Education Loans for USA: Get All The Details in One Place

When applying for an education loan to study in the USA, Indian students need to be aware of specific eligibility criteria. While these requirements may vary slightly between different banks and loan providers, some fundamental guidelines for education loans for USA generally include:

1. Citizenship: The student must be a citizen of India.

2. Academic Background: The applicant should have an excellent academic record.

3. Age Requirement: Students applying for an education loan for USA must be 18 years of age or older.

4. Admission Status: Students must have secured admission to recognized colleges or universities in the USA.

5. Visa Application: An F1 visa application form is required.

6. Credit Score: The student's CIBIL score must not be too low.

7. Criminal Record: The student must have no prior criminal record.

These guidelines are essential for securing an education loan for USA.

Several Indian banks offer loan schemes for students seeking education loans for USA. Here are some notable options for education loans for Indian students in the USA:

Indian Public Bankto Provide Education Loans for USA:

Public banks, such as SBI, offer an education loan for studying in the USA of up to INR 1.5 Crore. These loans generally come with favorable terms and lower interest rates compared to private lenders. For those looking for an education loan for MS in the USA, public banks provide competitive options for financing your education.

SBI Global ED-VANTAGE Scheme:

• Maximum Amount: INR 1.5 crore

• Repayment Period: 15 years

• Collateral Requirement: Required

• Repayment Start: 6 months after course completion.

Oriental Bank of Commerce:

• Loan Amount: This depends on the institute's fee structure.

• Benefits: No prepayment penalties and offers insurance coverage.

• Margin: 15% for loan amounts exceeding INR 4 lakhs.

PNB Udaan:

• Repayment Period: 15 years

• Repayment Start: Course end plus a 1-year extension.

• Margin: 15% for loan amounts exceeding INR 4 lakhs.

• Collateral Requirement: Required for loan amounts above INR 7.5 lakhs.

Indian Private Bankto Provide Education Loans for USA:

Private banks also offer education loans for the USA, with options for up to INR 50 Lakh.  These education loans for study in the USA can cover a wide range of expenses, including tuition and living costs. For those interested in a non-collateral education loan for the USA, private banks provide specific solutions that may not require collateral.

HDFC Bank Education Loan for USA:

• Maximum Amount: INR 40 lakhs

• Interest Rate: Nominal

• Benefits: Offers tax benefits and can be sanctioned before admission.

Education loans for USA from NBFCs

In addition to nationalized banks, Non-Banking Financial Companies (NBFCs) also offer education loans for studying in the USA. NBFCs can cover complete tuition fees and provide both collateral and non-collateral education loan for USA options. For those seeking an education loan for MS in USA without collateral, NBFCs offer specialized solutions. Some prominent NBFCs include:

Avanse:

• Coverage: Up to 100% of tuition fees and other expenses.

• Interest Rate: Floating

• Processing Fee: 1-2% of the loan amount

Analyzing these loan options is crucial for securing an education loan for Indian students in the USA, enabling them to achieve their academic goals abroad.

When a student secures an education loan for studying in USA from a lender, they are responsible for repaying the principal amount along with interest. Factors such as the loan amount, repayment period, the creditworthiness of a cosigner, and the lender's rate range all affect the interest rate for an education loan for the USA. This applies to various types of loans, including education loans for MBA in the USA and general education loans for Indian students in the USA.

Calculating EMIs manually for an education loan for USA can be complex and time-consuming. Here is a formula to determine the applicable EMI for an education loan for Indian students in USA:

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 application process for most US universities begins in October, making it crucial for Indian students to start evaluating education loans for USA and securing solvency letters as proof of funds well in advance. Securing an education loan for MBA in USA involves a structured process. 

 Understand Your Eligibility

Before applying, ensure you meet the eligibility criteria for an education loan for USA, including being an Indian citizen, having confirmed admission to a recognized university in the USA, and maintaining a good academic record.

Choose the Right Bank

Major Indian banks offer education loans for USA up to ₹2 Cr. Compare interest rates, loan terms, and benefits for an education loan for Indians in the USA.

Gather Necessary Documents:

• For Students: Admission letter, academic records, entrance exam scores, visa documents, ID proof, and residence proof.

• For Co-applicants: ID proof, residence proof, bank statements, relationship proof, and collateral documents if applicable.

Apply for the Loan:

• Decide between online or in-person application. Submit the completed form and documents. Track your application status using the provided application number.

Wait for the Decision:

• The bank reviews your application. Approval depends on factors like academic performance and the co-signer’s financial status.

Understand Loan Sanction Terms:

• Review the sanction letter for education for USA, detailing the loan amount, interest rates, fees, and repayment terms.

Finalize the Loan:

• Compare approved loan offers, pay the processing fee, and obtain the sanction letter for visa and I-20 purposes.

Wait for Loan Disbursement:

• The loan amount is disbursed closer to your fee payment deadline or departure date, typically per semester.

When applying for an education loan for study in the USA, it's important to submit the correct documents to ensure a smooth approval process. Here’s a summarized list of the required documents for an education loan for USA:

Documents for Students (Primary Applicant)

1. Proof of Identification: Aadhar card, voter’s ID, valid passport, or PAN card.

2. Proof of Residence: Driving license, Aadhar card, or utility bill (telephone/electricity).

3. Proof of Age: Birth certificate.

4. Academic Records: Mark sheets from class 10th, 12th, undergraduate degree, and postgraduate degree (if applicable), and relevant certificates (e.g., CA, ICWA, CPA).

