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Education Loan to Study in the USA: A Comprehensive Guide for Indian Students

Jun 16, 2023

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The United States of America (USA) has always been a popular study destination among Indian students due to the availability of prestigious higher education institutions, diverse academic opportunities, abundant course options and specializations, research prospects, great employment opportunities, and cultural diversity. Students from all around the world including India choose to study in the USA because of the prior specified perks. However, the cost of studying in the USA can be a matter of concern for many study abroad aspirants. 

Despite the cost of education at this leading study destination being on the higher side, international students prefer to study in the USA for obvious reasons. So, let us check out how this challenge of funding can be overcome with meticulous reach and planning.

One way to reduce the cost of studying in the USA is to apply for scholarships available for international students. There are numerous fully or partially funded scholarships to study in the USA, just that you need to fit into the eligibility criteria. Also, the scholarships are quite competitive.

So, another way to fund the expenses can be opting for an education loan. To help you get clarity, we will explore the various types of education loans available for Indian students who wish to study in the USA. Keep reading this comprehensive guide to know everything about education loans to study in the USA. Let us first check out the cost of education and then analyse the loan part.

Cost of Education in the USA

The cost of studying in the USA can vary depending on the institution and the course chosen. On an average, the tuition fees for a bachelor’s degree can range from $25,000 to $50,000 per year, while a master’s degree can cost up to $50,000 or more annually. In addition to tuition fees, students need to consider living expenses such as accommodation, food, transportation, and health insurance, which can add up to an additional $15,000 to $20,000 per year.

Nevertheless, as specified earlier you can fund your education in US through a study abroad loan. Not just that you can also get some benefits out of this. So, let’s proceed to know the top benefits of taking an education loan. 

Top Benefits of Taking an Education Loan for USA

  1. Taking an education loan to study in the USA can help ease the financial burden on parents and it also enables students to pursue their academics without worrying about the funding.  
  2. Opting for education loans as a funding option keeps personal savings intact. 
  3. Income Tax benefits are given to the loan applicants and co-applicants on the education loan taken.  
  4. Education loans provide students with the opportunity to invest in their education and acquire the skills and knowledge needed to succeed in their future careers. 
  5. Education loans for studying in the USA often have lower interest rates compared to other types of loans. 
  6. The loan repayment period can be extended if required, making it easier for students to repay the loan.

Overall, these benefits result in a tension-free study in the US!

Considering how beneficial taking an education loan is, let us now discuss the types of education loans available for Indian students. Make sure that you simultaneously check the loan eligibility to understand which will be a suitable loan option for you. 

Types of Education Loans 

There are two types of education loans that students can choose from, secured education loans and unsecured education loans.

  1. Secured Education Loans

Secured education loans require collateral as security against the loan amount. Collateral can be any asset such as property, gold, PF, or any other valuable asset that the lender can sell to recover the loan amount in case of default. If you have a property in the city limits, we recommend going for a secured loan. 

Secured education loans usually cover all kinds of study and living expenses in USA. The interest rates for secured loans are generally lower compared to unsecured loans due to the reduced risk factor for the lender. Nationalised and private banks will be a great choice if you want to get a secured education loan. 

2. Unsecured Education Loans

Unsecured education loans do not require any collateral or security against the loan amount. As a result, these loans have higher interest rates compared to secured loans. Unsecured loans are often preferred by students who do not have any collateral to pledge as security against the loan amount. Private banks, NBFCs and International Lenders provide unsecured education loans with many benefits.

Lenders Offering US Education Loans to Indian Students

Indian students have access to several types of lenders who offer education loans to study in the USA. These include:

1. Public-Sector (Nationalised) Banks

Public-Sector or Nationalised Banks such as the State Bank of India (SBI), Bank of Baroda (BOB), Bank of India (BOI), Union Bank of India (UBI) and the Bank of Maharashtra (BOM) offer education loans to students who wish to pursue higher education in the USA. 

You get competitive interest rates and flexible repayment options with public-sector banks.

These banks provide secured overseas education loans of up to 1.5 crore or more depending on the cost of education and the collateral security pledged. 

2. Private-Sector Banks

Private-sector banks such as ICICI Bank, Axis Bank, and IDFC First Bank also offer education loans to students who wish to study in the USA. 

These loans come with several benefits such as no margin money requirements, no collateral requirements, and fast processing time. However, the loan applicant and co-applicant need to have a strong ITR. 

These banks provide an overseas education loan of up to 1 crore, depending on the applicant’s eligibility and requirements. 

3. Non-banking Financial Companies (NBFCs)

Non-banking financial companies (NBFCs) such as HDFC Credila, Avanse, Incred, Auxilo, and Credenc also offer education loans to students who wish to study in the USA. 

These loans come with several benefits such as flexible repayment options, lower interest rates, and customized loan solutions. 

NBFCs provide unsecured overseas education loans ranging from 50 Lakhs to 75 Lakhs. Applicants with average ITR can apply for an education loan with NBFCs. With a good GRE score, students can get up to 50 lakhs of education loan. 

4. International Lenders

International lenders such as Prodigy Finance and MPower Financing offer education loans to international students who wish to study in the USA.

The best part of taking an education loan with international lenders is that no co-applicant/guarantor, property, CIBIL score, or IT return is required. 

Most international leaders provide education loans for the USA. These loan providers offer unsecured overseas education loans of up to 75 lakhs to Indian students. The only condition is that the applied university should be a part of the list of universities curated by the international lender. 

Having discussed the types of lenders offering education loans to Indian students planning to study in the US, let’s go ahead and understand the basic documents required to apply for an education loan. 

Documents Required 

To apply for an overseas education loan to study in the USA, applicants need to provide the following basic documents:

  1. Admission letter from a recognized educational institution in the USA.
  2. Cost of attendance (COA) letter from the educational institution, which includes details about tuition fees, living expenses, and other expenses.
  3. Passport and visa-related documents.
  4. Academic records, including transcripts and mark sheets.
  5. Proof of income and financial status of the co-applicant, such as salary slips, income tax returns, and bank statements.
  6. Collateral-related documents, if applicable, such as property documents or gold certificates.
  7. Any other document that the lender may require.

Ensure that you have all these documents ready before you proceed with the loan application. Furthermore, let’s discuss the loan application process.

How to Apply for an Overseas Education Loan 

Applying for an overseas education loan to study in the USA can be a straightforward process if students follow the necessary steps given below. 

  1. Research and compare various lenders offering education loans to Indian students to find the best loan options.
  2. Once you have chosen a lender, check the eligibility criteria for the loan and make sure you meet all the requirements.
  3. Arrange all the documents required for the loan application.
  4. Fill out the loan application form accurately and provide all the necessary details.
  5. Submit the loan application form along with the required documents to the lender.
  6. Once the lender approves the loan, sign the loan agreement, and complete any other formalities required by the lender.
  7. The loan amount will be disbursed directly to the educational institution as per the terms of the loan agreement.

These are the essential loan application details that every loan applicant must know. So, if you are planning to take an education loan for MS in USA or for any other degree, make sure that you follow the application steps given in this guide to have a hassle-free loan application experience. 

Studying in the USA can be an exciting and rewarding opportunity for you. With a little research and planning, you can easily find the right education loan to study in the USA and pave the way for a successful career.

Good luck for your higher studies abroad in the USA!

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