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How to Secure an Education Loan in USA 2024? Find Out Now!

Want an easy guide to applying for an education loan in USA in 2024? You’ve come to the right place. This blog is a complete guide to US study loans, their types, etc!

You must be aware of how tuition fees and other expenses come up with a ample price tag in the US. Do you know that an alternate option to fund all these costs is to go for an education loan in USA? That’s how you can easily afford to study in the country. Therefore, instead of dropping your dream career, you could rather move on to achieving it. So, we would advise you to think and research more to figure out the most suitable loan for yourself.

So, to ease this dilemma of finding the best education loan option, we've prepared this one-stop guide. This blog covers everything from the fundamentals of various loan types for the US to the repayment periods of different banks. Stay tuned and enlighten your academic aspirations in America.

Types of Education Loans to Study in the USA

There are considerably 2 types of study loan for USA - secured and unsecured education loans. Let's understand each of them one by one.

Secured Education Loan

  • To grant or approve a secured loan application, you will be required to submit a collateral form of security temporarily.
  • This form of security can be tangible or intangible assets such as residential or commercial property papers, LIC insurance, FDs, and any of your non-agricultural lands.

Unsecured Education Loan

  • In the case of an unsecured US education loan, you don't need any collateral assets to get approval for your loan application.
  • Since there is a high level of risk for lenders, interest rates are typically higher compared to secured loans and not easy to get consent for the loan.
  • Moreover, you will need a third party or co-applicant to get your loan application signed.
  • Meanwhile, the loan approval decision depends on your co-applicant's income and CIBIL score.

To gain more insights on secured and unsecured education loan in USA for Indian students, move on to the upcoming sections!

What Is a Secured Education Loan with Collateral?

Collateral security is a type of asset or property that has to be pledged to a lender as a guarantee to grant an education loan. Here, the assets provide a sense of security to the lender that the borrower will repay the loan amount in the future. Moreover, the moneylender holds the authority to seize your assets and property in case of uncertainty in money settlement or exceeding the repayment tenure.

Let's understand the various collateral types accepted by the lender: 

Different Types of Collateral

You can pledge any of these 3 collateral assets to the money lender for a secured education loan approval. These are - 

  1. Tangible Assets: Any immovable assets come under this category, for instance, separate houses, flats, plots, and any non-agricultural land. 
  2. Intangible Assets: Any movable investments such as documents or papers come under this asset category. Some examples include LIC policies, Fixed Deposits (FD), or bonds of any government schemes. 
  3. Third-party Collateral: In case a borrower doesn't own any collateral, they can submit any of their friend's or relative belongings to the bank or money lender. Meanwhile, the original documents have to be submitted as well.

Some of the points borrowers should note when pledging intangible assets to the lender- 

  • Your pledged FD should belong with the same bank from where you're applying for the loan. Secondly, in the case of an existing FD,
  • you can take a loan straight, or a new FD can be made for the same.
  • Lastly, your LIC policies should have a maturity date to be submitted as collateral assets.

Now, the question that might arise is why secured loans with collateral? So, we've prepared the next section covering attributes of the same!

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Features of Study Loan with Collateral

  • Tangible or intangible assets are required as security to grant an education loan with collateral.
  • This loan type generally offers high credit amounts, up to 1.5 crores, from government banks at lower interest rates (between 7.65% and 9%).
  • The requirement of parental income proof is optional, but having good income digits could be beneficial.
  • A longer repayment period is available compared to unsecured loans.
  • Some banks, including SBI or BOB (Bank of Baroda), don't ask for repayment of loans during the study period. Meanwhile, interest keeps on accumulating.

Thus, let's get detailed insights on banks providing secured collateral-based education loan in USA for Indian students with their interest rates.