5. Valid Passport Copy

6. Proof of Admission: Acceptance letter from the institution.

7. Statement of Cost of Attendance

8. Standardized Test Scores: GRE, GMAT, SAT, ACT, LSAT, TOEFL, IELTS, etc.

9. Recent Passport-sized Photographs: Two copies.

Documents for Co-Applicants

1. Proof of Identification: KYC documents, Aadhar card, voter’s ID, valid passport, or PAN card.

2. Proof of Residence: Driving license, Aadhar card, or utility bill (telephone/electricity).

3. Recent Passport-sized Photographs: Two copies.

4. Proof of Income: Salary slips for the last 6 months.

5. Bank Documents: Account statement for the last 6 months, copy of bank passbook.

For an education loan for studying in USA, ensure you review all terms and conditions and consult with banking agents to verify that all required documentation is provided.

Taking out an education loan for the USA can offer tax advantages. You may qualify for tax benefits that reduce your taxable income by deducting the interest paid on your loan. This applies to education loans for MS in the USA and other programs, allowing you to save money through tax deductions or credits in both India and the United States.

Under Section 80E of the Income Tax Act, you can claim tax deductions on the interest paid on your education loan for study in the USA. This benefit is available for up to 8 years or until the interest is fully repaid. This tax benefit can make your education loan for USA more manageable financially.

When studying in the USA as an international student, it’s crucial to understand the repayment terms for your education loans for the USA. Typically, the repayment period for education loans for Indian students in the USA ranges from 10 to 20 years. Understanding these terms is essential for managing your education loan for study in the USA effectively.

Public Banks: For education loans for the USA from public banks like SBI, repayment begins six months after completing your course, with a tenure of up to 15 years.

Private Banks: For education loans for MS in the USA without collateral from private banks such as ICICI Bank or Axis Bank, interest payments start immediately after your course ends, with EMIs commencing one month after completion and a tenure of up to 15 years.

When applying for an education loan for USA, it's crucial to thoroughly review the terms and conditions of the loan. Understanding all aspects of the education loan for Indian students in the USA is essential to avoid unexpected issues.

Collateral Rules for US Education Loans

Collateral refers to any movable or immovable property offered to a bank as security for a loan. It helps reduce the risk for lenders. Most Indian banks require collateral for education loan for USA to minimize their risk.

Types of Collateral Accepted:

• Liquid Assets: Shares, bonds, fixed deposits (FDs)

• Immovable Property: House, commercial property, or land (Note: Agricultural land is not accepted)

• Other Acceptable Assets: Mutual fund units, gold, life insurance policies, government securities, debentures, and bank deposits.

Role of a Cosigner in US Education Loans

For an education loan for Indian students in the USA, having a cosigner can be pivotal. A cosigner:

• Enhances Approval Chances: Provides additional security, increasing the likelihood of loan approval, especially for amounts above ₹4 lakh or ₹7.5 lakh.

• Shared Responsibility: Commits to repaying the loan if the primary borrower defaults, impacting their financial reputation and credit score.

• Credit Impact: Their credit score and financial stability are scrutinized during the loan process.

A cosigner’s involvement helps secure and manage an education loan for USA.

Question 1: What types of lenders offer education loans for Indian students in USA?

Answer: There are mainly four types of lenders offering education loans for Indian students in USA, namely -

• Public-Sector Banks: SBI, Bank of Baroda, Bank of India, Union Bank of India, and Bank of Maharashtra.

• Private-Sector Banks: HDFC Bank, ICICI Bank, and Axis Bank.

• Non-Banking Financial Companies (NBFCs): Avanse, Credila, and InCred.

• International Lenders: MPOWER Financing.

Question 2: What expenses are covered in the education loans for USA?

Answer: Education loans for USA often cover a range of expenses beyond tuition fees, including:

• College and hostel fees

• Examination, library, and laboratory fees

• Purchase of books, equipment, and instruments

• Caution deposit, building fund, and refundable deposit

• Travel expenses

• Insurance premium (if applicable)

• Laptop purchase (if required)

• Additional costs like study tours, project work, or thesis.

Question 3: What are the top government bank schemes in India that offer education loans to study in the USA?

Answer: Top government bank schemes in India offering education loans to study in the USA include:

1. SBI Global Ed-Vantage Scheme by State Bank of India.

2. PNB Udaan by Punjab National Bank.

3. Bank of Baroda Education Loan for Study Abroad.

4. Canara Bank Vidya Turant Scheme.

5. Union Bank of India Education Loan.

These schemes cover various expenses such as tuition fees, living costs, travel, and other educational expenses​

Question 4: Which are the top private banks in India for education loans to study in the USA?

Answer: Top private banks in India offering education loans to study in the USA include:

1. HDFC Bank: Offers unsecured loans up to INR 45 lakhs with interest rates ranging from 9.50% to 13.55%​.

2. ICICI Bank: Provides loans up to INR 1 crore with interest rates starting at 10.75% per annum​​.

3. Axis Bank: Offers loans with attractive interest rates and repayment tenures up to 15 years​.

4. IDFC FIRST Bank: Known for competitive interest rates and flexible repayment options​​.

Question 5: Can I apply for an international student loan before acceptance to my school?

Answer: Yes, you can start the application process for an education loan for studying in USA before being accepted to your school. However, to finalize the education loan for USA, you need to have your acceptance letter and student visa. This allows you to start securing financial support early, ensuring that once your acceptance and visa are confirmed, you can complete the loan process smoothly.

Question 6: How to get an education loan for USA?

Answer: To get an education loan for USA, students often need to research different lenders and their loan products, apply with the required documents, and ensure the cosigner meets the eligibility criteria. Understand the loan terms, interest rates, and repayment options before proceeding.

Question 7: Is it better to take a student loan in India or the USA?

Answer: Deciding whether to take an education loan for USA from India or the USA depends on personal preference and financial factors. Indian banks may offer lower interest rates, but consider currency conversion and loan terms. Review all options carefully to choose what's most beneficial for you.