Education Loans To Study in USA: A Complete Guide for International Students

Yatin Kumar Study Abroad Content Specialist

Study Abroad Content Specialist

Highlights

Cosigner-Free Loans: International lenders like MPOWER Financing and Prodigy Finance provide loans without a U.S.-based cosigner.
Collateral-Free Options: Indian banks like SBI and HDFC offer loans without collateral for top institutions.
Repayment Terms: Flexible repayment periods range from 5 to 15 years.
Interest Rates: Unsecured loans have higher rates, 2%–5% above secured loans.
Eligibility: Admission to a recognized U.S. university and a strong academic profile are essential.

Studying in the USA is a dream for many Indian students but comes with significant financial challenges. The cost of living and tuition in the USA is among the highest globally, exceeding that of countries like the UK, Australia, and Canada. To address this, many Indian students rely on education loans offered by banks, NBFCs, and international lenders.

Typically, a cosigner is required for most student loans. However, for exceptional applicants, some lenders may waive this requirement or the need for collateral. Education loans are broadly classified into two types:

Secured Loans: Require collateral such as property or fixed deposits.
Unsecured Loans: Do not require collateral but often have higher interest rates.

Also Read: Fully Funded Scholarships for Indian Students in the USA

Table of Content

Types of Education Loans
What do Loans Cover
Eligibility Criteria
Documents Required
FAQs

Types of Education Loans for Abroad University

Education loans for international studies can be categorized into Secured Loans and Unsecured Loans, depending on whether collateral is required. Here’s a comparison:

Feature	Secured Loan	Unsecured Loan
Collateral Requirement	Requires collateral such as immovable property, fixed deposits, or insurance policies.	No collateral is required; approval depends on creditworthiness and co-signers.
Repayment Period	Longer repayment period, offering greater flexibility.	Shorter repayment period.
Interest Rates	Lower rates due to reduced lender risk.	Higher rates, typically 2%–5% above secured loans.
Loan Amounts	Higher loan amounts are usually approved.	Loan amounts may be lower and depend on eligibility.

Key Insight:

Choosing a Loan Type: Students should opt for a secured loan if they can provide collateral, as it offers lower interest rates and longer repayment terms. Unsecured loans are suitable for those without collateral but come with higher rates.

What do International Student Loans Cover?

“How much student loan do you have to apply for?” If this question is bothering you, know that you can easily find a particular university's cost of attendance on its official website. There are education loans to study abroad by the Indian government, covering up to full tuition fees or collateral security. Some of the costs covered by international student loans are described below:

alt tags

Types of Loan Providers

Indian students seeking education loans for studying in the USA can choose from the following types of financial providers:

1. Banks

Key Features:
- Traditional and widely trusted financial institutions.
- Offer both secured and unsecured loans for international studies.
- Interest rates typically range from 9%–13% for education loans.
- Longer repayment periods (up to 15 years) for secured loans.
Examples: State Bank of India (SBI), HDFC Bank, Axis Bank, Bank of Baroda.

Also Check: Best Bank for International Students in USA

2. Non-Banking Financial Companies (NBFCs)

Key Features:
- Provide flexible eligibility criteria and quicker loan approval processes.
- Specialized in education loans with tailored repayment options.
- Interest rates can be slightly higher than banks but with faster processing.
Examples: Avanse, Credila, InCred.
Best For: Students who require quick loan disbursal or do not qualify for traditional bank loans.

3. International Lenders

Key Features:
- Specialize in loans for international students, often without requiring collateral or a cosigner.
- Loans are disbursed in USD, reducing the impact of currency fluctuations.
- Higher interest rates compared to Indian lenders.
Examples: MPOWER Financing, Prodigy Finance.
Cosigner Policies:
- While many international lenders require a U.S.-based cosigner, some, like MPOWER Financing, waive this requirement for eligible students.

Key Insight

Choosing a Lender: Indian banks and NBFCs are ideal for students with a cosigner and collateral in India. International lenders are best suited for those without access to these or attending globally recognized institutions.

