When people talk about the market for university education in the US, the word "market" is not an exaggeration at all. Applicants engage in thoughtful "shopping" of university programs: they do not just compare schools by level of prestige, but actively travel to campuses, talk to recruiters, sit in on lectures, study the "menu" of courses and professors' biographies. At the same time, university recruiters conduct a counter "shopping" of applicants: they try to lure promising athletes into sports teams with scholarships, and future science stars into laboratories. To succeed in this market, an applicant must understand why, exactly, the university needs him.
Any American university is a charitable corporation whose status and well-being are determined by the size of its trust fund. The larger this fund, the more opportunities the university has to subsidize scientific programs, invite celebrities to give lectures, award scholarships to impoverished geniuses, and buy athletes for its sports teams. The fund, in turn, largely consists of alumni donations, so universities seek to attract not so much straight-A students as people with high career growth potential. This is why special attention is paid to the applicant's social life during admission - universities do not need desk-bound "nerds" unless they have the makings of future Nobel laureates. Athletes are important because successful university teams stimulate alumni pride in their alma mater, prompting them to loosen their purse strings.
Of course, the described scheme of relations between an applicant and a university is superficial to the point of indecency. What matters is this: an applicant raised in the classical traditions of the native domestic school, that is, aimed primarily at excellent grades and solid knowledge, must "reformat" his approach when submitting documents to an American university. Become a bit of a conspiracy theorist: do not ask why yet another idiotic question is in the university application, but think about what cunning purpose this question serves, and answer accordingly. The more successfully an applicant answers the application, the more prestigious universities he will get into and the greater his chances of receiving a scholarship.
Divide and Apply
American universities can be classified in several ways. There are accredited and non-accredited universities. Non-accredited universities should not exist for you at all: they are an explosive mixture of the "Universal Academy of Paranormal Psychology" and a lady selling diplomas in a subway passage. All well-known universities, of course, are accredited, although since there is no federal accreditation system, there is also no single authoritative body with the right of final decision. The right to accredit often belongs to individual state governments, professional associations, and independent commissions. The federal Department of Education, in turn, accredits the accreditors, and its list is on the Internet. The federal government cannot forbid just anyone from calling themselves a university - it simply will not give students of a "fly-by-night outfit" a university loan.
Next, we should distinguish state universities and private universities. At state universities, tuition for residents of that state is about four times lower than for everyone else. Note - for state residents, not for all Americans. So, for example, at Penn State in Pennsylvania, a student from Boston and a student from Nairobi will still pay commercial rates, not much different from those at private universities. In the absence of a residency registration system, the concept of resident/non-resident is determined by the address on the tax return, and it is quite difficult to fool the system. Cunning emigrants, of course, find options, but for applicants from overseas, it is not worth the trouble: it is easier to try to get a scholarship to cover part of the tuition. Moreover, the best universities in the US are almost entirely private, and it is worth trying to get into one of them.
The admission procedure for a university is roughly the same for a college (first four years of study) and for a master's degree (additional one to three years). The applicant fills out an application and sends it along with supporting materials - essay, standardized test scores, recommendation letters - to the university. The university may invite the applicant for an interview, send a recruiter to his home, or make a decision simply based on the paperwork - details are not important. What matters is that when making the admission decision, the applicant's financial solvency is almost never considered. First you are admitted, and then you are expected to find the money for tuition. This is good: given that the university spends an average of $3-5 thousand on the selection process, it is interested in helping you find money - scholarships or educational loans.
In Search of Money
Scholarships, provided both by the universities themselves and by various charitable foundations, rarely cover the full cost of tuition. They are usually divided into "merit-based" scholarships and "need-based" financial aid. The award of a scholarship may be associated with certain special conditions (for example, work-study programs require working on campus or for a research supervisor for 15-20 hours per week). Many of these scholarships, especially work-study, are easier to obtain after already studying for a semester or two, learning the ins and outs of the university's workings, and getting well acquainted with the staff of the university's financial aid office.
The Financial Aid Department (Department of Student Aid) deals with both scholarships and loans. The fact is that the vast majority of education loan disbursements are transferred by the lender not to the student's bank account, but directly to the university. Department staff monitor the flow of documents and help resolve various bureaucratic conflicts so that delays in payments do not prevent the student from starting the semester on time. When I received my first loans, I was very worried - there were many documents, lenders did not answer my calls in time, everything was done at the very last moment. However, after spending some time "in the system," you begin to understand that this happens to everyone, and there is no reason to worry. Educational loan lenders are all old and respectable organizations, and although each of them writes in fine print on all application forms that "there might not be enough loans for you," in practice this never happens.
