How does one accomplish the low cost of study in the USA in 2024?
As the world woke up from the COVID-19 dip, there was a paradigm shift in the global movement of international students to reputed universities in the U.S. and Europe. With Indian students making up sizeable contributions to the same, the United States has come to accommodate around 1.67 Lakh international students from India in 2020 – 2021.
With global indices indicating a substantial hike in these numbers over the following years, 2023 is the right time to plan your overseas study in the United States. In this process, creating an economically compatible study plan is the first task to check.
Student loans and interest rates
It is often seen that students coming from middle-income families struggle to balance their finances while pursuing their overseas education.
Although course programs offer part-time job opportunities to students reaching the U.S., the admission process and getting selected to a good college is daunting for most.
So let’s review some fundamental factors to consider while planning your educational journey.
As growing trends indicate, a student loan is the most celebrated financing option among Indian students taking up Overseas education.
So let’s find out in detail about the things to consider before you plan an overseas education at the lowest cost possible.
Types of Interest Rates
Regarding student education loans for study in USA, the interest rate is the first thing to understand. Interest rate, by definition, is the percentage of principal that the borrower has to pay the lender, along with the actual principal amount.
It is repaid through Equated Monthly repayments. Regarding student loans, interest rates are provided with diverse and attractive options to help students pick up the most suited option for themselves.
Simple Interest Rate
Although Simple Interest Rate is usually calculated for short-term loans, they are also used to determine the sum to be repaid for a student loan during the moratorium period. In usual cases, the Moratorium period extends over the actual course period of the student, after which loan repayment starts.
Compound Interest Rate
Once the moratorium period ends, student loans shift to a compound interest rate.
Fixed Interest Rate
In this arrangement, students must repay their loan amount and a fixed interest sum every time. Mostly, fixed interest rates focus on the course type, student’s previous academic records indicating overall merit, duration of the course, and type of collateral property offered.
Variable Interest Rate
- Commonly called floating rates, variable interest rates are the popular choice in the student loan section.
- Variable interest rates are based on an underlying benchmark that changes with time.
- With favorable market fluctuations, variable interest rate options could lead to the student paying less than initially anticipated.
- SBI, one of the leading loan providers, has a wide range of floating interest rate options starting from 8.25% to up to 11.75%.
- Similarly, major loan providers like HDFC Credelia, IDBI, Indian Bank, and Union Bank have well-established floating interest rate systems for the eager student population.
Annual Percentage Rate
- Since student loan repayments are covered over several years, the annual percentage rate or the amount the student has to pay the lender becomes crucial in choosing the right loan provider.
- Lesser the annual percentage rate, the more attractive the loan option.
- However, it is equally crucial to calculate the actual period of repayment while considering the Annual Percentage Rate.
Discounted Interest Rate
- The discount interest rate is the rate at which a Central bank provides loans to the commercial banks under them.
- In this regard, a decrease in the Discount rate leads to increased credit availability and overall lending activity within the economy.
- So, Discounted Interest rates influence the availability of affordable student loans, especially for Indian students indirectly looking for overseas education.
Prime Interest Rate
- Prime Interest rate, or simply Prime, is the definition of interest rates that commercial banks charge customers with a well-founded credit history.
- According to the credit history, current financial burden, and collateral presented, lenders can add on or reduce the actual interest rate for a specific product.
- Regarding overseas student loans, Prime can be helpful to worthy candidates with a clean credit history to access cheaper loans to achieve the dream of global education.
- According to the credit-worthy nature of a lender, they are charged with a prime rate plus a specific percentage rate.
Choose EduLoans for a better financial understanding of studying in the USA
There are certain technicalities to cover before finding suitable financial lenders to fund your U.S. education. So, you will invariably need a trusted financial consultant to lead your way. At Eduloan, we are always prepared to answer your queries and guide you toward your overseas education dreams. Contact us for more information on the cost of education in the USA.
FAQ’s the low cost of study in the USA in 2024.
1. What challenges do Indian students face in financing their overseas education in the USA?
A. Indian students often struggle with finances while pursuing education abroad, especially from middle-income families. While part-time job opportunities exist, the admission process and securing a spot in a good college can be daunting for most.
2. Why is a student loan a popular financing option for Indian students studying in the USA?
A. A student loan is widely celebrated among Indian students for financing overseas education. It provides a viable solution, especially for those from middle-income families, ensuring they can pursue their educational aspirations in the United States.
3. What are the types of interest rates associated with student loans for studying in the USA?
A. Interest rates play a crucial role in student loans. There are different types, including Simple Interest Rate, Compound Interest Rate, Fixed Interest Rate, Variable Interest Rate, Annual Percentage Rate, Discounted Interest Rate, and Prime Interest Rate. Understanding these options helps students make informed decisions.
4. How does SBI offer variable interest rates for student loans, and what is the range?
A. SBI, a leading loan provider, offers variable interest rates, commonly known as floating rates, ranging from 8.25% to up to 11.75%. These rates are based on an underlying benchmark that changes with time, allowing students to benefit from favorable market fluctuations.
5. Why is the Annual Percentage Rate crucial in choosing the right loan provider for student loans?
A. The Annual Percentage Rate (APR) is a critical factor in choosing a loan provider. A lower APR makes a loan option more attractive. However, it’s essential to consider the actual repayment period while evaluating the APR for student loans.
Navigating the intricacies of financing your education in the USA is a significant step, and at Eduloans, we are here to guide you. As trusted financial consultants, we assist you in understanding the various aspects of studying in the USA. Contact us today for more information and let us help you turn your overseas education dreams into reality.