Scholarships vs Loans for Studying in the USA: Which is Better?
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In this article
- Benefits of Scholarships to Study in the USA
- Benefits of Education Loans to Study in the USA
- Top Scholarships to Study in the USA
- Top Education Loan Options to Study in the USA
- Eligibility: Scholarships vs Education Loans
- Application Process for Scholarships vs Education Loans
- Which is Better – Scholarships or Education Loans for the USA?
- Frequently Asked Questions
When it comes to funding your education in the USA, the best advice is to apply for as much aid as possible. It would be better to cover all possible scholarships for the USA and grants offered to help US study aspirants.
Along with scholarships, consider education loan options for one particular reason: the acceptance rate of fellowships for the USA can be extremely narrow. Education loans to study in the USA have a lenient eligibility criteria than most scholarships.
Let’s walk through the comparison of top scholarships for international students in the USA and education loan options.
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Benefits of Scholarships to Study in the USA
Scholarships in the USA for international students are offered by the US government, universities, and various organizations. The top benefits of US scholarships include the following:
- Financial support for the tuition and living costs
- Get access to top universities in the USA
- A standout opportunity for your academic life and career
- Opportunities to be part of scholar communities and events
- Encouragement to focus on academics
“An investment in knowledge pays the best interest.” – Benjamin Franklin
Benefits of Education Loans to Study in the USA
Education Loans help students study abroad, without economic worries. You are eligible to take an education loan with several lenders collateral or uncollateralized, and receive a loose scheme on the basis of your profile. The best advantages of education loan opportunities to study in the USA consist of:
- Get up to 80% – 100% funding, covering your academic and living expenses
- Build a strong credit history as you repay the loan debt early
- A wider range of courses and universities are supported
- Better approval chances compared to scholarships
Top Scholarships to Study in the USA
Every year, the US government, as well as various universities and organizations, offers merit-based and need-based scholarships for students in the USA. The number of scholarships provided varies every year, depending on funding availability and the total number of applicants.
| Scholarship | Offered By | Amount/ Benefit |
| Fulbright-Nehru Master’s Fellowship | US government | 100% of the tuition, living, and travel expenses |
| National Overseas Scholarship | Indian government | 100% of the tuition, living, and travel expenses |
| AAUW International Fellowship | Foundations/ Organizations | $20,000 stipend |
| Aga Khan Foundation Scholarship | Foundations/ Organizations | 50% coverage of the tuition & living expenses |
| Narotam Sekhsaria Foundation Scholarship | Foundations/ Organizations | Interest-free loan to cover your expenses abroad |
| Inlaks Shivdasani Foundation Scholarships | Foundations/ Organizations | Up to $100,000 |
| Generation Google Scholarship (APAC) | Foundations/ Organizations | $2,500 |
| The Gates Millennium Scholars Program | Foundations/ Organizations | Tuition fee + mentorship programs |
| Hertz Foundation Graduate Fellowships | Foundations/ Organizations | $34,000 – $40,000 stipend |
| Arizona State University Graduate College Enrichment Fellowship | University | $24,600 Stipend |
| University of Cincinnati International Outreach Scholarships | University | $5,000 – $15,000 |
| Northeastern University Scholarships | University | $10,000 to $28,000 |
| Texas A & M University International Student Scholarships | University | Up to $3000 |
| The University of Texas at Dallas Scholarships | University | Up to $2500 |
| Stevens Institute of Technology Provost Master’s Scholarship | University | Up to 100% of the tuition fee |
| Harvard University Graduate Scholarships | University | Up to 100% of the tuition fee |
Top Education Loan Options to Study in the USA
Top education loan options for studying in the US are offered by Indian banks and NBFCs, international lenders, and US banks. Education loan interest rate in the USA is often affordable to international students with a part-time job. The eligibility and loan conditions vary, according to the type of loan you choose and your profile.