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Indian Banks Offering Secured Education Loan for USA

Here's a table below that demonstrates a few banks concerning student loans for studying in the USA:



  • Loan Amount: Up to 20 Lakh
  • Interest Rate: 9.55% - 13.25%
  • Costs Covered: Tuition Fee and Up to 100% of Other Expenses
  • Collateral Options: FDs with HDFC Bank, and Immovable Collateral including Flats, House, Non-agricultural Land, Shops, etc. Documents.
  • Moratorium Period: Depend on Selected Courses
  • Loan Tenure: Up to 15 Years Including Moratorium Period.
  • Processing Fee: Up to 1.5% of the Loan Amount with Applicable Taxes

Axis Bank

  • Loan Amount: Up to 50 Lakh
  • Interest Rate: 9.99% - 10.50%
  • Costs Covered: Tuition Fee and Up to 100% of Other Expenses
  • Collateral Options: FDs with Axis Bank, and Immovable Collateral including Flats, House, Non-agricultural Land, Shops, etc. Documents.
  • Moratorium Period: During Course Period
  • Loan Tenure: Up to 15 Years (Including Course Duration)
  • Processing Fee: Up to 2% of the Loan Amount + GST
State Bank of India
  • Loan Amount: Up to 1.50 Crores.
  • Interest Rate: 10.15% - 11.15% (0.5% Concession on Interest Rates)
  • Costs Covered: Tuition Fee and Up to 100% of Other Expenses
  • Collateral Options: Real Estate Assets Like Houses, Flats and Other Vehicle Assets.
  • Moratorium Period: Course Duration + 6 Months After Completion of the Pursuing Course
  • Loan Tenure: Max. of 15 Years through EMI. (After Moratorium Period)
  • Processing Fee: Rs. 10,000 Per Application + GST (Non-Refundable)
Bank Of Baroda
  • Loan Amount: Up to 1.5 Crore
  • Interest Rate: 9.70% - 11.15% (0.50% Concession For Females)
  • Costs Covered: Tuition Fee + Each Additional Expenses
  • Collateral Options: Property Documents (Land, House, etc.). FDs in the Name of Student. + Collateral must be worth 100% of the Loan Amount. + Future Income Source Must be Provided.
  • Moratorium Period: Course Duration + 12 Months
  • Loan Tenure: 10 - 15 Years
  • Processing Fee: 1% Processing Charge (Max. 10,000) For Loan Above 7.5 Lakhs + GST (Refundable)

Moratorium Period: A specific time period during a loan tenure when the students don't need to make regular loan repayments. Further, let's understand the benefits provided by these banks to get US education loan with collateral security.

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Benefits of Study Loan with Collateral

Taking a secured collateral-based US education loan can offer various benefits compared to an unsecured one. Here are some of them:

  • Lower Interest Rates
  • Longer Repayment Tenure
  • Don't Pay During Moratorium Period
  • Large Loan Amount
  • More Chances of Loan Approval
  • Minimal Processing Fee (Refundable in some Public Banks)
  • Options in Choosing Collateral Assets

Moreover, you should note that the collateral you provide to the lender is at risk if you're unable to repay the loan amount within the tenure. Delaying in payment or defaulting on a secured loan might lead to seizing or selling your asset to recover the outstanding debt.
So, if you're unsure of a US education loan with security, there is another option for an unsecured study loan. You don't need to go anywhere just stay on this blog and scroll a bit since the following section covers the same.

What Is an Education Loan Without Collateral in the USA?

Non-collateral education loans don't require any assets as security since unsecured loans usually range between INR 4 lakh to 7.5 lahks. Thus, they only mandate the signature of a co-applicant, parent, guardian or a third-party guarantee.
Let's understand why to choose an unsecured education loan to study in the USA:

Features of Non-collateral Study Loan

The significant traits and merits of an unsecured education loan are mentioned below:

  • No Collateral Required: Applicants don't need to pledge any assets to lenders, including Property, Jewellery, FDs, etc., to grant the loan.
  • Minimal Documentation Process: Because of the lesser loan amount, the complete process goes very smoothly in the presence of required documents.
  • Flexible Repayments Conditions: In the case of non-collateral loans, students do not need to repay the amount until course completion or till they get a job to cover their expenses.
  • No Processing Charges: With loans up to 7.5 lakhs, no processing fee will be charged by banks.

There is always a negative side to everything. Thus, non-collateral education loans come with some drawbacks as well. Let's go through the following section!

Demerits of Non-Collateral Study Loan

Here are some of the disadvantages of unsecured education loans for the USA:

  • Lesser Loan Amount
  • Public Bank Limitations
  • Higher Interest Rates
  • Shorter Repayment Tenure

Government banks like SBI and BOB don't offer more than 7.5 Lakhs loan amounts without collateral security. On the other hand, there are higher interest charges and generally offer shorter repayment loan periods compared to collateral-based secured education loans.