Who is a Cosigner?

In the USA, a cosigner refers to a second party who will be legally responsible for the repayment of the loan amount if the borrower is unable to. This is similar to finding a guarantor or sponsor. But, finding a cosigner can be a difficult task. There are a few general guidelines international students should keep in mind during the process:

An eligible cosigner must be a US citizen or permanent resident who has lived in the US for at least two years with a good background history.
Must have a stable job and steady income.
He/she must have the affordability to cover the necessary expenses.
The income of the cosigner along with his/her total debts will be taken into consideration.

Also Read:
How to Get a Co-Signer for a US Student Loan	F1-Visa Financial Requirements	US Visa Application Fees
Required Documents for Applying to US Universities	Cheapest Cities in USA for International Students	Average Salaries in USA

International Student Loans without Cosigner

International students who do not have any cosigner can apply directly at banks, if the requirements match, then they can proceed with the loan application. Banks like HDFC, SBI, etc are some of the biggest student loan providers in India. Stated below are some top education loan providers in India:

Features	SBI Student Loan Scheme	HDFC Bank Education Loan for Foreign Education	Oriental Bank of Commerce Education Loan for Study Abroad
Amount Offered	Loans up to Rs. 20 lacs: NIL Loans above Rs. 20 lacs: Rs. 10,000 (plus taxes)	Covers the entire cost of education with no upper limit with collateral. If you are looking for an unsecured loan HDFC can offer up to Rs 45 Lakhs	Up to Rs.10 lakh
Expenses Covered	College fees, books/equipment/instruments/uniforms, travel, examination fee	Tuition fees, living expenses, books, travel, laptops, and more	Tuition fee, accommodation, related expenses, travel, books, equipment, projects expenses
Eligibility Criteria	A term loan granted to Indian nationals for pursuing higher education in India or abroad where admission has been secured.	Indian residents from 16-35 age	Indian nationals, meritorious students, and admission through entrance or merit-based test
Repayment	To be repaid in 15 years	Get a loan repayment option up to 14 years including the Moratorium Period.	Up to 15 years

There are several US student loans for international study providers. The interest rates might be higher than that of loan providers in India. But the rules and regulations are more relaxed if you apply for student loan to study in USA from a foreign loan provider in USA. The maximum loan terms are also longer than that of Indian loan providers.

Listed below are some of the top education loan providers outside India:

Features	MPower Financing	Prodigy Finance
Overview	A loan without a cosigner, collateral, or credit history	Student loans for international students without a cosigner
Maximum Loan Amount	Fixed-rate loans from US$2,001 to US$100,000 total at competitive interest rates	As per the requirement
Maximum Loan Term	10-year repayment	7 to 20 years
Annual Percentage Rate (APR)	13.72% APR	14.68% APR
Eligibility	F-1 student visa	Students should attend an eligible program and live in an eligible state

International Student Loans Repayment

Generally, the repayment period ranges within 10–20 years. Students have to be very clear about the repayment of student loans in USA for international students. Getting a job and repaying the amount is imperative. But one thing that a student needs to remember is that, the larger the loan amount, the longer the loan repayment period. So before applying for a time schedule for a loan for international students in the USA, be sure that you have a plan of repayment.

Eligibility Criteria for International Student Loans in USA

Most student loans for Indian students in USA are based on a few eligibility criteria. Students have to be aware of these guidelines before applying. Though the specific eligibility rules may vary for different banks and loan providers, some basic eligibility guidelines are listed below:

The student must be a citizen of India.
The applicant should have an excellent academic background.
Students applying for international loans must be of age 18 or above.
Students must have secured admission at recognized colleges or universities in the USA or other institutions.
F1 visa application form
CIBIL score must not be too low
No prior criminal record

Documents Required for International Student Loans in USA

The USA is home to more than 1 million international students coming to study at the world's top universities. Only a handful of international students secure family funds, awards, and scholarships to study in the USA to finance their education. So most have to apply for a study loan for USA. To apply, students have to submit a few important documents. This set of necessary documents along with the Loan Application Form have to be submitted for banks to evaluate a student's loan amount. The list of these documents is given below:

