Every Indian student, who dreams to study abroad, prefers the USA to be their study destination due to its world-class education system. The country also houses some of the top universities, like Stanford University, Harvard University, University of Chicago, etc. However, the education cost in the USA is considerably expensive compared to other study destinations.
Most Indian students depend on Education loans in USA for Indian students to meet their education costs. Though student scholarships are available, the competition and the eligibility criteria to obtain them are very high. Thus the students depend on Education loans to support their education.
Arranging the education funds is the most challenging part of studying in the US, the students rely heavily on education loans in USA for Indian students. There are a lot of possibilities available for students to apply for loans in Indian banks. They can also go for International loans if they have someone in the USA as a co-signer for their education loan.
Types of education loans in India to study in USA
In India, there are 2 types of loans offered to aid the students financially to study in the USA. they are,
- Secured education loans
- Unsecured education loans
Secured Education loans in India for USA
The high amount of loans where the banks ask for collateral are known as secured loans. For example, for loan amounts over 7.5 lakhs, public sector banks like SBI will be asking for security.
The borrower will be pledging collateral like a house, gold, agricultural lands, etc. which can be tangible or intangible. The collateral is considered non-performing assets by the banks, however, in case of repayment failure, the banks will use the security to obtain its fund. As the rate of risk is less, the interest rate for these secured loans is also less.
Unsecured education loans in India for USA
The type of loan, where you will not be asked to pledge security by the banks, are called unsecured education loans. Here no collateral will be required and the processing time will be less as there is limited paperwork.
However, as the bank’s risk factor is high, the interest rate will also be high. Here you will be asked for a Co-applicant or co-signer as security. The Co-signer's income and CIBL scores will be taken into consideration for sanctioning the loan.
Types of loan lenders in India to study in USA
To study in the USA, the students can apply for their education loan in 4 places. They are
- Public sector banks
- Private sector banks
- Non-banking Financial Companies
- International lenders
Education loans offered by Banks in India to study in USA
With more students traveling to the US for education, our Indian banks have come up with a few schemes to aid the students financially. Once they get admission to US universities, they can apply for any one of the following education loans offered by the banks in India to study in USA. The education loans offered by different lenders are mentioned below for your reference.
Top government bank schemes in India offering education loans to study in USA
There are a number of government schemes available in the public sector banks to support the students in their educational journey. The education loans in USA for Indian students through government schemes are,
This is an education loan for Indian students to study in the USA offered by the State bank of India. It is only for students who are going to do full-time regular courses in US universities. It is a secured loan, where you can get a loan for a high amount ranging between INR 20 lakhs to INR 1.5 crores. As this loan requires collateral, the Co-applicant resume is not considered much. You can take 15 years of time to repay your study loan and the repayment starts 6 months after your completion of studies.
For loan amounts less than INR 20 lakhs, the students can opt for the SBI student loan. Here you will be asked for collateral only if your loan amount is higher than INR 7.5 lakhs. Your repayment period is for 15 years and it starts 12 months after the course completion.
Bank of Baroda is considering the student's needs and is offering education loans to all the aspirants who are getting admission to the top universities of the globe. The benefit of getting a loan from the Bank of Baroda is that they fix their loan rates, based on the student's profile. Thus students can easily get a loan that matches their needs. The BOB has 100% loans for a few listed American universities with low-interest rates and fewer mortgages.
The Punjab National Bank education loan for abroad education is based on the student's requirement. Here the students can also apply for loans to pursue their diploma courses. 15 years is the loan repayment period and it starts after one year of course completion. The annual percentage rate is less and the students can easily avail of this loan.
Oriental Bank of Commerce Education Loan Scheme
This scheme is available for students who wish to pursue their education in foreign universities. Here the loan amount will be fixed based on the candidate’s university. For overseas education, the margin starts with 15% of the education cost for any amount taken over INR 4 lakhs. Here you have to start paying the interest right after the course completion and the maximum repayment period will be 15 years.
