Education Loan Sanction Letter and Process: A Comprehensive Guide

A sanction letter is an official document provided by the lender that indicates the basic information about the education loan, such as the loan amount, student’s (borrower) name, interest rate, loan tenure, and other terms and conditions. It is proof that the student has successfully applied for and been granted the loan.

The sanction letter is either sent by post or handed a hard copy to the student against acknowledgment. It is given once the loan is approved and sanctioned after the student submits the loan application form and the required documents. 

A loan sanction letter can be submitted as proof of funds for your admission and visa purposes.

Some foreign universities require students to submit proof of their ability to pay for their education before granting admission. Students must show proof of funds while applying for a student visa for countries like the USA, UK, Australia, and Germany. 

For example, to get an I-20, you must submit proof of financial support, for which the minimum fund requirement is 10,000 USD. In this case, a loan sanction letter makes you eligible for an I–20.

 

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Generally, education loans are sanctioned once students submit proof of securing admission abroad. However, students often need a sanction letter before getting admission to a university. In this situation, a pre-approved sanction letter helps them. 

A pre-approved sanction letter is a provisional sanction letter given to the borrower before they secure admission to a university. This letter can prove financial support during the admission process and, for select countries, during the visa process. 

Students can apply for a pre-approved education loan after receiving their standardized test scores. Remember, this facility is available with select lenders. If the lender finds any discrepancy with your application or submitted documents later, the pre-approved loan can get canceled. 

Format of an education loan sanction letter

The format of an education loan sanction letter varies for different lenders. While some lenders issue a 2 - 3 page long sanction letter, some others make it concise to fit within one page. 

• A sanction letter is addressed to the borrower and co-borrower
• It will contain comprehensive information on the loan that the student can use the letter for future reference
• The sanction letter is dated, and the validity is mentioned 

Sample of an education loan sanction letter

Based on the format mentioned above, here is a sample for an education loan sanction letter. Since the template for each lender varies significantly, we have adopted a format followed by a prominent public sector bank in India for study abroad education loans. 

Education loan sanction letter 

Documents required for a sanction letter 

The documents required to get a sanction letter vary depending on the type of lender. They are submitted with the initial loan application. A generalized list of documents is as follows:

Documents required from the applicant 

• Loan application form filled completely and correctly
• Identity proof - PAN Card, Passport, Voter ID card, etc.
• Address proof - a recent copy of telephone bill, electricity bill, or water bill 
• Copy of the passport 
• Past academic record - 10th, 12th, undergraduate
• Scores of entrance tests like GRE, TOEFL, IELTS, etc. 
• Proof of admission - students can submit a conditional offer of admission if they get it 
• Statement of expenses for the entire cost of education. 
• Passport-size photographs 
• Loan account statement of one year, if there are any previous loans taken from any lender

 

 

Documents required from the co-applicant

• Identity proof 
• Proof of address
• Proof of income - the documents for the same will differ depending on the type of employment, such as self-employed or salaried.

 

Self-employed co-applicants:

• Business address proof 
• Last 2 year’s IT returns 
• TDS Certificate 
• Certificate of Qualification 
• Bank account statement of the last 6 months 

 

Salaried co-applicants:

• Salary slips for the last 3 months 
• Copy of Form 16 for the last 2 years or copy of IT Returns for the last 2 years.
• Bank account statement for the last 6 months. 

 

The applicant will have to submit collateral documents along with the above-mentioned documents in case the student has applied for a secured education loan.

Education loan sanction letter process

The process of getting an education loan sanction letter is long stretched and requires multiple actions. You must choose your lender, prepare the documents, pay the processing fee, and wait for approval. The process is slightly different for various lenders, as you can see in the sections below.

Public sector banks

The education loan sanction process in public sector banks is slightly lengthy that can take up to one month. 

The process to receive the sanction letter is in three steps. 

• The process in banks, like State Bank of India, Union Bank of India, and Bank of Baroda, starts with filling up the application form

 

• The applicant will have to submit the documents that are mentioned above and some additional documents that may be case-specific

 

• The applicant have to pay the loan processing fee

 

• Once the application is processed and accepted by the bank, the sanction letter is sent to the applicant

Private sector banks 

The education loan sanction letter for private banks, like Axis Bank, ICICI Bank, and IDFC First Bank, is as follows:

• Fill up the loan application form online or offline
• Upload the documents online or submit them to a nearby branch
• The bank will verify the documents and send the application for further process
• Pay the processing fee charged by the lender. Generally, the processing fee is 0.5% - 1% of the loan amount plus GST
• The education loan sanction letter is sent via email or post

 

For a secured loan, the bank will evaluate the property and complete the documentation, while, for unsecured education loan, the bank will evaluate and verify the credit history of the applicant and the co-applicant.

