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

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    Arushi Anand

    Study Abroad Expert

    Studying in the United States can be tremendously expensive, especially for international students. Not all students can secure family funds, scholarships and awards to finance their education. In such cases, international student loans are an astounding way to fill the gap and overcome the hurdle of money. However, securing an international loan can be a tricky process if students do not have a thorough knowledge of the application process. 

    As per the statistics, the USA is home to around one million international students coming to study in the world's top universities. In 2019, the top-notch universities of US like Massachusetts Institute of Technology (MIT), Stanford University, Harvard University and the California Institute of Technology (CalTech) dominated the QS World University Rankings, with 157 institutions ranked in total, including 11 in the top 20. Throughout these years, the US has become the face of the world's leading education destination for international students. 

    In this article, we are going to provide all the necessary information about overseas education loans including its related key features such as Interest Rate, Repayment, eligibility criteria and necessary documents required.

    International Student Loans with Cosigner

    Since international students do not have a reliable credit history in the US, most lenders and loan-providing organizations ask students to have a US cosigner. Though there are a few education loan providers who do not ask for a cosigner if the student has a high career potential, attending a well-renowned university or planning to complete the graduation within the next two years, the requirement of an eligible cosigner is extremely necessary.

    Who is a Cosigner?

    In the United States, cosigner refers to a second party who will be legally responsible for the repayment of the loan amount if the borrower is unable to. In other words, the task of a cosigner is to take on a huge obligation of paying back the total amount of the loan plus the interest. Almost all US lenders require international students to provide the details of their cosigners. 

    Also, depending on the background and credit worthiness of a cosigner, the interest rate can fluctuate. Someone with an excellent credit history will get a more favorable interest rate since the risk the lender is undertaking is comparatively less.

    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. 
    • A good cosigner is the one with a stable job and steady income. 
    • Since the cosigner has decided to take the responsibility of paying back the loan amount in case the borrower fails to, he/she must have the affordability to cover the necessary expenses. The income of the cosigner along with his/her total debts (including mortgage, credit card debt and car payments) will be taken into consideration.

    International Student Loans without Cosigner

    International students who are not able to find a cosigner should not be discouraged as there are other options regarding international student loans without cosigners. Students can explore these options of loan providers in the country as well as outside the country.

    Top Education Loans 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 Maximum Rs. 20 lacs More than Rs. 20 lakhs (100% of educational expenses) 10.00 Lacs Without Collateral Security
    Expenses Covered College Fees, Books/Equipment/Instruments/Uniforms, Travel, Examination fee and Cost of a Two-wheeler upto Rs. 50,000/- Tuition fee, living expenses, books, travel, laptops and more Tuition Fee, Accommodation, Related Expenses, Travel, Books, Equipment, Projects Expenses
    Eligibility Criteria Indian Nationals pursuing higher education abroad Indian Residents from 16-35 age Indian Nationals securing admission in recognized institute abroad
    Repayment To be repaid in 15 years Varies To be repaid in 15 years (EMI Option also available)

    Top Education Loans 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 $50,000 As per the requirement
    Maximum Loan Term 10 years 20 years
    Annual Percentage Rate (APR) 8.89% to 14.97% 7.53% to 12.03%
    Eligibility F-1 student visa Students should attend an eligible program and live in an eligible state

    International Student Loans Interest Rates

    When a student secures an international education loan through a lender, he/she is obliged to pay back the principal amount along with an additional amount charged by the lender for the loan. This amount is called interest. The international student loan interest rates depend on many factors such as the amount of the loan, the time period, the creditworthiness of a cosigner, lender’s rate range etc.

    International Student Loans Repayment

    The repayment of the loan amount mainly depends on the loan option chosen by the student. This is an important factor to consider while applying for overseas education loans since most of the students can not work while studying in the United States. 

    Generally, the repayment period ranges from 10-20 years. This can vary depending on the amount of the loan, the larger the loan amount the longer the loan repayment period.

    What do International Student Loans Cover?

    Usually, international education loans cover the total cost of a student’s education abroad. This can vary depending on the institution chosen and the desired program's cost of attendance. Students can easily find a particular university's cost of attendance on its official website. 

    The costs covered by international student loans are described below:-

    • Tuition Fee:- This refers to the main fee of each academic period (Semester, trimester or year).
    • Mandatory Fees:- This involves expenses like student center fees, student activity fees, recreation fees, residence hall activity fees, new student fees, etc. It can differ from university to university.
    • Accommodation:- This expense includes on-campus university housing and the standard price of regular meals. If a student chooses the option of living off-campus, then the costs of rent, utilities and transportation will be considered.
    • Books and Supplies:- An estimated amount of books and supplies needed during the study. Supplies include lab costs, laptop or computer expenses etc.
    • Miscellaneous Expenses:- Expenses of leisure, communication and personal time are also considered.
    • Transportation:- Things like airfare, parking permit, monthly bus/ train pass etc.

    General Eligibility Criteria

    International students should have a thorough understanding of the eligibility criteria and must qualify for the same. Though the specific eligibility rules may vary for different education providers, the basic structure of the eligibility guidelines remains the same:-

    • A student must be an eligible citizen of India.
    • Students applying for international loans must be of age 18 or above.
    • The applicant should have an excellent academic background.
    • Students must have secured admission at a recognized university/ college or an institution. If asked, students must be able to show the relevant documents as proof.

    Documents Required for International Student Loans

    Every applicant needs to provide a set of necessary documents along with the Loan Application Form while applying for any International Student Loan. The list of these documents is given below:-

    Documents for Students (Primary Applicant)

    • 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 
      • Marksheet of Class 10th, 12th, Graduation, PostGraduation as applicable)
      • Certificate copies of CA, ICWA, CPA etc.
    • A copy of a valid passport
    • Proof of Admission ( Letter of Acceptance, Conditional Admission Letter or Offer Letter)
    • Statement of cost of attendance including other expenses as well.
    • Scoresheets of exams mandatory for studying abroad (GRE, GMAT, SAT, ACT, LSAT, TOEFL, IELTS etc)
    • Two recent-passport sized photographs

    Documents for Co-Applicants

    • Proof of Personal Identification (KYC Documents, Aadhar Card, Voter’s ID Card, Valid Passport or PAN Card)
    • Proof of Residence (Driving License, Aadhar 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

    • Minority Caste Certificate issued by the Government of India
    • Documents regarding any disability or illness
    • Extra-curricular Certificates (If applicable) 

    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. In case of any doubt, students are advised to consult with the experts before signing any important documents.