Education Loan Details: Eligibility Criteria and Basic Documents Requirement

Education loan eligibility depends on a number of factors. The eligibility for education loan changes at every step of the process. To begin with - to apply for an education loan, the student must fulfill the following criteria - 

• The student must have Indian citizenship. 
• They should have secured admission to a recognized university in India or abroad through merit or entrance test.
• They must have secured admission to career-oriented courses. 
• The student must have secured at least 50% in their last qualifying examination. 

It is the most basic requirement to apply for an education loan from any lender in the market. Once a student fulfills these parameters, the loan application is judged on further specifications. 

There are several public sector banks, private banks, Non-Banking Finance Companies (NBFCs) offering education loans to students. The eligibility criteria for a loan is not dependent on the type of lender, but the type of loan you choose.

There are two types of loans -

• Secured education loans
• Unsecured education loans

 The lenders in the market - public sector banks, private banks, NBFCs - offer both types of loans to students to pursue higher education in India/abroad. 

Before applying for the loan, students should compare the features such as loan amount limit, interest rate, processing fees, loan tenure, etc. 

Secured education loans are loans wherein the student has to pledge collateral to support the loan amount borrowed. The final loan amount is decided based on the value of the collateral. In addition to the above-mentioned criteria, the eligibility criteria for a secured education loan is as follows - 

• The collateral value should be equal to or more than the loan amount required. 
• The collateral documents should be complete and original. 
• The applicant must have documents, such as the Registered sale deed, chain documents (evidencing the ownership history of the property for 30 years), property tax receipt, occupancy proof. 
• Depending on the location of the property, the lender will demand further documentation related to the property such as NA order, NOC from the builder, Letter of Allotment, Encumbrance certificate, etc.

To know more about Types of Collateral Security Acceptable for an Education Loan, click here.

These documents are to be submitted with the loan application. The unavailability of any of the documents can lead to the rejection of the loan. GyanDhan provides the complete list of documents required to apply for the loan so that you don’t have to run from pole to pole to gather them. Often students worry about income and the job of the parents influencing the decision in secured loans. The value of the collateral pledged and the academic profile of the student influence the outcome substantially. 

Unsecured education loans do not require applicants to pledge any collateral. To be eligible for a loan, the applicant needs an earning co-applicant.

The eligibility for these loans is decided by factors like -

• The student’s academic profile,
• The future earning potential of the student,
• Ranking of the target course and college, 
• Co-applicant’s income, 
• Credit history of the student and the co-applicant. 

Private banks like Axis Bank, ICICI Bank offer unsecured education loans at competitive interest rates. 

Students applying for up to INR 4 lakhs are eligible for the loan without collateral, but with parents as the joint borrowers. If the loan amount is above INR 4 lakhs and up to INR 7 lakhs, the lenders ask for a third-person guarantor along with an estimate of the future earning potential of the student. For loan amounts above 7.5 lakhs, students will have to pledge collateral to be eligible for a loan from nationalized banks, like the State Bank of India, Bank of Baroda.

Students who do not have collateral to pledge can opt for unsecured loans. They are eligible for a loan up to INR 40 lakhs (even more in specific cases) without collateral. However, they require an earning co-applicant to co-sign the loan. 

In short, to be eligible for an education loan from Indian lenders, students require either collateral or a co-applicant. Students, who do not have collateral or a co-applicant, can apply for an education loan from international lenders without collateral or a co-borrower. 

International lenders offer education loans to students to study abroad. Students can apply for a loan without any collateral or cosigner. The loan is granted based solely on the academic profile and the future earning potential of the student. The loan amount covers tuition fees and living expenses.

The eligibility criteria of a loan from international lenders are as follows-

• The target college, course, and country should be on their approved list. 
• The student must be attending an abroad university. 

Key loan features like processing fees, loan tenure, rate of interest are decided based on the student’s profile. With a good academic record, students can fetch a great deal from international lenders. 

The eligibility for an education loan is influenced by factors like the low CIBIL score of the applicants, the past academic performance of the student, or the potential of the course. For secured education loans, the value and documents of the collateral pledged influence the eligibility criteria.