A Smart Guide to Education Loan Eligibility in India

Posted In education loan On March 23, 2019
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An Education Loan requires various eligibility criteria to be fulfilled. To avail the loan,

  1. Applicant must be a citizen of India.

  2. For Indian Universities, the student should have confirmed admission to the particular college/university before applying for the loan.

For Foreign Universities, the student should have a valid scorecard or confirmed admission.

  1. The age of the candidate must be between 18 to 35 years during applying for the loan.

  2. Copy of Foreign Exchange permits for applying to international universities (if available).

A lender looks into various aspects of the borrower while granting a loan. You are expected to share your full financial profile including salary, credit history, and assets. Your debt-to-income ratio cannot exceed a lender's maximum to qualify for the loan sanction. The lower the loan amount the less risk the lender has. Let us take a close look at the 5 C’s that a lender is looking for:

  1. Capacity- Your income and employment history determines your capacity to repay back the loan. The Debt-to-income (DTI) ratio may be evaluated by the lender before granting a loan.

  2. Collateral- For loan amount above a particular value, bank demands collateral in the form of a security deposit. Collateral can be any asset for example – car, home, land, etc.

  3. Capital- This comes into use if you lose your job or experience other setbacks. Capital is also a major look into criterion by the banks.

  4. Credit History- The credit score serves as a risk indicator for the lender based on your credit history.

  5. Conditions- As the loan is taken for Educational purposes, the bank may want to know further details based on your Educational involvement.

A co-borrower is a mandatory criterion required by the bank irrespective of the loan amount applied for. Eligibility criteria for a co-borrower are:

  1. Must be a salaried citizen of India.

  2. He must agree to co-sign and execute the loan agreement along with the borrower.

  3. In case of inability of the borrower to pay back the loan, the co-signer is entitled to repay the loan.

Banks nowadays provide a loan to almost all professional courses in India provided they have a higher employment rate in the future. In India, banks sanction maximum Education loans for bachelor's courses like engineering, MBBS and master's courses like M.Tech, M.D, MBA, etc. All banks have divided the list of colleges into Prime-A, Prime- B and Others with different ROIs according to their course fees. Other eligibility criteria include the previous academic score of the borrower and test scores like GRE and IELTS (in case of abroad studies).

Banks also demand documentation based on the courses undertaken. The documentation required involves:

  1. Duly filled and signed application form with affixed recent passport size photographs

  2. Copy of mark sheets of 10th and 12th Board exams.

  3. Statement of total course expenses.

  4. PAN Card, Aadhar Card and KYC of the student and guardian.

  5. Any financial aid letter that is required to provide any sort of interest subsidy (if any).

The bank disburses the loan amount after it has verified the details of the borrower. It also issues a sanction letter as proof of the loan granted. Credenc which is a multi-platform financing platform can make the loan process much easier than it seems. The experts at Credenc negotiate with the banks and help find the best ROI and EMI schemes for the borrower.
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