Meanwhile, let us take you to the next section covering various loan providers, including private, public, NBFCs, and international lenders offering education loan in USA for Indian students. 

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Unsecured Study Loans Offered by Banks and NBFCs to Study in USA

The different lenders that provide study loans without pledging any collateral for the USA are listed below:

  • Indian Public and Private Banks: SBI, UBI, Axis Bank, ICICI Bank, and IDFC First Bank.
  • Indian NBFCs: HDFC Credilla, Avanse, Auxilo, Leap Finance, etc.
  • US Banks and Lenders: Discover, Citizen Bank, Wells Fargo, etc. 

*NBFC: Non-banking Financial Corporation

Thus, the table below provides insight into education loans for study in the USA without collateral.

SBI Bank
  • Loan Amount: Up to 7.5 Lakhs INR
  • Interest Rate: 10.65% - 11.50%
UBI Bank
  • Loan Amount: Up to 40 Lakhs INR
  • Interest Rate: 9.80% - 11.30%
Axis Bank
  • Loan Amount: Up to 50 Lakhs INR
  • Interest Rate: 11.00% - 11.50%
  • Loan Amount: Up to 50 Lakhs INR
  • Interest Rate: 10.85 % - 12.50%
IDFC First Bank
  • Loan Amount: Up to 50 Lakhs INR
  • Interest Rate: 11.50% - 13.25%
HDFC Credilla
  • Loan Amount: Up to 65 Lakhs INR
  • Interest Rate: 11.25% - 13.00%
Avanse Financial Services
  • Loan Amount: Can be Customized
  • Interest Rate: 12.50% - 13.50%
  • Loan Amount: Can be Customized
  • Interest Rate: 12.50% - 13.50%
Leap Finance
  • Loan Amount: 100% Tuition Fee Coverage
  • Interest Rate: 8.25% - 9.85%
MPOWER Financing
  • Loan Amount: Up to 100,000 USD
  • Interest Rate: 12.99% - PG Programs
  • 13.99% - UG Programs
MPOWER Financing
  • Loan Amount: Up to 100,000 USD
  • Interest Rate: 12.00% - 14.00%
Discover, USA
  • Loan Amount: Based on GPA
  • Interest Rate: 2.99% - 13.99%
Wells Fargo, USA
  • Loan Amount: 100% Cost Coverage
  • Interest Rate: 3.21% - 6.76%

So, you must be aware of the lenders providing education loans to study in the USA for Indian students. But how to choose which bank or financial corporation is the most appropriate? The upcoming section elaborates on the same. Check it out!

Points to Note While Applying for a Study Loan in USA

To pick the most suitable bank for an education loan to study in the USA, one must remember certain points. Evaluating and comparing with other banks could help you make an informed decision. See the points below:

  • Coverage of tuition fees, including living expenses, health insurance, visa fees, air tickets, etc.
  • Pre-payment terms of loan
  • Processing Fee (Refundable or Non-refundable)
  • Interest Rate Charged
  • Income Tax Exceptions
  • Loan Margin Cost
  • Loan Processing Time

Check these variables, compare them with several banks, and then decide on which loan you want to apply. So, before moving on to how to apply for education loan to study in the USA, let's understand a few points you have to review before applying for a US student loan.

Factors to Check Before Applying for a US Student Loan

Below are some points that would be helpful for Indian students to review prior to applying for a US study loan: 

  • Figure out which university you want to enrol in with a preferred course.
  • Make points of the tuition fee, accommodation cost, and other expenses.
  • Explore other scholarship opportunities to cut short from overall expenses.
  • Select a suitable lender for your USA education loan.
  • Draft a list of required documents to be attached to the loan application.
    Terms & conditions of the loan, including applicable interest rate, moratorium & repayment period, margin requirement, etc.
  • Let's make headway to the expenses covered by the US education loan for Indian students.

Expenses Covered Under US Education Loan

List of the expenses covered under US student loan:

    1. Complete Tuition Fee as Determined by the College/University.
    2. Living and Hostel Expenses
    3. Examination Fees
    4. Library / Laboratory Fees
    5. Purchase of books / Equipment / Instruments / Uniform
    6. Purchase of Computer / Laptop
    7. Health Insurance
    8. Visa Fees and Air Travel Fares

Further, let's learn more about the eligibility criteria set by the banks for US education loan for Indian students.