The two main groups into which educational loans in the US are divided are federal and private loans. Federal loans are mostly issued by the same private banks, but your guarantor against default is none other than the US government. In exchange for the guarantee, the federal government itself sets the interest rate on loans, and this rate is extremely low: it is tied to the bank refinancing rate and usually fluctuates between 4% and 8% per annum. The maximum ceiling is 9% per year, so in the event of a sudden jump in inflation - as in the early 1980s - you only stand to gain. All federal loans have a truly wonderful characteristic: they are issued on the basis of more or less responsible financial behavior in recent years and "financial need" (credit readiness), not on the basis of your ability to repay them (creditworthiness). This does not mean, of course, that they can be not repaid: there are plenty of repayment levers and various penalties in federal loan agreements. But it does mean that a poor financial situation at the time of admission will not prevent you from getting an education.
There are several types of federal loans, differing in the degree of preferential terms. The applicant fills out a single application for a federal loan (FAFSA - Federal Application For Student Aid), and then, depending on his financial situation, the government student aid agency (FSA) determines the basket of loans provided: the poorer you are, the better the terms. Payments on all federal loans can be deferred until the end of education, and in case of job loss they can be frozen for a period of up to six months. Each federal loan tranche is issued for a term of 10 to 12 years, but upon completion of education these loans can be consolidated, stretching payments over 30 years. Federal loans are good in every way except one: only US citizens and legal immigrants permanently residing in the country (happy holders of a "green card") can get them.
Students are not the only recipients of federal loans. American universities expect that parents of students under the age of 25 should also financially participate in their children's education. Universities use some complex schemes to calculate the percentage of parental participation (expected family contribution). So that the lack of funds from parents does not become an obstacle for children, the government is also ready to guarantee preferential parental loans (PLUS loan). They differ from student loans only in that the debt obligations lie with the student's parents.
Private educational loans differ from federal ones in much greater variety, and they need to be chosen very carefully. Many of them - especially those with the lowest interest rates - are also issued only to American citizens or holders of a "green card". Some of those available to foreigners require a US citizen or legal immigrant to act as a guarantor-co-signer (roughly speaking, if the money cannot be shaken out of you, the guarantor becomes liable for payment). In addition, the private educational loan market, albeit regulated, is quite commercial, so loans that are the same in amount and requirements can be issued on very different terms.
"The devil is in the details," as Americans say: in the case of a ten-year loan, a difference in the rate of even 0.25% has a very significant impact on the amount of payments. In addition, attention should be paid to "additional conditions": various one-time payments "for processing the application" and granting the loan, framed as payment of bureaucratic expenses, can easily reach 5-7% of the total amount. The interest rate on private education loans is slightly higher than on federal ones and fluctuates around 6-12% per annum.
For a foreign student without an American guarantor, it is difficult to even get a private quick loan - it is necessary to confirm family income and ownership of property that can serve as collateral. Roughly speaking, these loans are designed for children of foreigners living in the US or having serious business connections here. On the other hand, if the applicant's parents truly have some financial interests in America, paying for their child's education through a loan scheme may turn out to be much more advantageous than paying in cash, even if they can afford it: the loan interest is low and fixed and, at a certain level of income, is not subject to federal taxes. A daughter's loan can turn into a tax "umbrella" for dad, but that is already a topic for a professional accountant.
There are nuances
Educational loans cover not only the cost of the education itself (tuition), but also the cost of living (cost of living). The cost of living, of course, is determined by average student needs. The ceiling, depending on location, is $12-14 thousand per year. Tuition at a good college costs about $20 thousand per year, and in a master's program - $25-30 thousand, so the amount of educational loans for a bachelor's degree can reach $110-120 thousand for the entire period of study, and for a master's degree - plus another $70-90 thousand.
In practice, most students periodically receive one scholarship or another, reducing the amount of payments, or work during their studies so as not to take loans for living expenses. Almost all on-campus jobs are open to students, including foreign ones - a work visa is not required for this.
The American educational system, like any other, has many "holes". Energetic and not wealthy foreign students come to the country on a tourist visa, then enroll in the so-called Community College (something between an excellent technical school and a bad university), partially paying for their education with campus work. Tuition at Community College costs no more than $10 thousand per year even for non-residents. After changing their visa status from tourist to student and figuring out the system, foreigners transfer to more serious universities, finding scholarships or sympathetic guarantors. This requires a lot of time, a lot of luck, and even more persistence, especially now.