Education Loan for USA: Eligibility, Expenses, Requirements

The biggest challenge one always faces in studying in the USA is securing funding. The cost of living and studying in a country like the USA can be exorbitant, and not everyone can afford it. For this you can consider education loans. Check out about the education loans in USA here.

Arranging for education loans to study in the US is one of the most crucial parts of the whole exercise. Various banks have understood this scenario and resolved the complexity of financing higher education by giving student loans to aspirants to fund their studies.

Multiple rules and regulations need to be followed when you decide to go for an education loan to study in the US. You have to do a lot of paperwork, submit various documents and have to ensure you repay within time as per the interest rates. Once you are aware of these you have to also make a choice of the bank for lending you funds.

There is a step-by-step process to get an education loan to study abroad. In this article, we will inform you about key factors to consider while acquiring a student loan. We will also discuss what documents are required, and how much tuition fees and other expenses a student loan covers.

How to Choose a Bank for Study Loan for USA?

Compare the loans provided by different banks on the following parameters:

• Interest rate
• Different elements of costs it covers (e.g. tuition fee, living expenses, cost of books etc.)
• Processing Fee
• Income tax exemptions
• Loan margin
• Loan processing time
• Prepayment terms

Top Indian Banks to Get Education Loan for USA 2026

Various private and public banks in India offer education loan for USA. These include HDFC Bank, SBI, PNB, Axis and many others. Each of these offer education loans in India at a different interest rate and follow a different repayment tenure. Here are these top Indian banks offering educational loans to study in USA or abroad along with the maximum loan amount, interest rate and repayment tenure below: 

Apart from this, there are more student loan providers in India for study abroad.

Application Process for Education Loan in USA  for Indian Students

The application process for a majority of the US universities starts in October. So, one should always start the procedure of loan evaluation, loan sanction and getting solvency letters which prove as ‘proof of funds' to the universities before this period. Loan disbursement can be done after receiving the confirmation of admission and the i20 form from the university. The loan evaluation can be done before the admission is confirmed. As the whole process is time-consuming, one should always start early with each exercise in order to avoid the last-minute rush. After submitting your applications to the institute, while waiting for the offer letter, do not take a rest and sit back. This is the time to do thorough research on loans offered by various banks.

Factors to Consider Before Applying for US Education Loan

Before applying for a student loan one should always have a clear idea about how much money they require and how much they are going to pay from their own pocket. Other important Factors to keep in mind before applying for an education loan are as follows:

• Finalise the course you want to pursue and the university you want to study in
• Estimate the amount you need to finance the education
• Make a list of documents required
• Identify the guarantor
• Make sure to apply for the loan three months before the visa interview date
• Estimate the time of disbursement 

Documents Required for Securing a Student Loan in USA

While giving a loan, banks also need to verify that you are a genuine student (customer) and you have secured admission in an established university, so, they can assess your capability of repaying the loan. Here’s a list of Documents required for securing a student loan, which the banks usually require to process an education loan.

• An offer letter is given by the university (proof of admission)
• Loan application form (filled)
• The estimated cost of study (as per the I-20 form)
• Original education certificates/mark sheets
• Documents of qualifying exams (GMAT, TOEFL)
• Residential Proof of student and co-borrower
• IT returns of the co-borrower
• PAN card and other identity proofs of the student and the co-borrower
• Proof of income of the co-borrower
• Passport copy
• Details of assets and liabilities of parents/co-obligates/guarantors 

NOTE: The requirement of documents can vary as per the banks’ own rules and regulations, so it is always advised to check the list of the documents required with the respective bank.

Expenses Covered under Study Loan for USA

Always make sure to check apart from the tuition fee what other expenses are covered in your loan scheme. There are various other things which you need to take care. Use an Education Loan Calculator to check how much you would need to to fund education in USA. Nowadays, various loan schemes are available which cover different types of expenses other than the tuition fee. Some of the expenses covered under the loan are:

• Fee payable to college and hostel
• Examination, library, laboratory fee
• Purchase of books, equipment, instruments
• Caution deposit, building fund, refundable deposit
• Travel expenses
• Insurance premium for the student, if applicable
• Purchase of laptop (if required for the course)
• Other expenses like study tours, project work, or thesis

Read: How does the proposal of levying tax collected at source will affect study abroad aspirants?

