1995 saw the 1st education loan being sanctioned by SBI in India and with this started the trend of taking an education loan for going abroad for higher studies. Going abroad for higher studies had been a dream come true for Indian middle-class students. However, out of the thousands who dreamt of going abroad, only a measly few were able to make their study abroad dream a reality, and that too with the help of financial aids such as scholarships. However, things changed with education loans have made it possible for the humble middle class to finance their studies abroad. Today, a large number of Indian students are open to taking an education loan to pursue their study abroad dream. If you too are one such student and are wondering if you are eligible to take an education loan, then read this blog and get all your doubts on loan eligibility cleared.
- Who can avail of an education loan?
The eligibility for an education loan differs from lender to lender. However, a few common criteria that are uniform for all lenders are as follows:
- The borrower must be an Indian citizen.
- The student must have a minimum score of 50% in their previous qualifying examination.
- The student must also have secured admission to a career-oriented program.
- The student must have got admission through merit or a qualifying exam to Indian or foreign institutes that are recognized by the relevant authorities.
- Full-time employed individuals who have gained admission to an institute of repute to pursue higher education will also be eligible for an education loan.
Students who meet the above-mentioned criteria can get in touch with different lenders to check their individual eligibility conditions.
- Eligibility requirement for an education loan
When it comes to individual eligibility criteria, it varies from lender to lender and scheme to scheme from the same lender too. Lenders could be public sector banks, private banks, or even NBFCs and each one of these have different eligibility criteria. The loan eligibility also depends on the kind of loan the student is seeking. A secured loan and a non-secured loan will both have differences in their eligibility criteria. Let us take a look at the eligibility criteria for both secured and unsecured education loans.
- Eligibility requirement for a Secured education loan?
A secured education loan is a loan where the student has to attach collateral or security when applying for the loan. It is also called an education loan with collateral. In this case, the amount of collateral attached decides the total loan amount that would be sanctioned by the lender. Students who meet the above mentioned common criteria and wish to apply for a secured education loan must additionally meet the following criteria:
- The value of the collateral being attached should be greater or at least equal to the loan amount that is being applied for.
- All documents related to the collateral should be original and complete.
- If a property, such as a house is being attached as collateral, the bank will look for documents such as a Registered sale deed, property tax receipt, chain documents (that prove the ownership history of the attached property for the last 30 years), and occupancy proof. They could also ask for other documents related to the property such as NOC from the builder, NA order, Encumbrance certificate, Letter of Allotment, etc.
- Eligibility requirement for an Unsecured education loan?
An unsecured education loan or loan without collateral is an education loan where the borrower does not need to attach collateral when applying for the loan. It should be remembered that these loans are sanctioned only when the applicant has a co-applicant with a regular income. Some eligibility criteria for these loans are as follows:
- The student should have a sound academic profile.
- Co-applicant’s income is a deciding factor when sanctioning such loans.
- The institute where the student will study. The better ranking the institute and program, the greater the chances of unsecured loan sanction.
- The applicant (student) and the co-applicant’s credit history
- The future earning potential of the applicant
It should be noted here that lenders are very meticulous about documents that they require when processing an education loan. Lack of any documents can result in the rejection of the loan application. To overcome such a problem, students can take the help of GyanDhan and get a customized list of documents that will be required for their loan application process.
- Lenders who sanction unsecured education loans and co-applicant?
Well, the higher your loan amount requirement, the narrower your choices are. Students who wish to take an education loan of INR 4 lakh can apply for an unsecured education loan with their parents as joint borrowers. For those who need an education loan between INR 4 lakhs and INR 7 lakhs, the bank will ask for a third-party guarantor along with an estimated future earning potential of the student. Students who need an education loan of more than INR 7.5 lakhs will have to apply for a secured loan to government banks such as SBI or Bank of Baroda for the best deals.
Students who need an education loan of more than INR 7.5 lakhs but have no collateral to pledge should not lose heart. They can apply for an unsecured education loan of up to INR 40 lakhs along with an earning co-applicant. This loan amount can even be increased in individual cases.
- What are the eligibility requirements for getting an education loan from an international lender?
Students who have neither collateral nor co-applicant can approach international lenders for an education loan. The loan is sanctioned purely on the applicant’s academic profile and future earning potential. The eligibility for such international lenders are as follows:
- The applicant must have got admission to a foreign university.
- The applicant’s target college, program, and country should be on the international lender’s approved list.
- Are there any factors that influence your eligibility for an education loan?
A lot of factors influence a student’s eligibility of an education loan. Factors such as a low CIBIL score of the applicant or co-applicant, the potential of the course, and the future earnings of the applicant top the list for influencing the sanction of an unsecured education loan. For a secured education loan, incomplete collateral documents, or a low collateral value influence the sanction.
As explained earlier, the eligibility for an education loan – whether secured or unsecured – varies from scheme to scheme for the same lender too, and is case specific. Many times, students are unaware of these and end up taking loans at not-so-favorable terms and conditions. It is here that GyanDhan, India’s first education financing platform, comes to your help. They have a loan eligibility tool where you can check your loan eligibility. You can also approach them and get help from a dedicated loan counselor who will help choose the best education loan for your specific case. They also have partnered with leading Indian public and private banks and international lenders to help students get the best loans at the most favorable terms and conditions.
Get in touch with GyanDhan and start your education loan application process in no time.