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Getting a student loan in India and US
This article will guide you through different bank policies of taking a student loan in India and USA and will help you in financing your education. Via this article, you will also get to know what is the interest rate of student loans in India and the maximum amount you can get. Also, this article will guide you about the various means of financing education and/or student loans in USA and India.
In India, you can get a student loan from various nationalized banks like SBI and you can borrow up to 4 lakhs without collateral and between 4 lakhs to 20 lakhs with collateral ranging from ordinary guarantees to mortgaging your house. Repayment starts within 6 months of completing the education and lasts up to 5 to 7 years. Standard interest rates for getting student loans in India are 12 to 14% p.a. For private banks in India, you can go ahead with HDFC and you can borrow somewhere around 10 lakhs without collateral and between 10 lakhs to 20 lakhs with collateral. This might seem better, but private banks are kind of tightlipped about interest rates on student loans. You can anticipate anywhere 15% to 17% p.a. and repayment schedule as before; however, for the big names like Harvard Business School and Hopkins Medical Institutions, some of these banks are ready to negotiate the extent of collateral necessary, though none of them are going to openly tell you so. The idea followed by banks is that if you are exiting your program, you are more likely to be employed and earning enough to cough up the EMI.
For US banks, you would need a US citizen co-signer in 99% cases, especially considering they are all going broke, I would say you might as well forget about borrowing money from them. Sallie Mae Student Loans and Citi Student Loans assist for only 2 major US schemes that have lent money to international students without guarantors in the past, but with Citibank and Harvard parting ways, it is tough if not impossible. Also, interest rates in the US are higher than in India. Suppose you took a loan for Hopkins tuition of 48k, then by the end of 5 years, you have paid 120k to the US bank. The loan plus interest pretty much doubles the tuition but of course softens the blow over 5 years.
Finally it also depends on how much can you expect to earn in the yearlong OPT?
Check the 1st bar of the 2nd bar chart:
Assume that you earn at 45k during the opt and for each of the 3 years after that. Then, the rule of thumb is to borrow only up to your minimum expected annual income after your program. Suppose if you were to attempt repayment of a maximum loan over 4 years, you would be down to a PHD student budget (ask any engineer doing an MS/PHD there for how much they earn, that is what you will have to live on basically).
The only two grey areas that need to be explored are whether that 44k during opt still stands in a recession and if it is entirely legal to take 2 zero collateral loans from different banks. I know of a fact that Indian Students doing MBAs at Harvard Business School, Wharton Business School, and Stanford do that regularly but these guys are in the business of finance to begin with.