For Indian students aspiring to study in the USA, financing education is often the biggest challenge. Thus, many turn to education loans. Yet, myths around collateral-free loans are plenty. These rumors often discourage deserving candidates from exploring their options. The truth is quite different, and understanding these misconceptions can save students from stress and missed opportunities.
In this article, we’ll debunk common myths, highlight the facts, and walk you through the process of securing an Education Loan to study in the USA for Indian Students without collateral.
Myths & Facts Behind Education Loan to Study in the USA Without Collateral for Indian Students
Here are some myths and facts behind education loans to study in the USA without collateral for Indian students:
Myth: Collateral is always required for an education loan.
Fact: Many banks and lenders offer collateral-free loans based on academic merit, admission offers, and future earning potential, especially for amounts up to ₹50-75 lakh for Indian students studying abroad.
Myth: Education loans are only for tuition fees.
Fact: Education loans cover the total cost of attendance, including tuition, living expenses, travel, insurance, and materials, ensuring comprehensive funding for international studies.
Myth: No credit history means no loan approval.
Fact: First-time student borrowers often have no credit history, but lenders evaluate the student’s academic profile and the co-borrower’s income rather than relying solely on credit scores.
Myth: Only prestigious or overseas universities qualify for loans.
Fact: Loans are available for many recognized universities, including non-prestigious institutions, as long as the course and university are approved by the lender.
Myth: Self-funding is better than taking an education loan.
Fact: Education loans provide financial flexibility with moratorium periods and repayment options, avoiding depletion of savings or emergency funds.
Myth: Interest rates for no-collateral loans are the same as secured loans.
Fact: No-collateral loans often have interest rates 2-4% higher than secured loans, reflecting higher risk to the lender.
Myth: Education loans require a co-signer or guarantor.
Fact: Some lenders provide no-cosigner loans based on admission, academic potential, and future income, though these are rarer and usually have stricter eligibility.
Myth: The loan repayment starts immediately after sanction.
Fact: Most education loans have a moratorium period covering the study duration plus 6-12 months after graduation, during which no EMIs are due.
Myth: Collateral means only property can be pledged.
Fact: Collateral can also be fixed deposits, life insurance, government bonds, or equities, but collateral-free options bypass this requirement entirely.
Myth: Education loan processing is slow and complicated.
Fact: Digital lenders like MPOWER and Prodigy offer fast approval processes within days, with paperless applications suitable for studying abroad.
After looking at the myths and facts about education loans to study in the USA without collateral for Indian students, let’s see some steps on how to get education loan for abroad studies without collateral.
Steps to Apply for Education Loan to Study in the USA Without Collateral for Indian Students
Here are some steps students can follow to apply for unsecured loans to study in the USA:
- Step 1: Students should start by looking for education loans without collateral offered by banks and financial institutions
- Step 2: They should compare these schemes based on loan amount, interest rate, eligibility criteria, and more.
- Step 3: Loan applicants should then gather the documents needed for the application
- Step 4: Students should apply for a loan and submit the required documents.
This brings us to the end of the article, where we saw some myths associated with unsecured loans offered by banks in India. We also saw some steps students can use to apply for the loan.
Students who want to know more about loans offered by banks and financial institutions for abroad studies can reach out to abroad education loan experts near them. They can help students find which bank gives education loan without collateral for abroad, so that students can find their ideal loan options. With the right support, students can find their ideal loan for studying abroad.
