Tuesday - Sep 18, 2018

Save Money for your family in India, when they come for higher education to USA


Before you get excited, there are some risks and assumptions to make this happen, so make your decisions wisely. You may not be able completely eliminate the need for a bank loan, but you certainly can minimize. If there is a 100% grant available, you do not have to worry about the loans, but grants are not easy to get now a days.

Every year, thousands of Indian students come to USA for higher education. Most of the students get a student loan in India to pay their tuition fees and you are looking at about $25,000 towards tuitions fees and the interest rate can be as high as 15% for loans issued in India.

To give you an idea, you could end up paying a total of approximately $40,000 if you pay back your $25,000 loan in 7 years at 15% interest rate.

You could pay $40K for a $25K loan issued in India.

You could pay a total of $40K for a $25K loan issued in India.

How can you minimize Interest charges? 

Instead of your family member taking loan in India, You could help them out in USA with Credit cards. Credit Cards are great not only for Miles and Points but also for 0% APR interest for some time. It would be wise to choose 0% APR cards to save money for your family if they plan on taking a student loan in India.

Note that, you may not  be able to get a credit limit of $25K in a short span of time even if you apply for multiple credit cards and even if you get a $25K credit, you will only be able to buy 1-2 years of  avoiding the interest charges. Not all universities will accept payments with credit card, even if Credit Cards are accepted there may be a processing fee.

As soon as your family member gets a social security number, get him/her to build the credit history with one of the techniques discussed here. It will take a minimum of 6 months to build any credit history.

Next step is the key to make this a smooth process. If your family member can get a part time job, he/she may be able to get a few entry level credit cards with 0% APR (do not expect a big credit line) and pay the tuition fees or start paying your credit card balances

In tomorrow post, we will provide a summary of resources to get money for 0% or lower APR and strategies to lengthen the duration for lower APR.

Conclusion:

Interest rates are lower in USA, you can leverage that benefit to save money for your family when they come to USA for higher education.

There are some risks involved like impact on credit score as your utilization will likely go up or you may not catch up with the balance before the 0% APR offer ends.

Disclaimer:  Links mentioned in this post do not earn us any commission.

Editorial Note: Opinions, analysis and any calculations shown are authors alone. Information in this post is not reviewed, approved and endorsed by any airlines, frequent flyer programs or financial institutions.

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