Collateral vs. Non-Collateral Education Loans for MS in the USA: Which is Better?

Table of Contents

1. Collateral Education Loans for MS in the USA
2. Non-Collateral Education Loans for MS in the USA
3. Collateral vs. Non-Collateral Loans for MS in the USA: Interest Rates
4. Repayment Tenure for Collateral vs. Non-Collateral Loans for MS in the USA
5. Pros vs. Cons of Collateral Education Loans for MS in the USA
6. Pros vs. Cons of Non-Collateral Education Loans for MS in the USA
7. Collateral vs Non-Collateral Loans for MS in the USA: Which is Better? 
8. Frequently Asked Questions

Investment in education today is a return for tomorrow. When you have big dreams like MS in the USA, finances should not blur your future goals—apply for an education loan without fear. 

Never think you are not eligible for an education loan. Finding the right one based on your profile is an important task here. You can choose from collateral and non-collateral loan options from diverse lenders. 

An asset backs collateral loans, while non-collateral loans are not. Both loans offer different levels of risk for the borrower and the lender. The loan amount, interest rates, repayment period, and all loan terms differ for both categories. 

Collateral Education Loans for MS in the USA

Collateral education loans are those you borrow with the guarantee of collateral. 70% – 100% of the collateral value is available as the loan amount. A plot, a fixed deposit, a bond, a shop, a building, etc., are accepted collateral for an education loan for an MS in the USA. 

Collateral loans are also known as secured loans. Compared to no-collateral loans, secured loans have lower interest rates. 

Top Collateral Education Loan Options for MS in the USA

Indian public banks are the top patrons of collateral education loans. The interest rates are lower compared to non-collateral education loans. They offer a high amount and repayment plans to suit the student borrower’s interests. 

Lender	Maximum Amount	Interest Rate	Margin Money	Repayment Period
SBI	INR 3 Cr	8.15% onwards	15%	15 years
UBI	No cap	9.00% – 15.00%	15%	15 years
BoB	INR 1.5 Cr	9.45% onwards	15%	10 – 15 years
Axis Bank	No cap	9.35% onwards	15%	15 years
ICICI Bank	INR 3 Cr	9.5% – 14.25%	15%	15 years
IDFC FIRST	INR 1.5 Cr	9.5% onwards	0%	15 years

Non-Collateral Education Loans for MS in the USA

Education loans without collateral security are known as non-collateral loans or unsecured loans. There are two types of non-collateral loans: with a cosigner and without a cosigner. 

With a cosigner: 

1. From Indian Lenders

• A cosigner is required for education loans from banks and NBFCs. 
• Without collateral security, a financially reliable cosigner/ co-applicant is required for a guarantee. 
• The cosigner must submit proof of income and should not have any existing loan dues.
• Your cosigner is your close relative, like your parents or siblings. 
• Other relatives or friends can be your cosigners if they have a high income and the lender agrees with them cosigning for your education loan. 
• For an MS in the USA, the cosigner must have a high income since the cost of study is around USD 20,000 – USD 60,000 or more. 

2. From US Lenders

• US cosigner loans are education loans for your MS offered by lenders in the USA. 
• A US citizen or permanent resident is required to cosign your US education loan. 
• Compared to other lenders, US cosigner education loans cover more universities in the USA. 
• The interest rates usually start at 3.39% APR to 15.00% APR. 
• The origination fee of 4% – 5% is added to the principal loan amount. 

Without a cosigner:

• International lenders like MPOWER Financing and Prodigy Finance offer no-cosigner education loans for MS in the USA. 
• Your MS degree must be from a university in the USA listed by these lenders. 
• An origination fee of 4% – 5% is added to the principal amount repayment. 
• Compared to domestic lenders, the interest rates are high due to the calculation in international currency.

Lender	Maximum Amount	Interest Rate	Margin Money	Repayment Period
Private Banks – AxisICICIIDFC FIRST	INR 50 Lakhs	11.00% – 14.00%	5% – 15%	10 – 20 years
NBFCs – CredilaAvanseAuxiloInCred	INR 30 Lakhs	11.5% – 15.00%	0%	10 years
US Lenders – Sallie MaeAbeUnion FederalEarnest	USD 100,000	3.39% – 15.00%	0%	7 – 20 years
International Lenders – MPOWER FinancingProdigy Finance	USD 220,000	8.33% – 15.00%	0%	10 – 15 years

Collateral vs. Non-Collateral Loans for MS in the USA: Interest Rates

The interest rates for collateral and non-collateral education loans for MS in the USA vary depending on your lender. The following table summarizes the interest rates for different education loan lenders: 

Loan Type	Interest Rates
Collateral Education Loans	8.15% – 15.00%
Non-Collateral Education Loans – Private Banks	11.00% – 14.00%
Non-Collateral Education Loans – NBFCs	11.5% – 15.00%
Non-Collateral Education Loans – US Lenders	3.39% – 15.00%
Non-Collateral Education Loans – International Lenders	8.33% – 15.00%

Repayment Tenure for Collateral vs. Non-Collateral Loans for MS in the USA

Education loan repayment is flexible for MS in the USA. You can choose a convenient repayment plan from the lender’s offerings. 

