How can Indian students secure an education loan to study in the USA

Guide for Indian students to secure education loans in the USA

Studying in the USA is a dream for many Indian students, but financing this education can be a challenge. Securing an education loan becomes essential with rising tuition fees and living expenses. 

This blog guides you through the process of securing an education loan for studying in the USA, covering essential topics such as types of loans, eligibility criteria, how to apply, and tips for choosing the right loan. Whether you’re just starting your application or comparing lenders, this comprehensive guide will help you take the proper steps toward achieving your educational goals in the USA.

What are the types of education loans for Indian students?

When pursuing higher education in the USA, Indian students typically have two main types of loans to choose from:

  1. Secured loans: These require collateral, such as property, your parent’s house or fixed deposits, and usually offer lower interest rates. Indian banks commonly provide them.
  2. Unsecured loans: These don’t require collateral or a guarantor and have competitive interest rates. They’re available from Indian and international lenders, including specialized institutions like MPOWER Financing.

Where to secure a USA education loan for Indian students

Indian students aiming to study in the USA can secure education loans from either Indian banks or international lenders.

Indian banks

Indian banks offer education loans that can be used to finance studies in the USA. However, not all banks provide loans for international education, and factors like inflation, insurance and currency exchange rates can pose additional challenges. Some of the Indian banks that offer these loans include:

    • HDFC Bank
    • SBI
    • PNB Udaan

(Note: These banks often have strict eligibility criteria.)

International lenders

International lenders are another option for financing your USA education. These loans can cover tuition, living expenses and more, with a streamlined application process and disbursement in U.S. dollars. These education loans may require you to meet typical requirements like a strong credit history, a cosigner or collateral. 

Fortunately, some international lenders, like MPOWER Financing, offer flexible education loans tailored for international students without needing a cosigner or collateral.

MPOWER Financing Student Loan

A loan based on your future earnings

Finding a no-cosigner USA education loan

When searching for a USA education loan, you’ll find that most banks require a cosigner. Eligibility for a no-cosigner loan typically depends on several factors:

    • The school you plan to attend
    • Your program of study
    • Your intended career path
    • Your academic success

What are the eligibility criteria for education loans?

To secure an education loan, an Indian student must meet specific criteria set by international lenders:

    • Academic qualifications: Most lenders require proof of admission from a recognized institution. Academic performance and test scores (like GRE and TOEFL) may also be considered.
    • Cosigner requirements: A creditworthy cosigner, often based in the lender’s country, may be required. Indian banks typically need a guarantor.
    • Financial background: A strong credit score and stable financial history improves your chances, particularly for unsecured loans.
    • Collateral: Secured loans usually require assets like property as collateral.

Start by finding out if you qualify for MPOWER Financing’s no-cosigner, no-collateral loans. Check your eligibility in less than one minute.

How to choose your USA education loan?

It’s wise to do your research and compare multiple lenders to find out which one will give you the best loan and terms. When you’re shopping around, compare loan features such as:

    1. Loan amount: Ensure the loan covers all your educational expenses.
    2. Interest rate: Look for a low interest rate to reduce your overall borrowing cost.
    3. Interest rate type: Decide between a fixed rate, which stays the same or a variable rate, which can change over time.
    4. Repayment period and terms: Understand the repayment period and options available.
    5. Fees: Watch out for application origination or disbursement fees, as they add to your borrowing cost.
    6. Annual percentage rate (APR): Use the APR to compare the true cost of different loans.
    7. Timing and method of funds disbursement: Ensure your loan will arrive in time to pay tuition and find out if it will be disbursed to your financial aid office or directly to you.

Lender comparison for loan application process

 

Lender type Processing time Documentation Interest rates Eligibility criteria
Public sector banks Slow Extensive Competitive Strict
Private sector banks Moderate Streamlined Higher Moderate
Nonbanking Finance Company (NBFCs) Fast Minimal Competitive Relaxed
MPOWER Finance Fast Minimal Competitive Relaxed

How do Indian students apply for a USA education loan?

Applying for an education loan to study in the USA as an Indian student involves several key steps:

Research and compare lenders

    • Research loan options and compare interest rates and repayment terms.
    • Decide between an Indian bank or international lender based on your needs.

Example: A student accepted into a master’s program in the USA might find that a bank offers a low interest rate but requires collateral, while another provider, such as MPOWER Financing, provides a seamless digital process  at a competitive interest rate.

