Are you planning to pursue higher education in the USA but worried about funding? Don’t fret! Securing an education loan for the USA is a feasible solution to finance your studies. This guide covers everything you need to know about education loans for studying in the USA, including types of loans, interest rates, application tips, and much more.
Why Study in the USA?
The USA is a dream destination for many international students due to its prestigious universities offering a diverse range of experiences and opportunities. In the academic year 2021/2022, over 199,000 Indian students pursued higher education in the USA, highlighting its popularity. One significant reason for this popularity is the ample employment opportunities worldwide after completing a degree from a US university. However, the cost of education in the USA can be high, with average tuition fees for international graduate students around USD 39,000 per year.
Types of Education Loans for Studying in the USA
Education loans for studying in the USA can be broadly classified into two categories: secured loans (with collateral) and unsecured loans (without collateral).
Secured Education Loans
A secured education loan requires the applicant to pledge collateral, such as fixed deposits, insurance policies, non-agricultural land, residential or commercial property. This type of loan usually offers lower interest rates and higher loan amounts. Public banks in India, such as State Bank of India (SBI) and Union Bank of India (UBI), commonly provide secured loans.
| Lender Name | Maximum Loan Amount (In INR) | Rate Of Interest | Margin Money |
|---|---|---|---|
| SBI | Up to 1.5 Cr | 10.65% (for girls), 11.50% (for boys) | 10% |
| UBI | Up to 1.5 Cr | 10.5% – 10.85% | 10% (listed university), 15% (non-listed university) |
Unsecured Education Loans
- Acceptance from a recognized American institution for a full-time program
- Minimum age of 18 years
- Good academic record
- Course of study with promising career prospects
- Collateral (for secured loans)
- Financial co-applicant meeting income requirements (for unsecured loans)
Required Documents for Education Loans
To apply for an education loan, you will need the following documents:
- Loan application form
- Proof of admission (admission letter)
- University fee structure
- Academic transcripts (school and bachelor’s)
- Standardized test scores (GMAT, GRE)
- English proficiency test scores (IELTS, TOEFL, Duolingo)
- Applicant’s KYC documents
- Passport-size photographs
- Resident proof of applicant and co-applicant
- Income proof of co-applicant (for unsecured loans)
- Property papers (for secured loans)
How to Apply for an Education Loan for Studying in the USA
Securing an education loan can be a lengthy process, but it can be simplified with proper guidance. Here’s how you can apply for an education loan through GyanDhan:
- Check Eligibility: Use GyanDhan’s platform to assess your eligibility for an education loan.
- Consultation: An education loan expert will contact you to guide you through the process and suggest suitable lenders.
- Document Checklist: You will receive a customized document checklist based on the lender’s requirements.
- Submit Documents: Submit the required documents either in hard copy or soft copy as per the lender’s instructions.
- Verification: The verification process takes about 7 to 15 days. Once approved, you will receive an agreement letter.
- Disbursement: Initiate the disbursement process at your convenience. Funds may be disbursed directly to your account or to the university.
Repayment of Education Loans
Repayment is a crucial aspect to consider when choosing a lender. Repayment tenure and moratorium options vary among lenders. Here’s a comparative guide on repayment options:
| Lender Name | Repayment Tenure | Repayment Option During Moratorium |
|---|---|---|
| SBI | Up to 15 years | No payment or SI |
| UBI | Up to 15 years | No payment or SI |
| Axis Bank | Up to 15 years | SI or EMI |
| ICICI Bank | Up to 10 years | SI or EMI |
| IDFC FIRST Bank | Up to 12 years | PSI or SI or EMI |
| HDFC Credila | Up to 15 years | PSI |
| Auxilo | Up to 15 years | SI |
| Incred | Up to 15 years | PSI or SI |
| Avanse | Up to 15 years | PSI or SI |
| MPOWER Finance | Up to 10 years | SI |
| Prodigy Finance | Up to 15 years | SI |
Conclusion
Pursuing higher education in the USA is a significant investment, but with the right education loan, it is achievable. Whether you opt for a secured or unsecured loan, it’s essential to compare different lenders based on loan amount, interest rates, repayment options, and other factors. GyanDhan can help streamline the process, offering personalized assistance to secure the best loan for your needs. Start your journey today by checking your loan eligibility and exploring your options.
Frequently Asked Questions
How to get an education loan in the USA for international students?
To secure an education loan, you need to be accepted by a US college or university first. Most lenders require a student visa, proof of acceptance, and often a cosigner who is a permanent US resident with good credit.
What types of interest rates apply to international student loans in the USA?
Interest rates depend on benchmarks like the Prime Rate or SOFR, plus a margin based on the borrower or cosigner’s creditworthiness. The Prime Rate is influenced by the federal funds rate, while SOFR is based on Treasury repurchase market transactions.
What are the repayment options for international student loans in the USA?
Repayment terms vary, but typically include full deferral, interest-only payments while in school, or immediate repayment of both interest and principal. The repayment period can range from 10 to 25 years, depending on the loan amount.
Can I get a student loan in the USA without collateral?
Yes, unsecured student loans are available and do not require collateral. These loans consider the borrower’s creditworthiness and may require a cosigner.
Should I take an international student loan in the USA or from my home country?
Interest rates for US loans vary between 8% and 19%. Loans from your home country might be more advantageous with rates around 10.25%. Compare both options to decide what’s best for you.
Embark on your journey to study in the USA with confidence, knowing you have the financial support you need. Apply for an education loan today and take the first step toward your academic and professional success.