama. “It’s so different from what they’re used to. We help as much as we can so they can be self-sufficient faster.”
Resources for refugees: From financial to emotional support
It’s possible to find help as a refugee. Rwasama emphasizes the importance of using the resources available at refugee resettlement agencies. Because each refugee is assigned one, it’s important for you to go there for additional help, whether you need emotional support or help with navigating the financial system.
The CSI Refugee Center offers orientations and provides the basic necessities so refugees can move forward as quickly as possible.
“We are in an area where the cost of living is low and wages are okay,” says Rwasama. “It’s harder in bigger places that are more expensive.”
In addition to refugee resettlement centers, there are other organizations that provide different levels of support to refugees. Some places to consider include:
- Office of Refugee Resettlement: This office is located within the Administration for Children & Families at the Department of Health & Human Services. You can find help accessing various resources, as well as see state-by-state programs.
- International Rescue Committee: Nonprofit organization that helps refugees navigate the legal system and find resources to help them thrive.
- Refugees Helping Refugees: This nonprofit focuses mainly on refugees in Western New York. They provide classes, training and other resources to help refugees.
- International Refugee Assistance Project: Focuses on providing legal assistance and other help to refugees.
Also, many states also have their own refugee resources. Check with your state to see what’s available. For example, Washington offers cash and medical assistance to refugees during their first eight months. You can also check to see if your state has a specific program for refugees. Idaho’s Office for Refugees isn’t affiliated with the state’s government, but it offers community meetings, various resources and ways to get involved.
Getting help and access to resources is important, and many refugees integrate in their communities. Being able to participate and have the help can provide refugees with a feeling of belonging to their adopted communities. In fact, on average, labor force participation rates rise to or exceed native-born rates, according to the Urban Institute.
Results from well-supported refugees also include:
- Reduced reliance on public assistance
- U.S. citizenship
- Improved English language proficiency
- High educational attainment for refugee youth
- Community contribution
- Establish businesses
“Most of our refugees are supposed to be self-sufficient by the time they’ve been here eight months,” says Rwasama. “We provide a lot of support and it pays off.”
While paying off refugee loans can be a daunting task, it is possible. And, if you need help, it’s possible to find it. Start with your assigned resettlement center, and look for resources beyond those. Many communities offer resources aimed at low-income residents — not just refugees — and it’s possible to look to those resources as well as using what’s available through refugee programs.
“In my five years at the CSI center, every family who has come through has become self-sufficient,” Rwasama says. “There are a lot of resources if you know how to ask for them.”