Each year, thousands of students from India move to the US to pursue their education since the US boasts half of the top-most universities in the world. But the biggest challenge before the students study in the US is to arrange funds, as the cost of living and studying in a country like the United States can be exorbitant and not affordable for many.
The most common mode of funding resorted to by the students is through scholarships, US education loans, or self-funding. With education costs touching on average 40-50 lakhs in the USA, self-funding is beyond the capability of many, and scholarships being mostly partly funding in nature, opting for an education loan to study in USA became the most prudent way of financing.
You can watch the 17th episode of the LoanFlix series where Ms. Damini Mahajan has explained each and every detail about the US Education loan, find the video below-
When it comes to a US education loan, officials at most banks are unaware of the documents required from students by universities/colleges and the US embassy. As a result of these bank officials' ignorance, an equally huge number of students miss out on golden opportunities to study in the USA.
The last-minute hustle and bustle for these documents unnecessarily put the aspiring students under immense stress. This article aims to give you a clear idea about the USA education loan process, thus helping you save time and avoid unnecessary stress.
Types of Education loans
Starting off with the basics, there are two types of loans you can finance your education in the USA-
- Secured education loans- A secured education loan is one where you need to pledge collateral/assets as a security to get the loan from the lender. And there are two kinds of collateral that are accepted by lenders-
- Immovable assets such as a house, flat, and non-agricultural land.
- Liquid assets such as Fixed Deposits, Term life insurance, and Government bonds.
You can also read this article- "Education Loan on Property" to get a better idea about everything involved with a secured education loan
- Unsecured education loans- These are education loans without collateral. As the name suggests, you don't need to pledge any security to the lender to avail an unsecured education loan, albeit there are certain eligibility criteria set by the lenders and only those who are eligible will get the unsecured education loan.
To know these eligibility criteria, you can go through this article- Eligibility criteria for unsecured education loans
What to check while selecting the education loan?
You should compare the various loan options offered by different banks to study in the USA and choose the one that suits your needs. Compare the loans options on factors such as:
- Loan Limit
- Loan type
- Rate of interest
- Moratorium period
- Processing fee
- Prepayment terms
- Repayment tenure
- Loans in USD Vs INR
- Processing time
- Income tax exemptions
- Loan margin
One thing that is worth mentioning is students already residing in the US and looking for study loans in the USA can also get education loans from Indian lenders. The loan schemes for such NRI students will be the same as for the students here. Read this article to know the few additional requirements for such students to avail the study loan in USA- How to Get an Educational Loan in India For NRI Applicants
Lenders offering US education loan - An overview
As you must have seen from the above table that the Government banks have the best to offer, it is just that they take a lot of time. But when you apply through WeMakeScholars, we can get it done within 15-20 working days by effectively coordinating with the loan sanctioning department of the respective bank.
Phases of getting into US universities
Procedure for applying for an education loan to study in USA
Colleges in the US start their admission in October and you need to select a suitable lender before that. Once you receive your acceptance letter/ offer letter from the university, you can start applying for your US student loans.
While applying for a US education loan, students are expected to have an acceptance letter/ offer letter from any US university. Based on the lender you are going with you either have to visit the banks to submit the loan application form along with the required documents or apply directly online by uploading the document. This documentation process is important for the lenders to verify the student's credibility. Go through this article to know what all documents are required for an education loan by different lenders- Document required by Government banks and Private banks.
If the loan criteria are met and the student deems eligible, the loan is sanctioned. The sanctioned letter can then be sent to the university as proof of funds which is required for an I-20.
The I-20 is an important document required by students to apply for a student visa from the US embassy. Once you show the proof of funds to the university, you get the I-20 from the university. This is to ensure that students have enough funds to complete their studies on their own.
Note: A Student cannot apply for a US Student Visa in absence of an I-20 form, however, having an I-20 does not guarantee that you will be given the student visa. You need to satisfy all the criteria set by the US authorities for getting it.
The problem students may get to face is that many officials at the banks are not aware of the latest policies of their banks regarding US student loans, which causes the officials at those branches to ask students to obtain I-20s earlier for a sanction letter. But the thing is you need a sanction letter to show it as proof of fund for an I-20. To avoid this catch 22, you can approach WeMakeScholars, we will talk to branch officials on your behalf and gets you your sanction letter which you can show as proof of funds for the I-20.
Higher studies in the US promise a bright and enduring career. While you work hard to get into the university of your choice in the US, pay equal attention to picking the lender/an education loan that can make this journey easy for you. Apply through WeMakeScholars by requesting a callback.
Note: WeMakeScholars is an organization funded and supported by the Government of India that focuses on International Education finance. We are associated with 10+ public/Pvt banks/ NBFCs in India and help you get the best abroad education loan matching your profile. As this initiative is under the Digital India campaign, it's free of cost. The organization has vast experience dealing with students going to various abroad education destinations like the US, Canada, UK, Australia, Germany, Sweden, Italy, New Zealand, France among others.