Check eligibility

    • Review eligibility criteria, including academic qualifications and cosigner requirements.
    • Unlike traditional banks, MPOWER Financing assesses students based on future earning potential and doesn’t require a cosigner. Check eligibility in less than one minute.

Gather required documents

Prepare the following:

    • Proof of admission: Confirmation letter from a USA educational institution
    • Academic transcripts: Mark sheets or degree certificates
    • Identity proof: Passport or Aadhaar card
    • Financial documents: Income proof and tax returns
    • Collateral documents (if needed): Property-related papers
    • Cosigner information (if required): Cosigner’s credit history and ID
    • Visa documents: Copy of your student visa or proof of visa application

Submit your application 

    • Submit your application online or in person, depending on the lender.
    • Ensure all information is accurate to avoid delays.

MPOWER’s application process is fully online, with a conditional offer provided instantly.

Loan approval and disbursement 

The lender reviews your application and, if approved, disburses the loan directly to your institution or to you.

MPOWER typically provides a conditional offer instantly, which can be used as proof of funds during the visa process.

Review loan terms carefully

Before accepting, review the terms, including interest rates, repayment schedule and fees.

MPOWER disburses funds directly to your university in alignment with the tuition payment schedule.

Required documents for USA education loan application

Depending on whether a secure or unsecure loan is selected and if the loan provider requires a cosigner or co-borrower, the documents required for a student loan to study in the USA typically include:

Student documents

    • Duly filled loan application form
    • Proof of identity (Adhaar card, PAN card, voter ID, passport)
    • Proof of address (utility bills, rental agreement)
    • Academic documents (mark sheets, degree certificates)
    • Admission letter from a university in the USA
    • I-20 form
    • Standardized test scores (TOEFL, IELTS, GRE, GMAT, etc., as applicable)
    • Financial aid award letter (if any)

Co-applicant documents (usually a parent or guardian)

    • Applicant documents (usually a parent or guardian)
    • Duly filled loan application form
    • Proof of identity (Aadhaar card, PAN card, voter ID, passport)
    • Proof of address (utility bills, rental agreement)
    • Income proof (salary slips, ITR returns)
    • Assets and liabilities statement
    • Credit report

Additional documents (as required)

    • Collateral documents (if applicable)
    • Education loan margin money (if required)

Final thoughts on USA education loans for Indian students

As an Indian student with the goal of studying in the USA, ensuring you have enough funding for your studies and living expenses is essential. For many, taking out an education loan is the only way to afford the cost of attendance. These loans can cover your expenses, helping you bridge the financial gap.

As you explore USA education loans for international students, be sure to consult your school’s financial aid office. Financial aid officers can provide valuable information on student loans, as well as grants and scholarships. Once your funding is secured, you can focus on your studies and make the most of your time in the USA.

For personalized assistance with obtaining an education loan, connect with a representative from MPOWER Financing today.

MPOWER Financing Student Loan

A loan based on your future earnings

FAQs


What are the eligibility criteria for securing an education loan?

Eligibility criteria include academic qualifications and financial background checks; and with some lenders cosigner and collateral requirements.

Do I need a cosigner for an education loan?

It depends on the lender. Some lenders require a cosigner, while others, like MPOWER Financing, offer no-cosigner loans.

Which lenders offer education loans to Indian students?

Indian banks, USA lenders, international organizations and NBFCs offer loans to Indian students with varying requirements like collateral and cosigners.

How does currency fluctuation impact my loan?

Currency exchange rates can affect the amount you need to repay, especially if you take a loan from an Indian bank that disburses in rupees but you must pay your USA education expenses in dollars.

Can I apply for both Indian and USA loans simultaneously?

Yes, certain students opt to combine loans from Indian and International lenders to meet all their financial needs. But careful financial planning is necessary when dealing with multiple loans.

DISCLAIMER – Subject to credit approval, loans are made by Bank of Lake Mills or MPOWER Financing, PBC. Bank of Lake Mills does not have an ownership interest in MPOWER Financing. Neither MPOWER Financing nor Bank of Lake Mills is affiliated with the school you attended or are attending. Bank of Lake Mills is Member FDIC. None of the information contained in this website constitutes a recommendation, solicitation or offer by MPOWER Financing or its affiliates to buy or sell any securities or other financial instruments or other assets or provide any investment advice or service.

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