Documents for Students (Primary Applicant)

Whether you are applying for an education loan for masters in US, or for a UG course, you will need to assemble the documents stated below to avoid any chances of getting your loan request rejected. Also remember you have to submit scoresheets of exams to study in the USA like GMAT/GRE/SAT, etc. The documents required for an education loan US are as follows:

Proof of personal identification (Aadhar card, voter’s ID card, valid passport or PAN card)
Proof of residence (Driving license, Aadhar card, telephone/electricity bill)
Age proof (Birth certificate)
Previous academic records including:

Mark sheet of class 10th, 12th, undergraduate degree, and postgraduate degree as applicable)
Certificate copies of CA, ICWA, CPA, etc.

A copy of a valid passport
Proof of admission
Statement of cost of attendance Standardized score certificates (GRE, GMAT, SAT, ACT, LSAT, TOEFL, IELTS, etc.)
Two recent passport-sized photographs.

Also Check: SOP for USA

Documents for Co-Applicants

In many circumstances, a student might have a co-applicant in the same education loan for USA study. In these situations the documents that are needed to be submitted are given below:

Proof of personal identification (KYC documents, Aadhar card, voter’s ID card, valid passport or PAN card)
Proof of residence (Driving license, Aadhaar card, telephone /electricity bill)
Two recent-passport sized photographs
Proof of Income (Salary slips of last 6 months)
Bank documents (Account statement for last 6 months, copy of bank passbook).

Optional Documents

If you want to submit any extra or optional documents for added advantage during your education loan for MS in US application, these are some optional ones you can submit. While opting for international student loans, students must carefully go through the terms and conditions mentioned in the loan agreement before moving ahead with their decisions to study in USA. The list of these documents is as follows:

Minority Caste Certificate issued by the Government of India
Documents regarding any physical or mental disability or chronic illness
Extra-curricular certificates (If applicable)

As an international student, you are eligible to get up to 100% expense coverage through educational loans based on their criteria like good academic score, CIBIL score is alright. It is feasible for students to contact their respective banking agents before applying for a student loan to know more about the terms and conditions and documentation.

FAQs

Ques: Can I get an education loan to study in the USA?

Ans: Many Indian public and private banks, as well as non-banking financial institutions, offer educational loans for studying in the United States. Some require a co-signer, whereas others do not. The co-signer must be a US citizen or permanent resident with a strong credit history. So if you can arrange all these prerequisites, you will be eligible for an education loan to study in the USA.

Ques: Can I get a student loan in the USA?

Ans: Yes, any new applicant at any USA university is eligible to apply for a student loan. The loan value might differ depending on the course and the student's educational background. But if you want to apply for a loan in the US, you just have to ask your educational advisors, and they will guide you through the process.

Ques: How can I study in the USA with a loan?

Ans: To study in the USA with a student loan, you will have to submit the following documents listed below for evaluation. The loan providers will evaluate your documents before sanctioning your loan application:

University offer letter
Estimated cost of study
Loan application form.
Original education certificates/mark sheets.
Documents/Scorecards of qualified exams like IELTS, TOEFL, GMAT, GRE, SAT, etc.
CIBIL score
Financial statement

Ques: Is it better to take a student loan in India or the USA?

Ans: Taking a loan whether from India or abroad is a matter of choice, as a student you can choose to take a loan from anywhere beneficial for you. Banks or other loan providers in India, have interest rates that can be lower than interest rates abroad. The currency conversion part should also come into account here. So, before applying for any loan make sure you read the terms and conditions.

Ques: Can I get a US visa while on an education loan?

Ans: Yes, you are eligible for a US visa even if you apply for an education loan, as once admitted to the university, the student can obtain their visa with a pre-visa disbursement loan. Students receive post-visa disbursement loans after receiving e-visa approval or the actual visa stamping on their passport.