How To Refinance Your Indian Student Loan in the U.S.

Updated on April 10, 2024

At a Glance

  • Student Loan Refinancing involves replacing your existing Indian student loan with a new loan from a US lender, typically offering better terms such as a lower interest rate or shorter term.
  • Benefits include lower monthly payments, lower interest rates, shorter loan terms, personalized service, and the possibility to release a cosigner.
  • Important considerations when choosing a lender include interest savings, repayment assistance plans, forbearance policies, hidden charges, US presence, and customer service.
  • The process involves finding suitable options, examining eligibility criteria, analyzing all options, and submitting the application for approval.

Higher education in the U.S. can be very expensive for Indian students, due to limited financial aid and the ever-increasing cost of education. With as many as 1.86 lakh Indian students, most Indian students rely on student loans from their home country to meet educational expenses in the US.

But most Indian student loans are expensive–at a very high rate of interest, as even though you have high potential, you are considered high risk due to the uncertainty of finding a stable job after you finish your studies abroad. Also, most Indian banks may require a collateral in such a case.

Therefore, it makes sense for you to refinance your Indian Student Loan in the US, once you graduate and start working full time. As, now that you have a stable income every month you are at a much lower risk of default, which is why you are eligible for better terms at a lower interest rate.

What is Student Loan Refinancing?

Student Loan Refinancing means paying off your existing Indian student loan with a new loan from another lender in the US, at new terms- usually at a lower interest rate or shorter term, considering your income and credit score.

There are many benefits to refinancing your student loans. Read on to learn about some of the best.

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Top 5 Benefits of Student Loan Refinancing

There are many benefits to refinancing student loans. Below we discuss the Top 5 benefits.

Lower Monthly Payments

Refinancing your student loan lowers your monthly loan repayment installment, by letting you extend your repayment period or by lowering your interest rate. Most refinancing loans give you the option of a flexible term at affordable interest rates.

Lower Interest Rates

By refinancing your student loans you can negotiate a lower rate of interest on your loan, depending on your financial situation and your credit standing. In some cases, adding a co-signer may allow you to lower your interest rate. This reduces the amount of your monthly payments and saves you money over the long term.

Shorter Loan Term

Now that you have a steady job, you may be comfortable paying a little extra towards the repayment of your loan, allowing you to shorten the term of your loan. It can save you a considerable amount of money in interest payments. Most student loan refinance programs levy zero prepayment penalty, making it an attractive choice for those who can afford early repayment.

Personalized Service

Having to pay your Indian student loan from the US can be challenging, due to lack of communication, which can often lead to misunderstandings. Most lending companies in the US have education loan officers specializing in their domain of service, they can guide you to negotiate better terms and conditions for your refinancing student loan.

Release your existing cosigner

Refinancing your student loan may allow you to release your cosigner from existing student loan in India. Your co-signer will be relieved as he can improve his credit score and gain access to new lines of credit now.

If you think student loan refinancing is the option for you, read below to learn about the important considerations to keep in mind when choosing a lender.

6 Important Considerations When Choosing a Lender

Some of the major considerations involved in choosing an Indian Bank for refinancing student loan in the U.S. are:

Savings in Interest

Choose a bank that offers competitive benefits in terms of savings in interest with the new loan. The whole purpose of refinancing is to ease your financial burden by opting for a new loan at better terms, so it’s of prime importance to quantify and compare your financial benefits.

Repayment Assistance Plans

Choose a lender that helps you manage your money through a variety of options, including multiple repayment options like graduated repayment, deferred repayment, consolidated repayment plans. Such flexibility can make your life easy and convenient.

Forbearance (Hardship) Policy

Some banks will be willing to lower or defer your loan payments for a time if you run into trouble repaying your loan. Choose a lender with a flexible forbearance policy, as having such a policy can really prove helpful when the going gets tough. A saving grace for the mayday.

Hidden Charges

Many lenders, including Indian Banks, levy unnecessary charges on a loan, such as an origination fee, prepayment penalty, etc. Find out in advance about these hidden charges. The objective is to save as much money as possible by minimizing the cost of the loan.

The number of branches in the U.S.

Now, it is really important for the Indian Bank you are considering to have a presence in the United States of America. For any future contingency, it is important to be able to discuss and negotiate the terms and conditions of your new refinancing loan.

Customer Service

The last thing you need is a bank who puts you on hold when you call. Choose a bank with student-friendly services like toll-free telephone numbers and a helpful staff that answers your questions and provides guidance when you call. Look for banks that offer 24/7 service through the Internet.

With these considerations in mind, you’ll be ready to choose a the right lender to help your refinance your Indian student loans in the U.S. Below, discuss how that process works.

Top 3 Personal Loans for Student Loan Refinancing

When it comes to student loan refinancing, there are many lenders that offer competitive interest rates, loan terms, and minimum credit score requirements. In this section, we’ll discuss our picks for the stand out refinancing lenders. Here are our top picks for student loan refinancing:

  1. Credible (Best for Options)
  2. RefiJet (Best for Lower Credit Scores)
  3. LendingClub (Best for Higher Credit Scores)

Read on to learn more about each of these refinancing lenders!

1. Credible (Best for Options)

Our top pick is Credible, a marketplace for personal loans ranging from $600 to $200,000. With a range of lenders and terms that cater to your needs, Credible offers flexibility for financing loans of diverse amounts. With APRs starting from 4.6% to 35.99%, Credible presents an potentially fantastic option for potential borrowers in terms of rates. Because Credible is a marketplace, there is no blanket minimum credit score borrowers will have to meet — minimum credit scores will depend on the lender, but the good new is you have options.

>> Check your rates with Credible

2. RefiJet (Best for Lower Credit Scores)

Notable for its diverse lending offerings, RefiJet comes in the second spot on our list. It’s an ideal choice for individuals keen on comparing offers from various lenders. With interest rates ranging from 3.39% and 22.00%, there’s a good chance to nab an attractive rate for your refinancing loan. RefiJet offers refinancing for loans of $5,000 to $100,000. Furthermore, with a minimum credit score of 550, RefiJet is an accessible alternative for those whose credit might not be perfect.

>> Check your rates with RefiJet

3. LendingClub (Best for Higher Credit Scores)

Closing out our list is LendingClub, a strong pick for those with strong credit scores. They offer a attractive range of interest rates, from 4.99% to 24.99%. With loan offerings between $4,000 and $55,000, LendingClub caters specifically to those looking to refinance more modest college debt. To be considered for a refinance loan with LendingClub, a more elevated minimum credit score of 660 is essential.

>> Check your rates with LendingClub

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Conclusion

Refinancing your Indian student loan in the US can be a tough call due to lack of government support and limited borrowing options, but it is most certainly worth the effort as it can save you a substantial amount of money in the long term. Not to mention the inconvenience of having to send money across seven continents for a long time.

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Frank Gogol

I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.

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