锘� Everything you need to know about Education Loan to Study in USA

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Education Loan to Study in USA

A large number of international students move to the USA for their further education. The biggest challenge they face for studying in the USA is an arrangement for funds. Cost of studying in USA can be huge and everyone cannot afford it. So in this article, we are going to present you with complete information about Education Loan to Study in the USA.

How to get the Education Loan to Study in the USA?

International Students looking forward to studying in the USA with the help of an education loan must start their process at least 7-8 months before their semester begins. They may also choose to start their loan application process with their university admission application. Here are the steps you need to follow for applying for a student loan:

  1. Research about the banks providing international education loans, eligibility, and document requirements.
  2. Calculate how much loan you will require and how much you will finance on your own.
  3. Get an admission letter from the admission office of the respective university in the USA.
  4. You should compare the different loan options provided by the different banks for studying in USA and select the one which suits your needs.
  5. Once you finalize the bank and the loan amount, you should fill out the loan application form.
  6. Submit other documents such as your co-applicant documents, security and collateral documents, co-signer documents, etc.
  7. As soon as the bank approves your loan, it will issue a loan document that includes various elements of the loan.
  8. After signing your loan document, the bank will pay the amount to you in installments or as required by the university.

Now we will present each step in detail. Go through each step thoroughly and take note of the important points, as it is a big decision which will affect your further life.

Research about the banks and loan options

Your process starts with the research of the different banks and loan options. But before you research, there are a few things you have to consider.

Factors to consider for applying for education loan

Before applying for a student loan to study in USA, you should have a clear idea about how much money you will require and how much you are going to pay from your pocket. Other important factors to keep in mind  before applying for an education loan are:

  • Decide the university you want to study in and the course you want to pursue.
  • Calculate the amount you will require to study abroad in USA.
  • Enlist all the documents you will require during the application.
  • Be ready with the guarantor
  • Make sure to apply for the international educational loan before the three months of your student visa interview date.
  • Estimate the time of disbursement.

After considering the above-mentioned factors, check your eligibility for an education loan to Study in USA. Here are the criteria:

Eligibility Criteria to apply for international education loan

Before applying, check whether you are eligible to apply for the loan or not. Different banks follow different eligibility criteria. The common eligibility criteria followed by all the banks are:

  • The applicant should have an outstanding academic record.
  • The applicant must have a confirmed seat at the American university.
  • The applicant must have enrolled in a professional or technical course of studies. Banks usually prefer to give education loans for job-focused courses.
  • The applicant must be above 18 years of age otherwise his or her parents will have to apply for the loan.

Calculate the amount required to study in USA

In the next step, you have to estimate the amount you will require to study abroad in USA. Generally, an education loan to study in USA covers the total cost of a student’s education in the USA. This can vary depending on the chosen institution and study program. While calculating the expenses, consider the following expenses:

  • Tuition Fee:- The university fee for each academic period.
  • Mandatory Fees:- This involves expenses like student center fees, student activity fees, recreation fees, residence hall activity fees, new student fees, etc. It varies with the university you choose.
  • Accommodation:- This expense includes on-campus university housing and the standard price of regular meals. If an international student chooses the option of living off-campus, then the expenses covered will be the rent, utilities, and transportation expenses.
  • Books and Supplies:- You will also have some books and supplies expenses during the study in USA. Supplies include laptop or computer expenses, lab expenses, etc.
  • Transportation:- Things like airfare, parking permit, monthly bus/ train pass, etc.
  • Health Insurance premium for the student, if required.
  • Miscellaneous Expenses:- Expenses of entertainment,  communication, clubs, etc are also considered.

Once you get your final amount, you have to check how much you will be able to pay on your own and how much you will require to take a loan from the bank. 

Letter of acceptance from the university in USA.

You have to get admission to the University of USA. You have to show proof while applying that you are admitted to the American University. There are plenty of universities in USA open for international students. Here are the top universities in USA:

  1. Massachusetts Institute of Technology (MIT) 
  2. Stanford University 
  3. Harvard University 
  4. California Institute of Technology (Caltech)     
  5. University of Chicago 
  6. Princeton University
  7. University of Pennsylvania 
  8. Yale University 
  9. Cornell University 
  10. Columbia University 

Not only the above-mentioned universities, but you also have a spectrum of options in the USA where you can pursue your higher education. You will get full information here: Universities in USA

Comparison of Education loan options

You should compare the different loan options provided by the different banks for studying in USA and select the one which suits your needs. Compare the loans options offered by the different banks on factors such as:

  • Interest rate
  • Expenses covered such as tuition fees, books, travel, etc.
  • Processing Fee
  • Loan margin
  • Income tax exemptions
  • Loan processing time
  • Prepayment terms

Each factor is important, so take your time and come to a conclusion. If you take the decision after careful planning and comparing you can save a few dollars. 

International Education Loan application form.

In the next step, you will legally start the process of applying. After deciding on the bank and loan amount, you have to fill out the application form. It can be online or offline. Make sure to fill correct information in it.