Loan Type	Repayment Tenure
Collateral Education Loans – SBI, UBI, BoB	15 years
Non-Collateral Education Loans – Axis, ICICI, IDFC FIRST	10 – 20 years
Non-Collateral Education Loans – Credila, Avanse, InCred, Auxilo	10 years
Non-Collateral Education Loans – Sallie Mae, Abe, Union Federal, Earnest	7 – 20 years
Non-Collateral Education Loans – MPOWER Financing, Prodigy Finance	10 – 15 years

Pros vs. Cons of Collateral Education Loans for MS in the USA

Why Collateral Education Loans for MS in the USA? 

• Collateral loans offer the best interest rates. Considering the high cost of MS in the USA, the interest savings will be significant over the repayment period. 
• Lower credit score requirement since collateral guarantee is there. 
• Higher borrowing limits. 
• Collateral loans are easily credible since the lender gets collateral assurance. 
• Collateral loans for MS in the USA offer tax advantages under section 80 E of the Income Tax Act.
• For courses like MS, you can apply for eligible subsidy schemes with collateral loans. 

Cons of Collateral Education Loans for MS in the USA

• Everyone has no high-value collateral. Not all collateral is accepted for education loans. 
• Lenders often have a strict policy for collateral acceptance. 
• The loan amount is based on collateral value, not on your cost of attendance. 
• There will be a margin of 5% – 15%. 
• Collateral documentation is often complex and takes time. 
• There will be a collateral documentation fee.

Pros vs. Cons of Non-Collateral Education Loans for MS in the USA

Benefits of Non-Collateral Education Loans for MS in the USA

• No collateral is required for deserving students. 
• The approval process is easier and faster than collateral education loans. 
• It covers major expenses like tuition fees and living expenses. 
• The margin is often zero for many lenders. 

Cons of Non-Collateral Education Loans for MS in the USA

• Higher interest rates than collateral education loans. Considering the high cost of MS in the USA, the loan debt over the years will be high. 
• Finding an eligible co-signer is often challenging if your parent or sibling doesn’t have a high income. Not all lenders are flexible with external cosigners. 
• The approval policy is often rigid. Your course, university, and financial backups are subject to extreme scrutiny. 

Collateral vs Non-Collateral Loans for MS in the USA: Which is Better? 

The right loan choice for MS in the USA depends on your goals, financial condition, and risk tolerance. Consider both options and weigh the pros and cons of each before making your decision. 

As the MS funding in the USA is a high-ticket involvement, choose your option after consultation and discussions. Check with your friends or seniors for better understanding and personal experiences. 

The best way to make your decision? Connect with Nomad Credit’s counsellor and get complete guidance for free. Our seasoned counselors will evaluate your profile and offer customized, non-biased suggestions. Explore our guidance at zero cost today! 

Frequently Asked Questions

Which collateral or non-collateral loan for MS in the USA is better? 

Choosing between collateral and non-collateral education loans for MS in the USA depends on your financial situation, risk tolerance, and eligibility. After analyzing all the sides, choose your option accordingly. Connect with our counselor to make an informed decision. 

Can you get an education loan for an MS in the USA without collateral? 

You can apply for an education loan for an MS in the USA without collateral. Prominent lenders include private banks, NBFCs, US lenders, and international lenders. Learn more—connect with us today. 

Is a cosigner mandatory for MS education loans in the USA? 

A US cosigner is often a mandatory requirement for study abroad loans in the USA. The cosigner must be either a permanent resident or a US citizen. 

Are education loans from US lenders a good solution? 

US education loans for MS are a good solution. You save the FOREX conversion charges when you borrow from a US lender. Plus, the loan process is comparatively simpler and faster. 

Can international students get a loan for an MS in the USA? 

Yes, international students can apply for an education loan to study for an MS in the USA. However, a cosigner who is a US citizen or permanent resident might be required to guarantee your loan.