Top private banks in India offering education loans to study in USA
Being the largest commercial bank in India, Axis bank offers education loans in the USA for Indian students. Here you can possibly avail of INR 40 lakhs loans without any collateral with an interest rate between 11% to 13%. Till INR 4 lakhs, there will be no margin amount allocated and for loans above INR 4 lakhs, a margin of 15% education cost will be allocated. You don't have any prepayment penalty and the mortgage period will be 12 months after the course.
ICICI offers students an education loan for studying in the USA with a good interest rate and a repayment period. The maximum loan amount you can apply for in ICICI is INR 1 crore. You can avail of secured or unsecured loans here. Up to INR 40 lakhs, it is possible to get an unsecured loan. The margin amount will be zero for loans below INR 20 lakh above which it will be 15%. Your repayment starts after 12 months of your course and there is no prepayment penalty.
IBA Model Education Loan Scheme is offered by the Canara bank to support the students studying in US universities. You can get an unsecured loan for INR 7.5 lakhs, above which collateral will be asked. The repayment tenure is 15 years and it starts after 1 year of course completion. The margin for abroad education is 15 percent.
HDFC bank education loan for foreign education
HDFC offers a student loan of a maximum of INR 45 lakhs to students who are pursuing their higher education in US universities. HDFC loans are famous due to their attractive interest rates. Here the loans will be sanctioned before college admission.
Top NBFCs to offer education loans to study in USA
HDFC Credila is the first loan lender in the country to offer education loans for students to pursue their education in 1000’s universities in 35 plus countries. Here you can avail of unsecured loans up to INR 40 lakhs with an interest of 11% - 12.5% p.a. The interest amount must be paid during your course duration and 6 months after your course, the repayment process starts. 1-2% of the loan amount (plus GST) will be charged as the processing fee. There will be no prepayment penalty.
Avanse Financial Services
Avanse is one of the top lenders in the education industry, financing more than 1626 Universities, and 1262 colleges for 6000+ courses in 44 plus countries. Here the highest amount you can avail of without collateral is INR 40 lakhs. The interest rate ranges between 11.75% to 16% p.a. The SI must be paid during your education tenure and the principal amount repayment will be made after 6 months of your course completion or 3 months after you get a job. The processing fee is 1% of the loan amount and there will be no prepayment penalty.
Incred offers education loans for Indian students to study in the USA at a comfortable interest rate. You can get up to INR 40 lakhs without any collateral. You will be paying your SI during your education and the maximum loan repayment period is 10 years. The interest rate in InCred is generally between 11.75% to 16% with a processing fee of 1% loan amount.
Auxilo is also one of the NBFCs that offer students education loans to support the students in pursuing their education dream of studying abroad. You can apply for a loan amount of INR 4o lakhs without collateral. The interest rate here will be 12.70% to 18%. The processing fee will be 1% to 2% based on the criteria.
Top international lenders to offer education loans to study in USA
MPOWER financing is offering education loans for students without any security or collateral. The maximum amount that can be secured without collateral from this lender is 50,000 USD. The annual percentage rate varies between 11.99% to 13.99% for loans without collateral. The unique feature is that there is no margin amount and the repayment tenure will be 10 years.
The UK-based financial lender is offering education loans for students based on their academic performance, without any collateral or co-applicant. The loan amount is offered in USD or Euro based on the university choice. The interest rate will be APR 9.4% and there is no margin money involved in this loan type. The repayment period is 20 years and repayment during the moratorium period is not allowed.
Process to apply for the education loan to study in the USA
Once you have decided to apply for the education loan, you must know the procedures to apply for the loan. The loan procedures are mentioned below. You can use it as a reference while applying for a loan.
- Check your loan availing eligibility.
- Collect information regarding the various loan opportunities to decide on which loan is best for you.
- Once you finalized the lender, you can apply for the online application form.
- Get your required documents list and prepare all the documents.
- Submit the supporting documents either online or get them picked from your home.
- For collateral loans you will be submitting the necessary documents.
- After the document submission, your application will be evaluated by the officials.
