The most challenging aspect of studying abroad, especially in the United States, is securing funding. The cost of living and tuition can be high, and not everyone can afford it.
Therefore, one of the essential processes of studying abroad is financial management. Several banks recognize this need and provide student loans to students who aspire to study overseas.
The first factor in evaluating whether or not you are eligible is to apply for the loan. Apart from being an Indian citizen and having an excellent academic record, there might be some particular criteria by the college or university you intend to apply.
Some of the loan amounts and schemes offered by Indian banks for studying abroad are -
SBI Student Loan Scheme
Indian students who have been accepted into any institute in India or abroad can apply for this scheme. A maximum amount of INR 20 lacs can be borrowed at a minimal interest rate, with a 15-year repayment period. The repayment period begins a year after the course is completed. Borrowers must also provide collateral as security if the loan amount exceeds INR 7.5 lacs.
HDFC Bank Education Loan for Foreign Education
This loan program is available to Indian students who want to study abroad. The maximum amount available is INR 20 lacs at a minimal interest rate. This scheme also provides tax benefits to the borrower and can be approved before admission.
SBI Global ED-VANTAGE Scheme
This loan is available to Indian students who intend to study full-time in a foreign country. Students can take out a loan of up to INR 1.5 crore and repay it over 15 years. The borrowers will be required to produce collateral to secure this loan, and repayment will begin six months after the course is completed.
Oriental Bank of Commerce Education Loan for Study in India and Overseas:
If the student decides to continue their studies in the United States, the loan amount will be determined by the fee structure of the institute to which they have applied. On loans taken for studying abroad, the margin is 15% if the loan amount exceeds INR 4 Lakhs. An advantage of this loan scheme is that it does not charge borrowers a prepayment penalty and provides insurance coverage.
Student loans are available from non-banking financial organizations in addition to nationalized banks (NBFCs). Students can get total tuition payments from non-banking schools.
When a student takes out an international education loan from a lender, they are responsible for repaying the principal amount and a fee paid by the lender. Interest is the name for this sum. The amount of the loan, the repayment period, the creditworthiness of a cosigner, the lender's rate range, and other factors all influence international student loan interest rates. The average interest rate for an educational loan for ten years is between 8.5% to 14%, and for 20 years, it is between 7% to 12%.
Calculating EMIs manually can be a complicated and time-consuming task. Following is a formula for calculating the applicable EMI for an educational loan:
EMI = [P x R x (1 + R) ^ n] / [(1 + R) ^ n - 1]
P= Principal loan amount
R= Applicable rate of interest
n= Number of monthly installments.
The majority of U.S. universities begin accepting applications in October. As a result, one should always start the loan review, loan sanction, and obtaining solvency letters that serve as 'proof of finances' to institutions before this deadline.
Before the admittance is confirmed, the loan can be evaluated. After receiving confirmation of admission and an i20 from the university, your loan can be disbursed. Because the entire process takes time, it is best to begin each exercise early to avoid a last-minute rush.
Do not relax and sit back after submitting your applications to the institute and waiting for the admission letter. You must perform extensive research on the loans available from various banks and financial institutions during this time.
Banks and financial institutions will verify if you are a genuine student (client) and that you have been accepted into an established university before they can assess your ability to repay the loan. Here are the documents that banks typically demand during the education loan process -
Proof of admission - your offer letter
A complete loan application form
An estimated cost of study (as per the I-20 form)
Your original education certificates/mark sheets
Documents of qualifying exams (GMAT, TOEFL)
Residential Proof of student and co-borrower
I.T. returns of co-borrower
Proof of income of co-borrower
Details of assets and liabilities of parents/co-obligants/guarantors
Additional documents (country-specific): PAN card and other identity proofs of student and co-borrower for India
There are advantages to taking out a student loan! While repaying your college loan, you may be eligible for tax benefits. After securing a loan sanction for your studies, you are entitled to tax benefits from the tax office.
Benefits from the taxation system help you save money. A tax benefit might be in the form of a deduction or a credit. Any tax regulation that allows you to reduce your tax burden if you meet specific qualifying rules is referred to as a "tax advantage."
Tax incentives are available in both India and the United States. When computing taxable income, interest paid on your student loan is deducted from your gross taxable income.
For all types of student loans, repayment is typically made in equivalent monthly installments (EMIs) over a 15-year term. The repayment period starts after the course ends, plus one year. The repayment period usually starts after the end of the course or six months after. The margin offered for loans is 15% if the loan amount exceeds Rs. 4 lakh.
This is one of the most crucial considerations when taking out a loan. You must always read the loan's terms and conditions thoroughly before proceeding. This point should be taken seriously and is extremely important because you should always be aware of all the loan agreement terms. If you have doubts about anything, seek advice from specialists rather than the bank representative.
Question 1: What types of lenders offer U.S. education loans to Indian students?
Answer: There are mainly four types of lenders that offer education loans for Indian students who want to study in the U.S., namely -
Non-banking financial companies (NBFCs)
Question 2: What expenses are covered in the education loans for the USA?
Answer: Various loan schemes in India cover almost all expenses except your tuition fee. Some costs covered under the study loans are:
Fee payable to the college
Examination, laboratory, library, fee
Books, instruments, etc.
Caution deposit, refundable deposit, building fund, etc.
Insurance premium (if applicable)
Laptop (if required)
Other expenditures like study tours, thesis, etc.
Question 3: What are the top government bank schemes in India that offer education loans to study in the USA?
Answer: Some of the top government bank schemes in India that offer education loans for the U.S. are -
SBI Global Ed-Vantage
Bank of Baroda Scholar
Oriental Bank of Commerce Educational Loan scheme
Question 4: Which are the top private banks in India for education loans to study in the USA?
Answer: A few private banks in India offer education loans to study in the USA. Among them, the leading ones are:
IDFC First Bank
Question 5: Can I apply for an international student loan before acceptance to my school?
Answer: While you can begin the loan application before being accepted to your school, acceptance at the university is mandatory, along with your student visa, to finalize the loan.
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Updated on Dec 12 ,2022
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