Things to Remember When Applying for US Education Loans

• Moratorium period: This is the time period during which the borrower need not make any repayment to the bank. This period varies from bank to bank and could last up to some time after completion of the course.
• Loan Margin: Usually, banks do not provide the complete amount i.e. 100 per cent of money needed to fund the education. The majority of the public sector banks issue 90% of the total amount, the remaining 10% has to be arranged by the aspirant himself.   
• Effect of Exchange Rate: Always calculate the amount which you will be receiving at the time of disbursement, as any change in the exchange rate can affect the amount you will be receiving.

Collateral Rules for US Education Loans

What is Collateral? Any property whether movable or immovable, which can be offered to a bank as a security for a loan is collateral. Most Indian banks demand collateral as security in order to reduce the risk involved in paying off the credit.

Types of collateral

Any liquid asset preferably shares, bonds, FD, or any immovable property like the house, any commercial property, or land can be classified as collateral. One important point to keep in mind is that agricultural land is not accepted as collateral. Even mutual fund units, gold, life insurance policy, government securities, shares, bonds, bank deposits, debentures, or bank deposits are also accepted as collateral.

How much can you borrow against collateral?

• If you want to take the loan with your immovable property as collateral, in that case, the bank’s representative will verify your property and prepare a report on whether it can be mortgaged or not.
• Also, the bank’s representative will evaluate your property. Based on this report, the loan amount will be approved.

Role of a Guarantor in US Education Loan

Becoming a guarantor for a loan is a huge responsibility as the guarantor will have a legal obligation to pay in case the borrower defaults on his payment. If the loan amount exceeds INR 4 lacs, then the bank may ask for a guarantee from a third party. If the borrower is not able to repay the loan amount irrespective of the circumstances, in that case, the guarantor holds the liability to repay the complete amount to banks.  

Eligibility Criteria to Apply for Student Loan in USA

The first and foremost thing to consider is whether you are eligible to apply for the loan or not. The general eligibility criteria that are followed by all the banks are:

• The applicant must be an Indian citizen
• The applicant should possess a strong academic record
• The applicant must be seeking admission to a professional or technical course of study. Banks always prefer giving loans for job-oriented courses.
• The applicant must have already secured admission at a foreign university
• The applicant must be above the age of 18 years or his/her parents will have to take the loan

Repayment of Education Loan

Repayment of the student loan is generally paid in equated monthly instalments (EMIs) for a period of 15 years for all categories of loans.

Capability Certificate

Many universities require the students to submit a certificate issued by their banks giving details of the sponsors’ financial capability. It is done in order to ensure that the sponsors are financially capable of meeting the expenses of the student going for studies. Banks issue this capability certificate after reviewing the financial and other supporting documents of the sponsors.

Loans from NBFCs (Non-banking financial companies) to Study in USA

Apart from the nationalised banks, student loans can also be availed from non-banking financial companies/institutions (NBFCs). Non-banking institutions can offer complete tuition fees to students. Borrowers need to provide collateral as security to the banks as the loan amount is generally more than INR 7.5 Lacs. NBFCs also provide non-collateral loans to students. Some of the NBFCs options are:

• HDFC Credila: Credila is part of the renowned HDFC bank and provides loans to Indian students wishing to study abroad. The loans are given at a competitive floating rate of interest and can be repaid within a period of 10 years.
• Avanse: Part of the DHFL group, it is considered one of the most popular non-banking financial institutions in India. Student loans from Avanse cover your tuition fees up to 100% and other expenses. Apart from this, the interest rates are floating and the processing fee can go up to 1 to 2 per cent of the loan amount.     
• International Student Loan Program (ISLP): This program is specially designed for international students who want to study in the US. Through this program, students can borrow amounts as little as $1500 and can extend the repayment period up to 25 years. The loan disbursed under this program covers tuition fees and other expenses.
• Global Student Loan Corporation (GSLC): The GSLC offers loans to international students to pursue their higher studies in the US without the requirement of any co-signer.

Read the agreement carefully (Disclaimer) before accepting your student loan. We always suggest you go through the terms and conditions of the loan carefully and then move ahead with it. This is one factor we really stress, as you should always be clear with all the conditions mentioned in the loan agreement. If you have any doubt regarding anything then always consult the experts apart from the bank representative.

Get in touch with India’s top-rated loan providers and apply for an education loan through Shiksha Study Abroad