Non-Banking Financial Companies

The process for an education loan sanction letter for Non-Banking Financial Companies (NBFCs) starts with filling up the loan application, submitting the required documents, and receiving the sanction letter. Here are the details of the process for different NBFCs: 

• HDFC Credila education loan sanction letter is issued a day after the applicant successfully pays the processing fees. On request, HDFC Credila can also issue the letter before the student secures admission to a university. 

 

• Avanse education loan sanction letter is issued after the documents and other financial details have been verified. Moreover, Avanse offers five different types of education loans; Pre-Admission loans, Pre-Visa loans, Bridge loans, Fast-track loans, and the Certificate of Availability of Funds to help students financially at every step. 

 

• Auxilo and InCred education loan sanction letters are issued in a synonymous manner. Auxilo and InCred also offer pre-admission education loan sanction letters to students. Auxilo takes approximately 2-3 days, and InCred 5 days to verify and issue the sanction letter. Students will have to pay the processing fee upon receiving the provisional loan approval. Read more about the education loan process of Auxilo and InCred.

International lenders

International lenders like MPOWER Financing and Prodigy Finance offer education loans to students without any collateral or co-signer. They offer a provisional loan offer within 2 days of applying for the loan, which is valid for up to 2 weeks. Once the student accepts the offer, the lender issues a Loan Confirmation Letter, otherwise known as the Sanction letter.

To ease the education loan process for the USA, MPOWER and Prodigy Finance issues two types of sanction letters:

• A conditional confirmation letter if an I-20 is required from the school. 
• A confirmation letter when applying for a student visa.

 

The letters are available on the dashboard of the applicant’s account. Read more about MPOWER Financing and Prodigy Finance education loan process here. 

An education loan sanction letter is a formal document outlining the details of your education loan. It serves two purposes - informing the funding details for you and answering multiple inquiries on your funding options by the university and visa authorities. 

On receiving the education loan sanction letter, you must go through the details specified and inform the lender that you agree with the terms and conditions. Unless you don’t inform the lender, there might be no disbursement post the issuance of the sanction letter. 

However, there is a challenge in getting a sanction letter - the process is long stretched and can lead to rejection at the last minute if you make any mistake. Avoid the lengthy process and make your application hassle-free, and get the loan sanction letter within days of submitting the documents. Take advantage of the opportunity - check your education loan eligibility now. 

Read also:

• HDFC Credila Disbursement Process
• Avanse Education Loan Disbursement Process
• Disbursement Process of InCred Education Loan
• HDFC Credila Abroad Education Loan

Frequently asked questions

To get a sanction letter online, you must apply for any of the SBI education loan schemes online or offline, submit the relevant documents, and let the bank verify all the details you submit. If you are eligible for an education loan, the bank will issue a sanction letter, which you can request them to send via email. 

When you apply for an education loan, the lender examines all the documents for security purposes. The verification process involves legal documentation of your collateral if you are applying for a secured education loan and a legal agreement with the co-applicant for unsecured education loans. 

HDFC Credila loan sanction letter is an official statement provided by HDFC Credila to an applicant showing basic loan data, like course details, loan amount, names of the borrower and co-borrower, interest rate, margin, etc. Refer to the sample of an education loan sanction letter in the blog for a detailed understanding.

Public and private banks, NBFCs, and international lenders take up to 2 days to issue the sanction letter once the student pays the loan processing fee.

The ICICI education loan process is easy if your profile is strong. You can explore various schemes by the ICICI Bank and apply for the right option. Make sure you have a good academic background and a co-applicant with the required salary. 

Yes. You can submit the education loan sanction letter as proof of your I-20 application. 

In typical cases, there are fewer chances of delays if you meet the eligibility requirements and the documents are submitted correctly. There might be unexpected delays if your documents are not proper. It will take more time for the lender to evaluate and proceed further with your application. 

In general, you cannot expect a pre-approved sanction letter from all the lenders without analyzing your profile. Getting a pre-approved education loan sanction letter depends on the strength of your application and the lender’s decisions.