Education Loan for USA for Indian Students

Updated on 29 August, 2024

Shivangi Mishra

Shivangi Mishra

Sr. Content Editor

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. 

Bank 

Minimum Loan Amount 

Maximum Loan Amount 

Rate of Interest

SBI  Above $9037.01 up to $1,80,740.25

10.65% (for girls)

11.50% (for boys)

UBI Above $9037.01 Up to $1,80,740.25 10.5% - 10.85%

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. 

Bank 

Maximum Loan Amount

Rate of Interest

Axis Bank  Up to $60,276.15 11% - 13.50%
IDFC FIRST Bank Up to $42,193.30 6.50% - 12.25%
ICICI Bank Up to $60,276.15 9.85% - 12.50%
HDFC Credila Up to $78,345.08 11.25% - 13%
Incred Up to $72,318.54 12.25% - 14%
Auxilo Up to $78,345.08 11.25% - 13%
Avanse Up to $90,398.18 9.50% - 13.50%
MPOWER Financing Up to $100,000 

12.99% (for graduate programs)

13.99%

(for undergraduate programs)

Prodigy Finance Up to $100,000  12% - 14.88%

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.  

Bank 

Repayment Tenure (in Years)

SBI 15
UBI 15
Axis Bank  15
IDFC FIRST Bank 12
ICICI Bank 10
HDFC Credila 15
Incred 15 
Auxilo 15 
Avanse 15 
MPOWER Financing 10 
Prodigy Finance 15 

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:

FAQs

Who is eligible for an education loan in the USA?

Students who fulfill the following criteria are eligible for education loans in the USA: 

  • Good academic record
  • Secured admission in professional or technical courses or any job-oriented courses. 
  • Got approval for admission to a recognized university
  • Age should be at least 18 years
  • Should have Indian citizenship (if Indian student)

Which is the best education loan for the USA?

There are many student loans for the USA available today. The best education loan is the one that offers lower interest rates and a longer moratorium period. Some banks that offer the best loans for students opting to study in the USA are SBI, UBI, Axis, IDFC FIRST, Avanse, Prodigy Finance, MPOWER financing, etc. Both public and private banks are good for applying for education loans. Always analyze and compare their rates to get the most appropriate one for yourself as per your admission requirements. 

How much study loan can I get for the USA?

Students can avail of a maximum of $1,80,763.20 education loan or even more at a considerable interest rate ranging between 8.5% to 14%. While calculating how much they need a study loan, one must include the cost of living, health-related expenses, examination, lab, library, and book charges, caution and refundable deposits, laptop or any thesis expenses, and tuition fees along with the basic fee. 

Should I take a loan in India or the USA?

Taking a loan from USA banks can prove to be an issue for the borrower, as the conversion of INR to US dollars may require extra effort, or a lot of confusion will occur. Moreover, you will be required to have US citizenship to apply for the USA education loans. However, you can take scholarships offered by the USA universities to get concessions on your expenses. 

Therefore, it is better to take an education loan in India so that you don’t have any issues with exchange rates or conversion rates. Moreover, many public and private banks offer education loans in the USA for Indian students. To avail of such loans, one should be an Indian citizen and satisfy all the eligibility criteria for loan approval. 

How long will it take to pay off a student loan?

The repayment period for a student loan in the US depends on several factors, including the total loan amount, interest rate, and chosen repayment plan. 

What is the student loan limit for the US?

The student loan limit for Indian students pursuing studies in the USA varies across different banks and loan schemes

What is the education loan interest rate in the USA for international students?

Interest rates on student loans for international students vary. The US Department of Education also offers Direct PLUS education loans. However, most international students may not qualify for this service. Private lenders set their own interest rates, which can be higher. It's important to compare rates from different lenders before choosing an appropriate loan.

Did you find this article helpful?

Shivangi Mishra

Sr. Content Editor

She is an experienced writer and journalist who has extensively covered the education sector in India and Abroad. Now helping Indian aspirants realise their foreign education dream by providing them with relevant content and information through upGrad Abroad. Amateur traveller, loves to read Architectural Digest!

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