Eligibility Requirements for US Education Loan

The eligibility to grant an education loan varies from bank to bank. Generally, nationalized banks have stricter policies compared to NBFCs since they offer loans with lower interest.

Let us learn some usual eligibility criteria to apply for a US education loan:

  • Must keep all the collateral security papers ready at the time of applying for the education loan.
  • Confirmation of acceptance from an American institute for a full-time study program.
  • Must have a rich academic history. Since, you might be asked to attach a copy of your mark sheets with the loan application.
  • Borrower and co-applicant must be an Indian citizen.
  • Co-applicant must have an Indian bank account with cheque facilities.
  • Age should not be less than 18 years of the student.
  • In some cases, the bank would ask for pay slips if you hold professional experience.

Let's go through the papers required to process the US study loan.

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Documents Required for the US Education Loan

Every bank to grants an education loan demands various paperwork and documents for a smooth and successful operation. Then, they verify every detail and start processing the education loan to study in the USA. 

Loan Application Form Fully Completed and Signed
Loan Application Form
  • Applicant 
  • Co-applicant
Photo IDs
  • Permanent Account Number (PAN) Card
  • Passport
  • Driving License
  • Aadhar Card
  • Voter’s ID Card
Residence Proof
  • Passport
  • Driving License
  • Aadhar Card
  • Voter’s ID Card
Academic Documents and Mark sheets of Students
  • 12th Exam Mark sheet
  • Any College level Education, e.g. BE, B.Com, etc.
  • Mark sheets of any Entrance Exam, e.g. CAT, CET, etc.
  • GRE / GMAT / TOEFL / IELTS / SAT / PTE Scores (If Applicable)
  • Scholarship Documents (If Applied)
Proof of Admission in US University
  • Printed Admission Letter from a Recognized American Institution on its Letterhead with University’s Address

Bank Statements of Co-applicant

  • Last 8 Months Bank Statements
  • If more than 1 Bank Account, Provide Copies of All.
Income Proof of Co-applicant
  • A. In Case of Salary Account
  • Latest 3 Salary Slips
  • Last 2 Year’s Form 16 from Employer / Last 2 Year’s Filed ITRs
  • Any Other Income Proofs.
  • B. In Case of Business / Self-employed Account
  • Last 2 Year’s Filed ITRs
  • Last 2 Year’s Certified Financial Statements Duly Certified By Chartered Accountant.
  • Proof of Owned Office (Utility Bill, Lease Deed, Title Deed, etc.)
If Collateral Asset (Flat, House, Non-agriculture Land)
  • Property Title Deed
  • 7 / 12 Extracts If Showing Land Documents
  • Original Registration Receipt
  • Allotment Letter by Municipal Corporation
  • Previous Chain of Sale Deed Establishing Title
  • Latest Property Tax Along with Receipts
  • Approved and Valid Building Plan 

With all the knowledge, let's move on to the steps of how to get education loan to study in the USA.

Steps to Apply for a USA Education Loan

Before applying for an education loan, the applicant must be aware of the overall amount required to cover tuition fees and other expenditures. Finalize the course and the institution accordingly to make a final estimation. Moreover, make sure to apply for the loan 3 months before the scheduled visa interview date. 

Let's understand how to get study loans for USA from these steps:

  1. Initially, choose a suitable university intake and begin the loan application process before the commencement of classes.
  2. Secondly, analyze various lenders, banks, and other financial companies based on their loan amount, interest rate, repayment periods, etc. and finalize one.
  3. Submit the important documents to start the process.
  4. Then, after receiving a conditional offer letter from the bank/lender, use it as your "source of funds".
  5. Next, submit this letter to your university, visa/immigration office, etc. to get approvals.
  6. Show all of the documents to the bank and sign the legal loan agreement document.
  7. Finally, wait until you receive the loan amount.

Hopefully, we've answered everything here, in case you've more questions, feel free to keep in touch with financial experts at Gradding.com. 

In conclusion, receiving a education loan in USA from a bank or lender is not the end of the procedure. After leaving the country, students have to achieve good grades and maintain their scores throughout the course. Besides, taking a loan from a trusted financial corporation is necessary and it requires a lot of research. New to this? No need to worry, taking assistance from experienced counselors will get quick approval on educational loans.