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Getting a student loan in India and US

Updated on October 26, 2012

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.

Getting a student loan in US is tough for Indians
Getting a student loan in US is tough for Indians | Source


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:

http://www.payscale.com/research/US/Degree=Master_of_Public_Health_(MPH)/Salary

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.

How to Get Your Student Loan Discharged or Forgiven?

Source

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    • profile image

      adi 

      5 years ago

      Interest rates in US are higher than in India.

      Is it true?

      I dont think so....everyone is saying the opposite.???

      Explain!

    • profile image

      TishaR 

      5 years ago

      http://www.dealsofloan.com/

      its the best personal loan providers in India.

    • profile image

      home loan delhi 

      5 years ago

      My Loan Bazaar is one of the reputed loan provider in india. Get lowest rates on home loans, car loans & personal loans, and apply for a loan online. Get lowest loan rates from SBI, HDFC and others.

      http://www.myloanbazar.com/

    • soni2006 profile imageAUTHOR

      Rajinder Soni 

      6 years ago from New Delhi, India

      Please don't spam here banksindia and myloanbazar.

    • soni2006 profile imageAUTHOR

      Rajinder Soni 

      7 years ago from New Delhi, India

      I wish that my hub serve the purpose of enlightening information seekers for many more years. Thanks Simone for your visit and comment.

    • Simone Smith profile image

      Simone Haruko Smith 

      7 years ago from San Francisco

      This is a GREAT Hub with a great perspective - I appreciate how you have narrowed down the topic, since generic financial guides are a dime a dozen. I've learned quite a few new things from your guide, and hope that it continues to enlighten people for many years to come!

    • soni2006 profile imageAUTHOR

      Rajinder Soni 

      7 years ago from New Delhi, India

      Thank you so much Lilly. I don't know that I will win or not since there are many expert hubbers who have written better than me. I am just a tiny drop in the ocean of knowledge.

    • LillyGrillzit profile image

      Lori J Latimer 

      7 years ago from The River Valley, Arkansas

      This is an excellent Hub, you know your way around finance, that is for sure. This was well put together, and a sure winner. :0)

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