- If the loan gets approved, you will be receiving the sanction letter from the lender.
Education loan eligibility to study in the USA
To avail of an education loan in banks to study in the USA, you must have the following eligibility criteria.
- You must be an Indian citizen.
- The Co-signer or the Co-applicant must also be an Indian citizen.
- You must be at least 18 years old to apply for the education loan.
- The Co-applicant must have a bank account and cheque writing feature in any Indian banks
- Before the loan disbursement, you must have the college admission confirmation letter.
- You must be getting admission for technical or professional courses that are job oriented.
- You must have a strong academic background without any backlogs.
Factors to check while applying for an education loan in USA for Indian students
If you are going to apply for an education loan, you must have clear planning about the amount you are going to borrow and the way you are going to spend it. The amount received must be spent only on your abroad education purpose. The other factors, that you need to focus on while applying for an education loan to study in the USA Indian students are,
- Decide the course and the US university in which you are going to take up your higher education.
- Get complete details about the amount required for completing the course. Then plan on the amount you wish to receive from the bank.
- Gather all the necessary documents required by the lender.
- Choose a suitable co-applicant.
- The loan application date is to be fixed. You must be applying for the loan at least 3 months prior to your visa interview.
- Estimate your repayment tenure and start preparing yourself.
Hope these factors would help you in choosing the best lender and to get your loan applications cleared in the first go.
Important points to be remembered while applying for an education loan in Indian banks
- Moratorium Period- The period between your course completion and the repayment is considered the moratorium period. This is a courtesy tenure offered to the students to grab job opportunities to repay their loans. This time varies between 6 months to 12 months.
- Loan Margin- The margin amount between the overall education cost and the received amount is the loan margin. Mostly all the banks will have a certain loan margin and it will also differ based on the amount availed.
- Effect of Exchange Rate- you must have a clear estimation of the amount you are going to receive during your disbursement. There may be discrepancies due to the foreign exchange rate, thus read the documents carefully, to check the calculations.
Any tangible or intangible property offered by the customers to the banks as a security for their loans are known as collateral. This collateral is considered as the security deposit to reduce the risk of the banks in case of delayed or nonrepayment of the edification loans. This type of collateral loan involves less paperwork and the loan process can be completed quickly.
The properties that can be given as collateral are shares, funds, houses, lands, and commercial space.sometimes you can also pledge on mutual funds, gold, commercial space, bank deposits, debentures, etc. in recent days, agricultural lands are not considered for security purposes.
For the education loan, involving the collateral, the officials will be physically checking the documents as well as the collateral. If your collateral is free of a discrepancy, then you will be sanctioned a loan at the earliest. The collateral is required for the loans amounting to over INR 4 lakhs.
The Co-applicant or the Co-signer you are going to select for your loan process, must have the following prerequisites.
- He/she must be an Indian citizen who is earning from an Indian company.
- They must be related to you in any of these following relationships, father, mother, brother, sister, or spouse to be your Co-applicant.
- The supporting documents to prove their relationship with the student are necessary.
- The Co-applicant must have a good CIBIL score to support the student's liability.
Role of a Guarantor
The role of a guarantor is very critical in loan processing. The loan guarantor or the co-applicant will be liable for the loan amount if the student fails to pay the money in time. The guarantor earnings and the CIBIL score will be considered for sanctioning the loan amount to the students. Thus a proper Co-applicant must be selected.
What are the costs covered in the education loan in the USA for Indian students?
When applying for a loan, it is necessary to check what are the other expenses covered in the loan amount. As the living expenses are higher in the USA, you must have a clear estimation of the loan amount and its coverage. Most of the loans offered by the Indian banks will be covering the following expenses.
- College fee and accommodation fee.
- Examination, library, and infrastructure fees.
- Study materials and other necessary books purchase amount.
- Caution deposit, refundable deposit
- Travel expense
- Student insurance if required
- Equipment purchases like laptops, stethoscopes, etc.
