What Makes You Eligible for an Educational Loan?
Banks provide education loans to qualified students who require financial aid to continue their studies. People's careers have benefited from these loans, allowing them to continue their studies when they might not have been able to otherwise.
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However, not everyone qualifies for a student loan. Banks have a set of requirements that applicants must complete before acquiring any form of loan.
Factors Taken into Account
When banks receive an educational loan application, the main factors they would consider are:
- Academic background of the student: The bank examines the applicant's track record of marks, credits, and achievements.
- Course: Banks also research the course that the applicant wants to pursue. They check whether the course applied for by the applicant is credited or not.
- Institution: Banks also analyse the institution to which the applicant applied. Institutional repute and accreditation are crucial.
- Collateral: The applicant's ability to provide collateral for the loan. The bank will consider the type of collateral provided as well as its value.
- Co-borrowers: Whether the loan's co-borrowers or guarantors are parents, guardians, or other appropriate third parties. We will also investigate the co-employment borrower's history and reputation.
Courses Eligible for Educational Loans
Banks offer loans for students to study almost anything if the course and the institution are accredited by the concerned authorities or have a good reputation. Students can avail themselves of loans for the following courses.
- Undergraduate degrees/diplomas and special courses.
- Postgraduate degrees/diplomas and special courses.
- PhDs and Doctoral Programs.
- Certificate courses
Banks also provide loans for specialised training, degrees, and courses. Not all banks will finance these courses, but a candidate can do their research to discover one that will, especially if there is a chance of getting a job or a promotion in their existing position.
Some of the courses include:
- Computer certificate course
- Engineering diploma
- Certificate courses from Industria Training Institute (ITI)
- Data entry operator course
- Nursing/Teacher Training certificate courses and B.Ed
- Agri diploma
- Veterinary diploma
- Any job-oriented diploma or certificate course
- Degree or diplomas for aeronautics, pilot training, shipping held by recognized regulatory bodies for the purpose of employment in India or abroad
- Vocational courses run by a government organization or department
- Courses run by State Skill Missions, State Skill Corporations, or National Skill Development Corporation
Eligible Institutions
Banks will also assess the university you have chosen to continue your education. They will not support any older university or programme. A bank wants to know that if it gives you money, you will be able to finish your degree and find meaningful employment.
Banks frequently provide a list of reputable and pre-approved universities. They also have a list of universities that they do not accept applications from.
In India:
Some of the universities that are preferred for studies in India are listed below.
- Universities or colleges recognized by the University Grants Commission (UGC), Govt., All Indian Council for Technical Education (AICTE), Associate of the Institute of Biomedical Science (AIBMS), Indian Council of Medical Research (IMCR), etc.
- Approved polytechnic institutions
- Reputed foreign schools/universities in India
Abroad:
- Universities of good repute and standing.
- CPA in USA, CIMA-London, etc.
Documents Required for an Educational Loan
For students seeking a loan for studies within the country, they can provide the following documents.
- Duly filled application form.
- Two passport size photographs.
- Graduation, Secondary School Certificate, or High School Certificate or mark sheets
- Know Your Customer (KYC) documents which include ID, address, and age proof.
- Signature Proof
- Income Proof of parents or guardian
- If collateral is required, documentation for Immovable property, Fixed Deposits (FDs), etc.
For students interested in a loan to study abroad, they will need to provide the documents below:
- Duly filled application form.
- Two passport size photographs.
- KYC Documents that include ID, residence and age proof.
- A copy of statement of marks or certificates of last examination passed.
- Proof of admission to the university and the course
- Schedule of course expenses
- If you have received a scholarship, a copy of the scholarship letter is needed.
- Copy of Foreign Exchange permit if you have it.
- Bank account statement for last six months of the borrower, parents or guardian.
- Last two years' Income Tax assessment of the borrower, parents or guardian.
- For loans with collateral, the specifics of the security pledged must be provided. You may also be expected to give an advocate's search and report on its marketability, mortgage eligibility, and so on.
- Proof of the source of margin is required.
Educational loans are a focus area since they enable students to continue their studies. It promotes the growth and development of the country and its people. Because student loans are a long-term investment, rigorous study and caution are required.
Furthermore, the government and banks offer subsidies and lower credit rates to promote universal education.
FAQs on What Makes You Eligible for an Educational Loan?
- What are the criteria for getting an education loan?
The applicant must be Indian. If the candidate is under 18, their parents must apply for the education loan on their behalf. Furthermore, the applicant should be accepted into a renowned university or institution.
- Is it possible to avail an educational loan without a guarantor?
Usually, lenders require a guarantor when providing an educational loan. However, depending on the course and profile, a guarantor may not be needed.
- Is it possible to change the educational loan interest rate to a floating rate from a fixed rate?
Yes, the educational loan interest rate can be changed from a fixed rate to a floating rate.
- Is it possible to change from repo rate to Marginal Cost of Funds Based Lending Rate (MCLR)?
No, it is not possible to change from repo rate to MCLR.
- Does the repo rate change every year or does it remain the same?
The repo rate is provided by the bank every month. The repo rate is usually reset every three months.
- Can any student get education loan?
Yes, a student who wants to pursue higher education in a reputed university or college in India or abroad can apply for education loan.
- Why do education loans get rejected?
If an applicant's parent's credit score is less than 750, the bank may reject the education loan. Other reasons for your education loan being rejected include insufficient applicant information and enrollment in unknown institutions.
- What are the documents required for salaried co applicant?
If you are a salaried co applicant, you need to submit the documents like salary slips, PAN card, Aadhar card, driving license, utility bills, and two passport size photos.
- What is the minimum income to apply for an education loan?
The minimum monthly income to qualify for an education loan is Rs.30,000. However, some lenders consider offering education loans for candidates earning less than Rs.30,000 per month.
- Do all students get approved for student loans?
Almost all students get approval for education loans if they fulfill all the eligibility criteria.
- What are the documents required for the self-employed professionals to apply for an education loan?
The following documents are necessary for self-employed professionals to apply for an education loan: business address evidence, identity proof, TDS certificate, previous six months bank account statement, and qualification certificate.
- Why is it so difficult to get an education loan?
If you don’t fulfil the eligibility criteria of getting an education loan like low credit score or incomplete information, then the lenders will not approve the education loan.
- Can we get education loan at 0% interest?
No, it is not possible to get an education loan at zero percent interest. However, you can apply for several scholarship schemes where you can get interest free education loan.
- How to repay education loan?
Once the applicant gets job after the completion of the course, the lender will deduct the EMIs every month from their salary accounts.
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