You have to fill in your name, parent's name, address, ID proof, course name, university name, duration of the courses, date of birth, age, Income, Liabilities, employment details, type of security, tuition fees, other expenses, etc. fill all the columns correctly and recheck it before applying.

Submit the documents

Every applicant needs to provide some common and important documents along with the Loan Application Form while applying for an education loan for USA study. The list of these documents required while applying for the loan are listed below:

Documents for Students (Primary Applicant)

  • A copy of a valid passport.
  • Applicant’s latest passport-sized photos
  • Previous Academic Records including Marksheet of Class 10th, 12th, Graduation, PostGraduation and Certificate copies of CA, ICWA, CPA.(as applicable).
  • Identification document of the applicant. For example Aadhar Card, Voter’s ID Card, Valid Passport, or PAN Card.
  • Proof of Residence. For example Driving License, Aadhar Card, Telephone /Electricity bill.
  • Proof of Age. You can present your Birth Certificate as evidence.
  • Proof of Admission at the University of USA. 
  • Statement of cost of attendance.
  • Statement of Other expenses. 
  • Scoresheets of exams are mandatory for studying abroad. For example TOEFL, IELTS, GRE, GMAT, SAT, ACT, etc

Documents for Co-Applicants

  • Proof of Personal Identification 
  • Proof of Residence 
  • Two recent passport-sized photographs.
  • Proof of Income.
  • Bank Documents (Account Statement for the last 6 months, Copy of Bank Passbook)

Other Optional Documents

  • Official Certificate of Minority Caste.
  • Certificates of Extra-curricular activities 
  • Documents regarding any disability or illness

International Education loan agreement

As soon as the bank approves your loan, it will issue a loan document that includes various elements of the loan. It will include the borrower's name, agreed loan amount, the period of repayment, interest rate, the signature of both the parties, collateral security, etc. Read the agreement and then sign it.

Disbursement of Loan Amount

After signing your loan document, the bank will pay the amount to you in installments or as required by the university. It will also be mentioned in your loan agreement. Once you receive your amount, spend on the necessary expenses such as tuition fee, books, supplies, accommodation, etc. Don’t waste your money on non-essential expenses. 

Collateral Rules for Education Loan to Study in USA

What is Collateral?

Any property either movable or immovable, which can be kept as a security in the bank for an education loan is collateral. The interest rate of education loans to study in the USA depends directly on collateral availability. Most of the banks demand collateral as security to reduce the risk involved in paying off the credit.

Instruments used as collateral: 

  • Any liquid asset such as shares, bonds, Fixed Deposit. 
  • Any immovable property such as land, house, commercial property, etc can be used as collateral. 
  • Even gold, mutual fund units, life insurance policy, government securities, debentures, etc can also be accepted as collateral.

How much can be borrowed against collateral?

  • If you want to take the loan by keeping your immovable property as collateral, the representative of the bank will verify your property and prepare a report on whether it can be kept as collateral or not.
  • Additionally, the representative of the bank will also evaluate the value of your property. Depending on this report, the loan amount will be decided by the bank.

Student loans without collateral to study in USA are also provided by some NBFCs at high-interest rates. To get an international private loan, students don’t need collateral but instead, they will need co-signer security. 

International Student Loans with Cosigner

Since international students do not have a reliable credit history in the USA, most lenders and loan-providing organizations ask students to have a USA co-signer.  Let us first know what is the meaning of the consignor.

Who is a Cosigner?

A cosigner is the second party who will be legally responsible for the repayment of the loan amount if the borrower is unable to repay. The task of a cosigner is to take on the huge responsibility of paying back the amount of the loan including the interest. Almost all lenders in the USA require international students to provide the details of their cosigners. 

Guidelines for selecting Cosigner

Based on the cosigner’s background and creditworthiness, the interest rate can differ. Here are a few general guidelines international students should consider:

  • An eligible cosigner must be a US citizen or permanent resident who has lived in the US for at least two years with good background history. 
  • A good cosigner will be one having a stable job and a steady income. 
  • Since the cosigner has taken the responsibility of paying back the loan amount if the borrower fails to, he or she must have the affordability to cover this amount. To confirm it, the income of the cosigner along with his/her total debts will be taken into consideration.

International Student Loans without Cosigner

International students who are unable to find a cosigner should not lose hope as there are other options for international student loans without cosigners. There are a few loan providers for education in USA who do not ask for cosigner security. Students can explore the options of loan providers in the country as well as outside the country.

Repayment of Education Loan to Study in USA

The loan taken to study in USA can be paid in installments. The loan can be repaid within a period of 10 -15 years after taking the loan. The repayment period starts from 4- 12 months after the end of the course. However, the period and installment amount differ with the bank and loan amount.

You should also read these articles:
Admission process to visa: Study in USA
Stay back and Work permit after Study in USA
Top Student Cities and Universities to Study in USA

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