Documents required to apply for an education loan in India to study in USA
Here are the documents you must have in order to apply for your education loan in India for studying in the USA.
- Completed application form
- Address proof
- Identity cards
- Passport size photo
- Income proof
- Scholarship letter copy
- 10 and 12th mark sheets
- Graduation mark sheets (for post-graduate course)
- FOREX permit copy
- admission letter
- Other expenses list
- Collateral support documents
- Financial support proofs
- Birth certificate
- Proficiency test and skill test score cards
All these documents must be true and valid. Any discrepancy in the documents may cost you loan sanctions. So be careful while gathering your documents.
Rate of Interest
The rate of interest is the amount a lender is charging its borrower based on its principal amount. For education loans in the USA for Indian students, the rate will be differing between 11% to 16% p.a. This simple interest amount will be paid every month to the lender.
The rate of interest depends on various factors of the student like university, academic background, financial status, collateral value, loan amount, etc.
The lender paying the loan amount is known as the loan Disbursement. Mostly it will be done in Indian rupees and given in installments. The education fee will be directly transferred to the particular university as per the university fee structure and policy. The other expense amount will also be given to the student directly throughout the study duration.
Loan repayment terms
The overall tenure of the loan will include the education period, followed by a courtesy period of 6-12 months and a repayment period. Generally, the repayment period of various bank schemes differs between 10 years to 20 years. In case of repayment failure, necessary actions will be taken to retrieve the loan amount. During the repayment period, the interest will be paid every month.
Capability certificate is a support document required by the universities from the students. It is a proof document to showcase that the students are capable of handling the expenses during their studies. The capability certificate will be offered by the banks after a clear verification of the student’s financial status.
Is there an education loan in USA for Indian students?
Being international students in the USA, Indian students will find it hard to identify their financial aid. This is because of their visa status. However, there are few international lenders who will be offering education loans in the USA for Indian students. The competition for these loans is very high and the students have to prove their excellence to acquire the study loan in the USA.
Education Loan Sanction Letter Format
Make sure your education loan sanction letter format is followed in your sanction letter as per your requirements. The loan sanction letter must contain the following details,
- Education Loan amount
- Rate of interest
- Rate of interest calculation
- Repayment period
- Repayment mode
- EMI/ pre-EMI payment amount
- Loan validity period
- Tax benefits
Average Debt for Student Loans USA
The average debt for student loans in the USA is tremendously increasing compared to the nation's economy. The average debt is around 20.3 million USD. The borrower number is increasing as the education cost keeps on rising. The American education loans rose to $1.75 trillion among 46 million borrowers. The study loan in the USA is offered to all eligible students.
Education loan program for Indian students in USA
When it comes to education loans for Indian students in the USA, you have a lot of options. You have to analyze the possible options available to you and choose the perfect match as per your requirements.
Some of the popular education loan programs for Indian students in the USA are mentioned below.
With an affordable interest rate, Discover is one of the most preferred loan lenders in the USA for Indian students. This is because the student’s university admission and their GPA are only considered for offering the loan amount.
The citizenship and other proof details are not required here. You can avail of the loan once you receive your admission letter from a US university. The loan amount also covers the overall expenses of the student incurred during the education tenure and the repayment period can be chosen by the student as per their concern.
Citizen bank offers student education loans for international students and to do so, they require a Co-signer. The Co-signer must be an American citizen with a good credit rating and will be considered liable for the student loan. To obtain an education loan from Citizen Bank you must have a good academic record.
The loan will be sanctioned only after you get your admission letter and the student visa. Thus if you wish to apply for this particular loan, you will have to start the process well ahead of your admission process. Your language skill test scores are also considered for giving the loan approval. Thus try scoring a high proficiency test score if you are going for this loan.
Indian students can go for the Well Farago loan schemes if they are looking for an education loan in the USA. The Well’s Farago is offering loans based on their university and the repayment methods are structured for the convenience of the students. They can pay the amount as per their amount availability.
