Education Loan for USA for Indian Students

The United States continues to be a top destination for Indian students seeking an education abroad. According to a 2023 report by the Times of India, Indian students studying in the US surged by 35% in 2022-23, reaching a record high of 268,923. However, the high cost of education in the USA can be a significant hurdle. This is where education loans for USA are beneficial. This guide helps Indian students find the right loan to study in the USA. We'll explain different loan types, how to apply, and important things to know before getting a loan.

Types of Abroad Education Loans for the USA

There are broadly two types of education loans for the USA: secured education loans with collateral and unsecured education loans. 

• A secured education loan requires a collateral form of security to grant or approve the loan application. The collateral can be any movable or immovable assets like LIC insurance, residential or commercial property, fixed deposits, and non-agricultural land. 
• An unsecured education loan does not need any collateral to grant the loan. Since unsecured loans have a higher risk for lenders, interest rates are generally higher than secured ones. Moreover, these loans require the signature of any co-applicant based on whose income and CIBIL score loan amounts are approved. Usually, government banks accept credit scores of 685 or more, while private banks and NBFCs accept 700 to 750 credit scores. 

Secured Education Loan for USA

Secured loans provide higher loan amounts without any co-applicant. You only have to keep some collateral to get your loan approved. You can consider two public sector banks that offer education loans for the USA. State Bank of India (SBI) and the Union Bank of India (UBI) offer high amounts of loans at nominal interest rates. 

Unsecured Education Loans for the USA 

Following is the list of banks that offer unsecured education loans for Indian students in the USA for their bachelor’s and master’s degrees. 

How to Choose a Bank for Study Loan in USA

To choose the most appropriate bank for a student loan for Indian students in the USA, one must look for certain things. Analyzing and comparing certain parameters helps you decide which study loan is good for you. 

• Miscellaneous costs include tuition fees, books, living expenses, etc. 
• Loan margin money
• Prepayment terms
• Processing fee
• Interest rate
• Income tax exemptions
• Loan processing time

Check these parameters that your bank provides, and then decide on which loan you want to apply. 

List of Indian Banks Offering Loans to Study in USA

Several Indian banks offer education loans for students pursuing higher studies in the USA. Some of the prominent lenders include:

• State Bank of India (SBI)
• HDFC Bank
• Axis Bank
• ICICI Bank
• Bank of Baroda

Interest rates, loan amounts, and eligibility criteria may vary between banks. Before making a decision, it's essential to compare offers from multiple lenders.

Application Process for Education Loans in USA for Indian Students

The application process for a student loan, USA, can vary slightly depending on the bank or NBFC (Non-Banking Financial Company) you choose. However, the general steps involve the following:

1. Research and Compare Loan Options: Explore different lenders, and compare interest rates, loan amounts, and repayment terms.
2. Gather Necessary Documents: Prepare documents such as an admission letter, academic transcripts, the university's fee structure, KYC documents, and co-signer details (if applicable).
3. Apply for the Loan: Submit the completed application form along with the required documents to your chosen lender.
4. Loan Approval and Disbursement: Once your application is approved, the loan amount will be disbursed directly to the university or your chosen account. 

Factors to be Considered Before Applying for US Education Loan 

The following are some important factors that you should check before applying for a student loan for international students in the USA:

• Decide which university you want to study in and what course. 
• Know the entire fee structure of the course and other expenses. 
• Prepare a list of required documents.
• Always apply for a loan 3 months before your interview date.
• Consider the time to repay your loan. 

Expenses Covered by Abroad Education Loan for USA

Study loan for international students in the USA covers many expenses of students while studying abroad. Following are the expenses covered by banks under the loan scheme:

• Tuition fee
• Living expenses (includes food, utility, accommodation, etc.)
• Visa fees
• Health insurance
• Examination, lab, library, and book charges
• Caution and refundable deposits
• Laptop or thesis expenses

Eligibility to Get Abroad Education Loan for USA

Certain criteria for the approval of education loans in the USA for international students are as follows: 

• Strong academic record
• Applicants pursuing professional or technical courses or any job-oriented courses. 
• Secured admission document from a recognized university
• Age should be at least 18 years
• Collateral is needed for secured loans

Documents Required for an Abroad Education Loan to Study in the USA

Banks require some important documents to verify the details and process the education loan in the USA for Indian students:

• Loan application form
• Proof of admission 
• Fee structure 
• Original mark sheets
• Certificate of qualifying exams like GMAT or TOEFL
• Residential proof
• PAN card or any identity proof
• Income certificate of student or co-borrower
• Passport copy
• ITR of co-borrowers 
• All assets and liabilities details of the co-borrower

How to Get an Abroad Education Loan to Study in USA

Following are the steps that a student is required to follow to get a student loan for international students in the USA:

• Step 1: Choose any bank in which you want to apply. Check its eligibility criteria for approval. 
• Step 2: If eligible, fill out the application form and submit it with the required documents in hard copy or soft copy on the portal. 
• Step 3: The verification process will start around 7 to 15 days after submission. 
• Step 4: Once your loan gets approved, you will receive an agreement letter. 
• Step 5: Sign that agreement and initiate the disbursement process. You may be required to give some upfront deposits in some banks. Check this factor beforehand to eliminate the last-minute urgency. 

How to Get Loans From NBFCs to Study in USA

Non-banking Financial Companies (NBFCs) also offer education loans for studying in the USA. Some popular NBFCs include:

• Avanse Financial Services: Provides education loans with flexible repayment options and minimal documentation.
• InCred: Offers education loans with competitive interest rates and quick loan processing.
• Credable: Provides education loans with options for both secured and unsecured loans.

While NBFCs might offer competitive interest rates and faster processing times, it's crucial to thoroughly research and compare their offerings with those of banks.

Typically, students aged 18-35 with a good academic record and admission to a recognized US university can get a loan from NBFCs by submitting an application and relevant documents.

Repayment of Abroad Education Loan for USA

Usually, banks provide a loan repayment period of up to 15 years after the moratorium period (until students are not required to pay their loan payments) of education loans in the USA for Indian students.  

Conclusion

Education loans enable and support potential students to fulfill their dream of studying abroad. Many banks offer student loans for the USA with considerable interest rates. It is good for students to plan their education finances when shortlisting universities to eliminate the last-minute hassles. Students can opt for any secured or unsecured loan depending on their suitability to arrange collateral. With these education loans, the complexity of higher education from abroad has been reduced, enabling a higher number of students to opt for universities abroad. 

Learn more about study in USA:

• Study in USA from India
• Universities in USA for Masters
• MS in USA
• Top Masters Courses in USA
• Why USA for Masters
• Top requirements for studying in USA
• Cost of Studying in USA for Indian Students
• Study in USA after 12th for Indian Students
• Best States to Study in USA for International Students