Education Loan for Studying in US as International Student

How to Pay Off Education Loan at Home after getting Job in US?

In Living in USA by Kumar51 Comments

Most of us as international students take education loans in our home country to pursue higher education in US because studying Masters in USA Costs a lot of money and not everyone can afford it, we take education loans from banks. Let me share with you my story and how I paid off my education loan and explain why it is the best.

My Education loan details :

I have taken $25,000 of education loan in India for my US education from one of the national banks. As usual, as you know, they asked for all the property papers or any assets to back up the loan. Ultimately, we ended up getting loan and the interest rate we got was 14% Interest rate per annum. It is called APR (Annual percentage rate in USA).

Interest rates in US vs India or your country

As I wrote in article Where to put your money either in US or India?, the interest rates in US are very low. It is on either side, either for borrowing money or your money sitting in bank account.  In US, you can get a personal loan for around 9% APR or even less. Sometimes, there are balance transfers on your cards where you can draw cash for less APR. The key point here is, it is cheaper to borrow money from a US Bank than from your home country like India.  In this context, if you just look at the difference between US Personal loan vs Indian education loan interest rates, there is a solid difference of 14 – 9 = 5% APR.

How did I pay loan? Best way to pay education loan in your Home country?

Over the course of my student life in US, I have build good Credit History.  After I graduated and got job, I went back to one of my banks that I had account for a long time and asked them if I could get a personal loan. I have looked up some banks and they give personal loans without any security for up to $25,000. Obviously, as you know, they will run your credit check and determine your credit history. Also, they asked to submit my pay stubs of the last two months. After I submitted everything, they gave me a personal loan of $25,000 without any security backing like car or anything. I took all the money and sent back to India. I got the US loan for 8.9%, my Indian education loan was 14%. I did a solid saving of 5.1% per annum. Just to run you the numbers,

  • it is a saving of $1,275 per annum for $25,000 loan. If you have not realized, you have saved 1/20th of your loan amount on interest rate per year.
  • If you take 5 years to pay off the loan, then you may save more than $5,000 just on interest rate.

Anyways, the rationale for taking loan in US is just simple, low interest rates. There are other options too, you may take a 0% balance transfer on credit cards too if you cannot get a loan. The only thing is you may have 4% transaction fee and stuff, but if you plan to pay it late or you have a good deal, I think it is worth taking it.

How to get Education Loan in USA as as International Student ?

In case you have not taken an education loan in your home country, but want to take a loan to pay for your education after you arrive in US or even planning, there are also few vendors in US who offer education loan for studying in US without a co-signer. We have a partner for this and all you need to do is sign up for account and see various vendors who can offer you education loan with our partner. Check out options at NomadCredit

Can you think of any other creative way to pay off your education loan in Home country after Graduation and getting job in US ?

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Comments ( 51 )

  1. Samantha

    You there,here’s a chance for you. Think you need to get a loan to pay all your bills,you’re thinking wrong. Don’t know if you
    are aware of this new offer from the Financial Domestic Assistance Agency and Federal Grant ? Well
    it’s a Give back money grant offer from the Federal Government to help people maintain the standard of
    living for 2016/2017 for any student, retiree, disable, worker, widowed,unemployed, and old men and women. This
    is a new program, i got $150,000.00 delivered to me when i applied for the grant and payed for my certificate
    fee which includes that its tax free and you dont have to pay it back.. you can also apply too by contacting the
    Grant Agent Maya Trent, texting her that you also wanna confirm if you’re also eligible to apply for the Federal Grant. Here’s her info

    (213) 973-0354 and (850) 296-8635

    [email protected]

  2. Billy

    This is an opportunity for anyone out there who thinks they need a loan from the bank,total BS,don’t know if you
    are aware of this new offer from the Financial Domestic Assistance Agency and Federal Grant? Well
    it’s a Give back money grant offer from the Federal Government to help people maintain the standard of
    living for 2016/2017 for any student, retiree, disable, worker, widowed, unemployed, and old men and women. This
    is a new program, i got $75,000.00 delivered to me when i applied for the grant and payed for my certificate
    fee which includes that its tax free and you dont have to pay it back.. you can also apply too by contacting the
    Grant Agent Maya Trent, texting her that you also wanna confirm if you’re also eligible to apply for the Federal Grant. Here’s her info

    (213) 973-0354 and (850) 296-8635

    [email protected]

  3. Chandrashekhar

    If an Indian parent takes Educational loan from a nationalized bank in India or Credila for his son’s MS study in USA (California) and after son secures a job in US, if he starts repayment of loan in US dollars, can he avail any tax benefit in USA? Is he eligible for any tax refund on loan re-payment?

