Loan Options for Studying in the United States

The USA has lots of choices for international postgraduates and is the world’s most preferred study overseas destination. America is one of the largest countries with 50 States and more than 4,500 higher educational colleges (out of which 1,700 offer Master’s degrees). Studying in these universities and colleges requires certain finances that can be easily arranged by taking an education loan for the US.

Education loan options for studying MS in the USA

An education loan is money borrowed to fund education-related costs. Introduced by the SBI in 1995, it is now proposed by most public and private sector banks and some NBFCs. 

An education loan comes with two options – a secured and an unsecured one.

An education loan without collateral is termed an unsecured loan. This means that the student concerned does not have to pledge any possession to get a loan. Many private banks and NBFCs offer such loans.

On the contrary, an education loan with collateral is termed a secured loan. In this, the student has to mortgage a fixed property or asset. This loan has a lower interest rate and a longer repayment tenure.

Process of getting an Education Loan for MS in the USA

• Getting an education loan may seem like a herculean task but it totally depends on certain terms and conditions. 
• Public and private sector banks and NBFCs have their own eligibility criteria followed by an application and approval process. 
• Loan sanction also depends on the institution the course is being pursued at.
• Seeking professional advice from an expert can help in easy approval making education loans for MS in the US more accessible.

Education loan options for MS in the USA without collateral

Education loans without collateral for the USA are offered by various types of banking institutions. Public banks offer educational loans only up to INR 7.5 lakhs without collateral which is insufficient to fund the cost of studying overseas. Private banks and NBFCs can also be considered to avail without collateral education loans to arrange funds for a greater amount. 

Advantages of education loans without collateral:

• Repayment tenure 

• • The maximum repayment duration for educational loans without collateral is 20 years.
  • Private and public banks, the tenure is 10 years. 
  • In case the student wishes to extend the repayment tenure they can get in touch with the lender and request for an extension.
  • Students can avail of a customized loan as well. 

• Processing Time 

• • Private banks take around 5-7 days 
  • NBFCs take 4-5 days. 
  • In the event of delay by the lender, the student can seek the help of the upper management and try to get the loan sanctioned on time.

• Expenses Covered 

• • Private banks cover 85% of the total cost 
  • NBFCs cover 100% of the expenses

• Co-applicant’s Income proof

• • Private banks usually demand co-applicants to show a monthly income greater than 35k. 
  • NBFCs normally require the co-applicant’s monthly income to be greater than 20k. 
  • The exact income requirement may differ as per the loan amount. 
  • As per standard guidelines, in NBFCs, 50% of the income should be enough to bear the interest per month. 
  • As for banks, this number is 65%

Eligibility criteria for education loan for MS in the US

• Citizen of India
• 18 years and above
• Letter of acceptance from university at USA or equivalent

List of documents required for a without collateral educational loan for the USA

All financial institutions providing unsecured loans urge borrowers to submit a standard list of documents. This may vary as per the bank and student’s profile. the main documents include: 

• KYC of both the applicant and co-applicant
• Valid Citizenship and residence proof of the applicant and co-applicant
• Appropriate mark sheets of the applicant
• Academic records of the applicant
• Proof of admission
• Bank account statements of the co-applicant 
• Form 16 and ITR of the co-applicant 
• Structure of fees 

Education loan options for MS in the USA with collateral

Public, Private banks, and NBFCs offer education loans for the US with collateral. Advantages of a loan with collateral include:

• Repayment Period

• • The repayment period for public banks is 15 years
  • Private banks and NBFCs stretch over 20 years and 10 years respectively.

• Processing Time  

• • Public banks usually take 12-15 days to process education loans
  • Private banks take 10-12 days. 
  • For NBFCs, the processing time is 8-10 days.

• Expenses Covered 

• • Public banks cover 90-100% of the total costs. 
  • Private banks cover 85%
  • NBFCs mostly cover 100% of the expenses. 

• Common Reasons for the decline

• • Public and private banks decline applications in case of incomplete collateral documents and poor CIBIL scores. 
  • NBFCs mainly state CIBIL and low income as the reason.

Collaterals accepted as secured education loan

• Tangible Assets including real estate such as land, house, flat, etc.
• Intangible Assets as in liquid securities such as mutual funds, fixed deposits, life insurance policies, government bonds, etc.

Documents required for an educational loan for the USA with collateral

The standard documents which banks commonly require the applicants to submit are:

• KYC of both the applicant and the co-applicant
• Valid Citizenship and residence proof of both
• Related mark sheets of applicant
• Academic records of the applicant
• Proof of admission
• Co-applicant’s bank account statements
• Form 16 and income tax details of the co-applicant
• Property related documents
• Structure of fees

If you are confused, it is best to get assistance from an education loan counsellor like GyanDhan. Choose the education loan smartly and ward off all the hassles of arranging funds for your study in the US!

Guest blog by Gyandhan