Understanding student loan costs for Indian students studying abroad

For Indian students planning to study abroad, understanding the cost of international student loans is a crucial step in planning their educational journey. With the rising number of Indian students choosing to study in the U.S. and Canada, student loans have become a vital lifeline, enabling them to pursue higher education and broaden their horizons.

These loans are designed to cover various expenses that Indian students face abroad, from tuition fees and accommodations to textbooks and other living expenses.

The cost of student loans for Indian students is more than just the initial amount you borrow, known as the principal. It also includes the interest that accumulates over the life of the loan. Interest is the primary cost of borrowing money, and it can significantly increase the total amount you end up repaying through the life of the loan. Additionally, there may be fees associated with the student loan, such as origination fees, insurance or late payment fees. As an Indian student, it’s also important to consider INR-USD exchange rates, which could affect the total cost of your loan.

Recent data highlights the significant financial investment Indian students typically face when pursuing studies abroad:

• Average cost of a master’s degree in the U.S.:According to the Education Data Initiative, as of November 2024, the cost of a master’s degree typically ranges between US$44,640 (INR 3,716,000) and US$71,140 (INR 5,945,000), depending on the school, major and program length. On average, the cost is around US$62,820 (INR 5,291,000). Source: Education Data Initiative – Average Cost of a Master’s Degree
• Median living expenses in popular student cities: According to The Times of India, certain U.S. cities offer affordable education and living costs for Indian students. Pittsburgh, Pennsylvania, has an average annual tuition of INR 13,45,000, with living expenses ranging from INR 90,000 to INR 1.6 lakh per month. Baltimore, Maryland, is another budget-friendly option, with tuition costs averaging INR 17,00,543 per year and living expenses between INR 85,000 and INR 1.5 lakh per month.Source: The Times of India – 5 U.S. Cities Where Indian Students Can Study Without Breaking the Bank

Note: Approximate exchange rate used is US$1 = INR 83; actual rates may vary.

For Indian students seeking education abroad, an international student loan from MPOWER Financing offers an easy and affordable way to finance education costs independently. MPOWER loans are particularly beneficial for Indian students as they don’t require a cosigner or collateral – a common challenge with traditional Indian bank loans. This means you can obtain the funding you need for your degree on your own and avoid putting any of your family’s assets at risk. From start to finish, the MPOWER loan process is fully digital, making it convenient for Indian applicants to apply from anywhere in India.

MPOWER offers loans ranging from US$2,001 (INR 1.66 lakhs) to US$100,000 (INR 83.2 lakhs) with fixed and competitive interest rates. Student loans come with a stable, fixed rate starting as low as 9.99% (11.16% APR). Our lowest rate includes a 0.25% auto pay discount.

Those eligible for an MPOWER student loan are:

• Graduate students about to begin a one-year or two-year program
• An undergraduate or graduate student within two years of graduating
• An international student, DACA recipient, U.S. citizen, refugee or asylum-seeker
• Admitted to or attending one of our 500+ eligible schools in the U.S. or Canada

Navigating the world of student loans can be daunting, especially for Indian students studying in unfamiliar territories like the U.S. or Canada. Traditional Indian banks often require extensive collateral or a cosigner, making it difficult for students to secure the necessary funds for their education.

When considering a private international student loan, it’s essential to understand the real cost. This includes the principal amount, the interest rate, applicable fees (application and insurance) and the loan term, which combined are expressed as the annual percentage rate (APR). An APR provides a useful “apples-to-apples” metric of total loan costs, expressed as an annual percentage, that can be compared across available loan products and providers.

The interest rate is the primary cost of borrowing money and is either fixed or variable. A fixed-rate student loan remains the same throughout the life of the loan, providing predictable monthly payments and a hedge against inflation. A variable rate, on the other hand, changes based on market conditions, meaning your repayments could increase or decrease over time. Most of the indexed rates on which these loans are based have risen more than 5% over the last few years.

The loan term is the time you have to repay the loan. While a longer term might mean smaller monthly payments, it also means you’ll pay more in interest over the life of the loan. Conversely, a shorter term means larger monthly payments but less interest paid overall.

Another factor to consider for Indian students is the impact of currency exchange rates. Since you’ll be repaying your loan in U.S. dollars while potentially earning in INR after graduation, fluctuations in exchange rates could affect the total amount you repay. MPOWER’s loans are in U.S. dollars, so the INR’s relative strength against the U.S. dollar is a key factor in exchange rates.

Understanding these factors can help you make an informed decision about the cost of student loans and ensure you’re prepared for the true cost of borrowing.