This loan amount will cover the overall education cost along with the cost spent on the study materials, accommodations, equipment, etc. However, you must check your Co-signer's credentials to surpass the screening process. The loan will be allocated based on various factors like academic background, university, etc. Thus before applying for the loan check your eligibility criteria.
These are the few education loan options available in the USA for Indian students. You can make use of their financial aid to pursue your education at your dream university.
Reasons for finding it hard to obtain an education loan in USA for Indian students
Though there are a number of options to avail of study loans in the USA, Indian students are finding it difficult to obtain the loans. This is because for the following reasons,
- No credit History: As the students are new to the country, the credit history of the students can not be evaluated. Thus there are no valid documents for validating the student's credit score, thus banks find it difficult to believe the borrower.
- Students can leave the country: The banks are at a higher risk when they lend money to foreigners as the students can leave the country at any time.
- Co-signer requirement: For getting a loan, you must need a Co-signer to support your loan process. The co-applicant must be a US citizen, which is hard to find.
Process for getting a personal loan in USA by Indian students
The process of getting a personal loan in the USA by Indian students is simple. The process is explained below. Make sure to have all the required documents before starting with your process for an education loan for MS in USA for Indian students.
- Check your eligibility- before applying for the loan, check whether you will be able to meet all the requirements, and have the necessary documents.
- Loan application- Once you have got your university admission, you can apply for the online application. Fill out the application form with valid information.
- Approval process- once the application is submitted the lender will be going through the application form and verify your details. Once they are satisfied, your application will be approved and the amount will be dispatched.
- Repayment process- Once you receive the amount, your repayment process will be starting. Every month you will be paying your interest and after your education tenure, you can repay your principal amount.
Thus you can see, even as International students, Indian-origin students are able to get an International student loan in the USA.
Are education loans the right option?
Education loans are the best option to receive financial aid for your education. Thus you can opt for the education loan and pay the lender in installments. Even if you are having ready cash, an education loan would be a better option as it gives you time to repay your amount after your graduation and a refinancing opportunity. The education loan for MS in the USA for Indian students is available at an affordable interest rate.
Read the agreement carefully
Last but not least, the most important thing to remember while taking an education loan either from banks or money lenders, you must be clear with your documents. You must spend time reading each and every line in the document and understand the terms and conditions carefully. If you have any doubts, you can reach out to your lender and get it cleared before signing the documents.
As an Indian student, who is aspiring to pursue their education in the US, you have plenty of financial aid available. You must pick the perfect support according to your convenience and get the complete benefits. Remember, you can always apply for a US education loan for Indian students through international lenders.
FAQ about Education loan in USA for Indian Students
1.What are the 3 steps in getting an education loan in the USA for Indian students?
The 3-step process of loan application is
- Online application
- Verification and approval
- Repayment process.
2. How much can you borrow as an education loan in USA?
The maximum amount sanctioned will be your entire education cost including tuition fees and other miscellaneous fees. At times your other expenses are also covered in the loan amount.
3. What parameters should be compared between different banks, while applying for education loans?
The parameters include,
- Interest rate
- Expenses covered
- Processing fee
- IT exemptions
- Loan margin
- Processing time
- Pre-payment schemes
What are the two types of expenditures you need to consider while applying for a loan?
The two expenditures to be taken into consideration are
- Direct expenditure- Which involves your tuition fee and other expenses related to your education.
- Indirect expenses- This involves additional costs like traveling costs, ticketing, application fees, etc.
What is the cost of obtaining education from US universities?
||$20,000 to $40,000 per year
||$20,000 to $45,000 per year
$28,000 to $55,000 per year
||English language program
||$700 to $2,000 a month
||$6,000 to $20,000 per year
What is the average living expense of an Indian student in the USA?
Apart from your tuition fee, there are also other expenses involved in your education abroad. They are as follows.
||Book and stationary
How much loan can I get in India to study in the USA?
To study in the USA, you can apply for education loans in various public sector and private banks. You can get up to a maximum of INR 1 crore amount with security. The interest and the repayment tenure will differ based on the bank.