Student Loans
for USA

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Note: The education loan information on this page is provided only for the information of the website users, digibank by DBS doesn’t offer this product at the moment.


USA Student Loans

A complete guide on education loans for the US

About international student loans

The United States is known to have some of the world's best colleges like the Massachusetts Institute of Technology (MIT), Stanford University, Harvard University, and several others. The country is a popular study-abroad destination with more than 200,000 student visas issued in November 2019. Universities in the US also encourage student-exchange programmes to strengthen the foundation of a great education.

However, studying in the US is expensive; apart from the tuition fee, you also have to consider hostel or off-campus accommodation and transportation costs. You can always look towards education loans to get the funds you need to pursue the course of your choice.

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Types of student loans

Education loans in USA for Indian students - Types

Several Indian public and private banks and NBFCs provide educational loans for studying in the USA. Some require a co-signer, while others don't. The co-signer has to be a US citizen or permanent resident with a good credit history. If the borrower defaults on the loan or leaves the US, the co-signer is responsible for paying back the loan.

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Types of student loans

Eucation loans in USA for Indian students - Types

Several Indian public and private banks and NBFCs provide educational loans for studying in the USA. Some require a co-signer, while others don't. The co-signer has to be a US citizen or permanent resident with a good credit history. If the borrower defaults on the loan or leaves the US, the co-signer is responsible for paying back the loan.

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Education loan for the USA - Features

Before applying for an education loan to study in the US, here are some of the loan features you must consider -

01. Interest rates

Along with your principal amount, you will have to pay an additional amount as interest on it. Interest rates depend on the loan amount, the lender's interest range, the co-signer's creditworthiness, loan tenure, etc.

02. Repayment

This is an essential factor to consider since you aren't expected to repay the loan while you are studying; however, the loan accumulates simple interest. Most banks permit you to pay the loan back through EMIs over the next 10-20 years. Usually, you have to start repaying the loan after your course is completed. Some banks provide a relaxation period of 6 months after securing a job for repayment. Others wait for up to a year after course completion.

03. Collateral

Most Indian banks demand collateral as security on the loan amount. This could be in the form of movable (shares, bonds, FDs) or immovable property (house, commercial property).

You can apply for a lesser loan amount without collateral. In some cases, your bank may request a third-party guarantee. The guarantor has a legal obligation to repay the loan if the borrowing party defaults on it.

04. Expenses covered

Educational loans cover your tuition fee; however, there are a range of other expenses that are also covered by various loans –

  • Hostel or off-campus accommodation
  • Library, lab fee
  • Study material
  • Miscellaneous expenses

Pro tip – Calculate the amount you have received at the time of disbursement. Any change in exchange rates will impact the amount you receive.

Are you moving to the US for studies? Ensure you have an excellent savings account to manage all your expenses.

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Eligibility

USA student loans - Eligibility

To apply for a student loan, you must fulfil the following criteria –

  1. You must be a citizen of India.
  2. You must be above 18 years of age. If younger, your parents will have to take the loan for you.
  3. You should have secured admission to a recognised university in the US.
  4. You should have an excellent academic record.

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Steps to get a USA student loan

Here are the steps before and after you decide to take an education loan for the USA:

  1. Consider the course and the college you want to choose.
  2. Estimate the amount you will need for your studies in the US.
  3. Identify a person who could stand in as a guarantor.
  4. Apply for a loan at least 3 months before your visa interview date.
  5. Compare bank rates and select the most competitive one.
  6. Fill out the bank's application form.

Along with your loan application form, you will have to provide documents like.

  1. Proof of admission (Letter of acceptance by the university).
  2. Proof of residence of borrower and co-borrower (Aadhar card, telephone/electricity bill).
  3. Proof of identity of borrower and co-borrower (Aadhar card, Voter's ID, PAN card).
  4. Original mark sheets (10th, 12th, graduation, post-graduation, etc.).
  5. IT returns, proof of income of co-borrower.
  6. Documents of qualifying exams (GMAT, TOEFL).
  7. Passport copy.
  8. Details of assets and liabilities of parents/guarantors.
  9. 2 recent passport-size photographs or borrower and co-borrower.

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Conclusion

With student loans, you can fulfil your dreams of studying in the US and building a successful career. The loan helps you bear all your expenses associated with studying abroad, including tuition fees, accommodation expenses, cost of food, travel, and more. Ensure you compare various lenders before choosing the one offering the best ineterst rate on your loan. Once you start earning, you can start repaying the loan and send money to your lender in India.

digibank by DBS provides international remittance services at preferential rates! Download the app to know more.

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Frequently Asked Questions

Who can I choose as my co-borrower?

A co-borrower is a person who accepts responsibility for repaying the loan, along with the borrower. The person you choose as your co-borrower should have a steady income source and a good credit history. You can choose your parents, guardian, or spouse as your co-borrower.

What is a moratorium period?

The moratorium period is the time given by the bank before the repayment tenure starts. Banks usually give between 6 months to a year after the completion of your course for repayment.

Do educational loans have income tax benefits?

Yes. You can get tax benefits on interest paid Under Sec 80E of the Income Tax Act. You can claim tax deductions from when you start paying the interest until you repay it in full or for a maximum period of 8 years, whichever comes first.

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