| Lender Type | Sample Lenders | Maximum Amount | USA Education Loan Interest Rate | Repayment Period |
| Indian Public Banks | SBI, UBI, BoB, Canara Bank, PNB | INR 1.5 Cr | 9.00% – 11.00% | 15 years |
| Indian Private Banks | Axis, ICICI, IDBI FIRST | INR 50 Lakhs | 10.00% – 13.00% | 15 years |
| Indian NBFCs | Credila, Auxilo, Avanse, InCred | INR 40 Lakhs | 11.00% – 14.00% | 10 years |
| International Lenders | MPOWER Financing, Prodigy Finance | USD 100,000 | 8.33% onwards | 7 – 20 years |
| US Banks | Sallie Mae, Abe, Union Federal, Earnest | USD 100,000 | 3.24% onwards | 7 – 15 years |
USA education loan interest rate:
- 3.24% onwards for US lenders
- 8.33% onwards for international lenders
- 9.00% – 14.00% for Indian banks & NBFCs
Check Your Top Funding Options in the USA
Eligibility: Scholarships vs Education Loans
For scholarships:
The exact requirements may vary from scholarship to scholarship. In general, the following criteria are followed:
- Secure admission to a US university
- Be academically brilliant
- Show extracurricular achievements and leadership potential
- Craft a top scholarship essay
- Demonstrate financial need
For education loans:
Education loan eligibility requirements are set by each lender, based on the loan type you apply for. Generally, the following criteria must be met:
- Secure admission to a US university supported by the lender
- Have a cosigner with a high CIBIL score
- No past loan dues
- Indian citizenship, for education loans from Indian banks and NBFCs
- Submit collateral documents for Secured loan options
Note: For no cosigner loan options, you don’t require a cosigner. Your university and course, and CIBIL score matter here.
Application Process for Scholarships vs Education Loans
The application process for scholarships and education loans to study in the USA starts with researching the right options. Both applications are online. Many scholarship applications are automatically done when your admission is processed.
Application process for scholarships in the USA
- Research your scholarship options by visiting university websites, networking with friends and peers, and checking news articles.
- Check your eligibility. It includes your academic scores, the university and course you have selected, and your financial status.
- Prepare the documents required for the application. The right documentation is an important step in the process.
- Complete your application before the deadline. Don’t wait for the last minute.
- Prepare for the interview round. Be confident and clear about why you need the particular scholarship in the USA.
Application process for education loans to study in the USA
- Identify which education loan type is suitable for you. There are education loan options with or without collateral and without a cosigner.
- Research your education loan lenders. Search among top lenders like Indian banks and NBFCs, international lenders, and US banks.
- Prepare the loan documents. Obtain a checklist of documents in advance, tailored to the type of loan you are applying for.
- Apply online and wait for the lender’s decision. Once your application is approved, you will get confirmation from the lender.
Which is Better – Scholarships or Education Loans for the USA?
Based on our detailed comparison of scholarships and education loans to study in the USA, here are our key findings:
- For scholarships, no repayments are required. However, it can be extremely challenging to win a scholarship, as the competition is intense.
- Education loan repayment comes with accrued interest rates. But you have better chances of getting a loan to study in the USA than a scholarship.
- Scholarships primarily benefit individuals with high academic scores, while education loan options are available for those with a score of 60% or above.
- Many scholarship applications are automatically processed at the time of admission. For education loans, you need to apply separately.
- It is possible to apply for an education loan even if you win a scholarship in the USA. This approach will save more for your education funding.
In short, scholarships and education loan options are great funding choices for your US study. Scholarship funding is not available to all due to high competition and the limited number of scholarships offered each year. For education loan options, your academic and financial profiles are evaluated.
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Frequently Asked Questions
Can I apply for both scholarships and education loans to study in the USA?
Yes, many students combine scholarships and education loans. Scholarships help reduce your overall financial burden, while loans cover remaining expenses like living costs, travel, or tuition not covered by the scholarship.
Can you get a 100% education loan to study in the USA?
Education loans for the USA typically cover between 70% and 100% of your academic and living expenses. The percentage of loan coverage depends on your educational and financial profile strength and can vary with the lenders you choose.
Do students with average academic scores get scholarships in the USA?
Getting a merit-based scholarship with an average academic score can be extremely hard. But yes, there are need-based scholarship options for deserving students. They should be from lower to mid-level-income families.
Is a cosigner or collateral mandatory for an education loan?
For most loan options, a cosigner is required in Indian or the USA, even for no-collateral loan options. There are numerous no-collateral loan options available from banks and NBFCs. An exception here is no collateral, no cosigner education loan options, offered by international lenders.
Which option is better in the long term, a scholarship or a loan to study in the USA?
It depends on your personal choice and situation to decide between scholarships and education loan options for the USA. Scholarships don’t require repayment, whereas education loans require repayment. However, getting a scholarship is not easy. For education loans, you can choose a repayment plan that spans from one-time repayment 5 to 20 years.
Snigdha Mathur
Updated on September 3, 2025
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