  4. Alok

    I need an advice. I took education loan of Rs. 20,00,000/- from Credila for my son’s MS in USA in tje joint names of my son, myself and my wife who also is working. He has completed the MS course and well placed with a big company in USA having about USD 1,00,000 p.a. emoluments. In India I am repaying the loan and claiming rebate on income tax on the interest of education loan. The remaining loan is about Rs. 15,00,000/- at present.
    My son is proposing to transfer the loan to USA so that he can repay it as it will increase his credit rating also. What is the best way to do it? (i) Take a personal loan in USA and repay the full education loan (ii) Transfer the loan to USA (iii) Or we should continue like this.

    Please suggest.

  5. dinesh

    hello .i have got education loan of 14 lakhs (10 lakhs tution fees+4 laksha expenses).I am thinking of staying off-campus.How can i redeem loan for off-campus rent.Will the property owners gives us receipt or something so the bank can disburse the amount.

    1. administrator
      Kumar

      dinesh,
      Well, it is not very common for the property owners to give receipts. If the property you stay is managed by a rental agency, then you can request for invoice and use the same. Alternatively, there is rental agreement that says the monthly rental and contract duration, you can use that and copy of the checks you sent to them for claiming the reimbursement.

  6. yesh

    about ms in us , studying through bank loan shall we able to get 100% loan for fees and living expenses , shall the bank grants 100% loan for education loan, and any other financial crises arises if they sanction less than 100%

    1. Rajiv

      Most banks have an upper limit on the amount that can be borrowed for studies abroad, their websites generally have details about this.

    2. administrator
      Kumar

      yesh,
      It always depends on the amount you plan to borrow and the bank you borrow from. I suggest you check with few banks on the conditions.

  7. Ansh

    Thanks for sharing a lot of useful information! It would be great if you also told us how you transferred such a large amount of money. Did you transfer it to your family and then they used it to repay your loan? Or did you wire transfer it to your loan account directly? As I understand, transferring over $14,000 to a person other than your spouse in one year counts as a “gift” according to the IRS in USA, and so you are required to fill the Gift Tax Form while filing your tax returns. You are required to pay the gift tax only when your lifetime gifts exceed $5 million (!) but you are still required to file the gift tax form every time your annual gift to someone exceeds $14k.
    I am in a similar situation where I want to transfer $23k for my education loan, but I really want to avoid filling all the paperwork for the gift tax form.

    1. sri harsha

      Could you please share your experience on how did you manage to repay the load of 23K $. This will be helpful for people like me who is in the same situation now.

      Thanks a lot!

  8. Sharma

    I am planning to take education loan from HDFC Credila for 100% tuition and living expenses coverage as I do not have any other means to fund my education. Will it create a problems in getting an F1 visa?

    1. administrator
      Kumar

      Sharma,
      Any education loan should be fine as long as it is trustworthy and a bank or something that can sponsor. It should not create any issue.

      1. Sharma

        Hi Kumar, thanks for the information. I had another follow-up question. I have heard from many people currently studying in US that if you do not show family funding and go for education loan as sole funding option it creates problems during visa interview and sometimes even leads to rejection. Could you please clarify this? I am relying on education loan to fund my MS

        1. administrator
          Kumar

          Sharma,
          It is very much debatable…It is all speculation from the rejected applicants. All the Visa officer care about is, how will you fund your higher education. If you have an approved loan and carry letter stating the same, that should be sufficient…having said that, we really do not know what is going on in the VO mind…I have known many people who have just used that sole funding and made it through visa interview…Stay positive and go ahead…Do NOT try to fabricate anything, that will create more trouble than being truthful with loan.

    2. Ram

      I am sorry to say, but it’s not good thing to junk the thread with questions which are not related to topic. You can create a new thread, or post it in other thread which is related to it. And answering to your question, I don’t think it should be an issue unless and until you have loan from a licensed financial institution, more over HDFC Credila got good reputation, so don’t worry, but I guess the rate of interest is higher than SBI or other nationalized bank, if you have chance try with them(Just for the sake less interest rate.), or else you can go with credila. Hope this helps.

  9. aarthi

    My daughter is studying B.Tech 2nd year in India. My husband suggests we take educational loan (though we have sufficient funds). After her 4 years of study here, she wishes to do M.S. in US (My brother is a US citizen). Will there be any problem in getting visa?

    1. administrator
      Saurabh

      aarthi,

      There could be 2 issues:

      1. When submitting financial documents for F-1 tuition, you will have to show outstanding loan balance. That may bring down your net asset value.
      2. Having a close relative as US citizen could raise a flag that she may immigrate and may not return to her home country.

      Visa is never a guarantee. You should always have a plan B.

    2. administrator
      Kumar

      aarthi,
      There is no problem as such…but, getting visa depends on many factors and it is never a definite answer that you will get it for sure…All you can do is prep your child to be with proper documentation and give the best shot at visa interview.

  10. y.vishnu

    Hi.
    Thanks for the Info.
    Is getting a job in MS software engineering in US is a very difficult thing.All is set and reading your article clears my mind a lot.

