Home > News >  Banks Providing Education Loan to Study in the USA. Learn More.

Banks Providing Education Loan to Study in the USA. Learn More.

Risha Sinha Risha Sinha
Content Curator

Banks Providing Education Loan to Study in the USA. Learn More.

Studying Abroad has become the most suitable option for many students in India nowadays. As per a report of the Reserve Bank of India, spending on tuition and hostel fees by Indians studying overseas has gone up by 44% from $1.9 billion in 2013-14 to $2.8 billion in 2017-18. This shows the rising trends for studying abroad. Among all the nations abroad, the United States has always been the top international destination for Indian students. The number of Indians studying in the US makes up around 17% of all the overseas students studying in the country.  

However, the biggest challenge that is faced while applying for study in the USA is the way to arrange funds. The living expenses, as well as the cost of tuition being high in the USA, make it difficult for students to afford to study over there. But in order to fulfill your aspiration to study abroad, you need a way out. So, banks are here to help us in arranging loans for our study abroad dream.

Let’s go through the complete guide to Education Loan for the USA:

1. Compare the Lenders and Apply for Loan 

Generally, the application process for a majority of US universities starts in the month of October. In order to avoid the hustle at the last moment start as early as possible. Determine the loan amount that will be required to cover all your expenses and be ready with all the necessary documents like:

  • Application form for the loan
  • Proof of Admission, i.e. Offer letter given by the university 
  • I-20 form for the estimated cost of study
  • Original mark-sheets and certificates
  • Qualifying Exams documents ( GMAT, GRE, TOEFL)
  • Address proof of student and co-borrower
  • IT returns filed by co-borrower
  • Identity proofs like PAN Card, Aadhar Card, etc.
  • Income proof of co-borrower
  • Copy of Passport
  • Asset and liability details of parents/guarantors/co-obligates.

The documents may vary according to the bank. You can refer to the bank for the complete list of documents. 

Start looking for a bank that is ready to give you an education loan and compare different banks on the basis of the following described criteria:

  • Interest rate
  • Processing Fee of the application
  • Processing Time of Loan
  • Conditions for prepayment
  • Expenses that will be covered
  • Income tax exemptions
  • Loan margin

Some of the different bank schemes are:

After receiving the I-20 form from the university, the loan will be disbursed to you from the bank. The I-20 form will contain all the necessary details like university code, address, department details, course duration, fee details, living expenditure, and SEVIS (Student and Exchange Visitor Information System) number. 

2. Some of the Important Things that Need to be Considered while Applying for a Loan  


Collateral is a property offered to the bank as a security. Any liquid asset preferably shares, bonds, FD or any immovable property like the house, any commercial property or land can be classified as collateral. Agricultural land will not be considered as collateral. 
First of all, you need to decide whether you want to take an education loan with collateral or without collateral. 

Loan Amount with Collateral Loan Amount without Collateral 
More than INR 7.5 LakhsUp to INR 7.5 Lakhs

To know more about collateral click here.

Role of Guarantor

 If a loan amount exceeds INR 4 Lakhs then the bank will ask for a guarantee by a third party. A guarantor will have a legal obligation to pay in case the borrower defaults on his payment. 

Eligibility Criteria 

The general eligibility criteria that are followed by all the banks are described below:

  • The applicant should be an Indian Citizen.
  • Banks generally give loans for job oriented courses. So, the applicant must be seeking admission to some professional or technical course.
  • The applicant’s age must be above 18 years and he/she should possess a strong academic record.
  • The applicant must have secured admission in the university of his/her choice. 

 To know about other important terms related to education loanclick here. 

3. Repayment of Loan 

Generally, the repayment of loan starts after the moratorium period (EMI holiday) or when the person has secured a job. The interest charged during the study period is simple interest while the interest charged after this is compound interest. 

You can do the repayment via 3 modes:

  • Simple Interest: During the study period, the student can continue paying a simple interest.  Hence, Simple Interest doesn’t keep on adding to the Principal amount and thus, the EMI is only the Principal amount+ Compound Interest.
  • EMI (Equated Monthly Installment): If the student has not paid any amount during the study period, the payments are made EMIs and the Compound Interest is charged on the Principal amount+ Simple Interest.
  • Partial simple interest: In this case, the borrower pays only a portion of the simple interest and the remaining interest keeps on adding to the principal amount. Hence, the compound interest is ultimately charged on the principal amount as well as the remaining simple interest.

So, even if the cost of study in the USA is high we can still fulfill our dream to study there with the help of an Education Loan.