What is education Loan?
Studying in USA is a dream and to fulfill the dream we need loan for it so people opt for education loan. As we know education is expensive, espically if one is aiming for a premium institution or a foreign degree. Education loans have proved to be a big help. Students look for cheaper interest rate. As we know interest rate in USA is Favorable and has proved to be better for international students. The biggest education loan provider in USA is Sallie Mae. It handles the two major types, the Stafford loan and the perkins loan. The major benefit of these loans is that they come with low interest rates and do not require collateral or a credit check. Education loan is also known as student loan. The US universities are tie –ups with many banks and institutes.
Features of education loan:
- Loans are also guaranteed or un-guaranteed.
- Loan repayment tenure is longer in USA.
- Students can start repayment after six months of completing the course.
- They need a guarantor whoever is a green card holder in some cases but if the universities take the stand then the students can take the loan in USA itself.
- The interest rate in USA is 7% compared to Indian bank. Indian bank gives 12.75% to 14.75%.
- In USA before sanctioning the loan bank checks the credit history of the guarantor.
- Students should give priority to scholarships and grants at the top of their list for funding a college education because there is no need of repayment of the loan.
What else can a loan a used for:
A loan can be used for education – related expenses such as tuition, books, fees, insurance and room and board. It can also be used to cover the expenses of travel to and from campus and even food expenses. Some miscellaneous expenses are also included in this loan like child care for dependent children and clothing etc.
Things to know before applying for an education loan in the United States:
- Fixed rate and variable or floating interest rate: If we opt for fixed interest rate a constant interest rate of time and the payment amount will never change during the course of the repayment. Whereas variable interest rate is subject to market risk and hence the interest rate goes up or down over the course of the repayment.
- Immediate or deferred repayment: We can choose either to start repayment of loan immediately after taking it or wait until after the completion of the degree. The interest rate of the education loan varies accordingly.
Thus we came to know that US has been proved to be an excellent investment for both individuals and for the public, even though there is differences in return.