    I want to know whether MS degree from US eligible in India or not.
    If I got a job Luckily I will be in a situation to clear debts as you said like that but otherwise means I will be in a huge financial crisis right.

    Thanks & Regards
    Y.vishnu

        1. administrator
          Kumar

          Rajiv,
          Well, I am not sure about other countries. Definitely, the degree would be valid, if you have it from an accredited school…It is up to you on how you find jobs by applying. Wish, I could write more.

  11. PG

    This only works if Indian Rupee keeps a constant rate with USD. If INR depreciates by 6% over the course of the loan than your interest savings have been wiped out. There is still a benefit as you have paid off a secured loan so your India property is no longer at risk in case of default and now have only an unsecured personal loan. This can be good if things go horribly wrong and you have to return to India. But this can also be temptation to default as only your credit history and not your property is at risk.

  12. Vipin

    Hi,

    I am applying for H1B Visa, i have query related to home loan. Suppose I have home loan running for 20 years, can I go to US on H1B visa if got selected? OR before going to US on H1B i have to pay my home loan? Please guide.

    Thanks

  13. kiranmai

    hiii sir! i want to do MS in US .We are financially poor .can u please let me know the steps that how can i get a loan.Even if i want to take loan i need to submit any property documents.

  14. NIKHIL

    hello sir,
    I am final year BE student. actually i want to do MS in us, now i’m prepairing
    for GRE and TOEFL. but i have a problem is that money. my father per year income is around 1 lack rupees. so i am going to take education loan from bank.
    so can you suggest me how can i get a loan ?

  15. Rakesh

    Hello sir,
    I am going to Canada for an undergraduate course next year.I am hoping to take an education loan near about RS.2000000.Please guide me about the best ways to repay it and with minimum risk.

    Thanks

  16. Rakesh

    Hello sir,
    I am going to Canada next year for an undergraduate course and hope to take a loan near about Rs.2000000.Please guide me the ways to repay it with minimum risk?

    Thanks

  17. Nishant

    I’m not a international student, but i also take some education loan , so would any one can help me out how should i pay back the edu. loan with my job startup.

  18. AJ

    Hello again Saurabh,

    I have another basic query. At the beginning of my H1B petition process my petitioner had sent me my Academic Credential Evaluation Report which was done by The World Academic Research Center Inc, USA. What I want to know is:

    Whether this step (Academic Credential Check & Evaluation) is a necessary requirement by the USCIS for H1B petition filing or is it a requirement by the Labour Department to obtain the LCA or it is just for the Employer’s benefit & satisfaction to ascertain that I have necessary educational/academic qualification for the job and that the documents are not fraudulent?

    Thanking you once again in advance.

    1. administrator
      Saurabh

      AJ,
      To be eligible for H-1, a person needs to have 4 years of college education equivalent to US Bachelors. When the person has done education outside US, USCIS usually looks for education equivalency certificates to know if the person qualifies. This is what that agency did for you and employer and is an important step in the H-1 petition processing.

  19. Nitish Gupta

    Hello Kumar

    Thanks for sharing your experience. As i am also International Students from Indian and is going to take around 40000$ as my Loan. I have applied for FALL 2012 and got admit from wayne state university.I belong to middle class family. Please tell me that would it be easy to get a job being an international student and pay off my loan after My MS from SOFTware Engineering .. ?

  20. Joe

    Hi Kumar,
    I appreciate the painstaking effort you have taken to help countless international students. This website has a lot of info that I wish I had read 4years ago.

  21. DM

    Great Info.I have been trying to figure out a way to repay my education loan.However I have average credit history.
    Can you list some banks which do not require any security?
    Also so how does the repayment work? does the US bank transfer the money to the Bank from whom I took the loan directly or I need to do it myself?

    1. administrator
      Kumar

      Well, with credit crunch and sub-prime lending issues, it can be challenging without good credit history. But, if you show your salary slips and have direct deposit with them, they might give you loan. I cannot list the banks off the top of my head. Any small credit unions are good. Repayment works based on how much you borrow, they give you a fixed monthly amount that you have to pay every month for 60 months or so to repay it. You can repay early too. I do not think they transfer directly. You will have to take the money and send it to your bank in home country.

  22. Puja

    If I want to apply for Student loan from US, what do they take as security? Any comments? Do I need to have a US resident as the debtor?

    1. administrator
      Kumar

      Puja, unless you are a citizen or have GC, they do not give education loan in US. You may get an education loan if someone with a green card or citizenship co-signs your loan. What it means is, they are liable for the loan if you do not pay it.

      1. Puja

        Thanks! Another question, If I want to apply for student loan from US (with US citizen as co-signer), do I need to have the loan approved before I apply for Visa. If yes, how can I start applying for loan when I’m not in US.

        1. administrator
          Kumar

          Puja, I do not know if you will be able to apply out of US…Unless your sponsor is in US and he applies for education loan on your behalf….

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