Education Loan Sanction Letter and Process: A Comprehensive Guide

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    The education loan process is long-winded and fraught with multiple steps. 

    It starts with you researching the eligibility for a loan. After reading the lengthy novel-like terms and conditions, you understand maybe one or two things. The next is filling up the application form. Do you know all the documents that you have to submit? Probably not. So you run from pillar to pillar, gathering the documents you need to submit just the next day. After this harrowing marathon, you finally submit your loan application. Now you have to wait for some letter. And the wait, still, continues… 

    But, with correct and useful information, the process can be made simpler. And with GyanDhan, the process becomes smoother, faster, and hassle-free.  

    We have published a series of blogs to help our readers understand the intricacies of the education loan process. Today, we have brought forth a piece that will answer one of the most asked questions - What is the Education Loan sanction process? 

    Let’s dive into it-

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    What is a sanction letter? 

    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, borrower’s name, rate of interest, loan tenure, and other terms and conditions. It is proof that the borrower has successfully applied for and been granted the loan. 

    After this, the borrower only has to request the disbursement of the loan amount. 

    How and when will you get a sanction letter? 

    The sanction letter is either sent by post or a hard copy is handed over to the borrower against acknowledgment. It is given once the loan is approved and sanctioned after the applicant has successfully submitted the loan application form and the required documents. 

    However, there are some foreign universities that require the student to submit proof of their ability to pay for the education even before granting admission. The students further need to show proof of funds while applying for a student visa for countries like the USA, UK, Australia, and Germany. For example, to get a Canadian study permit, students have to submit proof of financial support, for which the minimum fund requirement is CAN$ 10,000.  

    Without funds, students could not get the admission and student visa; and without the visa and the admission, students could not apply for the loan. And thus, a vicious cycle was created that was hard to break. 

    A simple solution to counter this problem - Pre-Approved Education Loan Sanction Letters. 

    What is a pre-approved sanction letter? 

    As mentioned above, students can apply for the loan after securing admission to a university, following which the sanction letter is issued. Some lenders only agree to disburse the amount after the student has received the study permit and visa. 

    A pre-approved sanction letter is a provisional sanction letter given to the borrower before they secure admission to a university. This letter can be used to prove financial support during the admission process and, for select countries, during the visa process as well. 
    Students can apply for an instant education loan approval right after they receive their standardized test scores. However, this facility is available only with select lenders. For the rest, GyanDhan helps students with pre-visa disbursement by approaching the concerned bank official. 

    What are the 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 - 

    1. Loan application form filled completely and correctly.
    2. Identity proof - PAN Card, Passport, Voter ID card. 
    3. Address proof - a recent copy of telephone bill, electricity bill, or water bill. 
    4. Passport 
    5. Past academic record - 10th, 12th, undergraduate mark sheet, test scores of entrance tests like GRE, TOEFL, IELTS, etc. 
    6. Proof of admission - students can submit a conditional offer of admission as well. 
    7. Statement of expenses - the entire cost of education. 
    8. Passport-size photographs 
    9. Loan account statement of one year, if there are any previous loans taken from any lender. 

    Documents required from the co-applicant -

    1. Identity proof 
    2. Address proof 
    3. Income proof - 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 of 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 of 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. 

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    What is the sanction process of public sector banks? 

    The sanction process in public sector banks is slightly lengthy, probably to balance the benefits of the excellent study abroad loan products. The process may take up to a month, though the same process with GyanDhan is reduced to 14 days. 

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

    • The process in banks, like State 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. 
    • Once the application is processed and accepted by the bank, the sanction letter is sent to the applicant. 

     

    Note- Public banks give out secured education loans for an amount above INR 7.5 lakhs. Therefore, the applicant will have to submit original collateral documents along with the loan application form for loan approval. 
    You can read about the SBI Education loan process and SBI Education Loan sanction letter here. Read about the Bank of Baroda Education loan sanction letter here

    What is the sanction process of private banks? 

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

    Axis Bank 

    • Apply for the loan on GyanDhan’s portal and fill up the loan application form. 
    • You can upload the documents online on the GyanDhan portal or you can request the doorstep-document pick-up service. This step will be easier as we provide a customized checklist of documents. 
    • The bank will verify the documents and send the application for further process. Meanwhile, you will have to pay the processing fee charged by the lender. For a loan amount up to INR 20 lakhs, the processing fee is refundable. If the loan amount is above INR 20 lakhs, you will have to pay 0.75% of the differential loan amount above INR 20 lakhs + GST. 
    • Since it is an unsecured education loan, the bank will evaluate and verify the credit history of the applicant and the co-applicant. 
    • Once the loan is approved, the Axis Bank education loan sanction letter is issued in a day.

     

    Read about the rest of the Axis bank education loan process here.
     

    ICICI Bank 

    • The ICICI bank education loan process is similar to the Axis Bank - starting with the loan application form and document submission, after which the students will receive their sanction letter. 
    • However, ICICI Bank also provides an Instant education loan with an instant sanction letter. The sanction letter is used as proof of funds at various steps of the process, therefore, students can get an instant sanction letter by pledging Fixed Deposit with the bank.
    • The loan is pre-approved and the sanction letter is electronically sent to the registered email address. 

     

    Read about the rest of the ICICI Bank education loan process here.    

    What is the sanction process of Non-Banking Finance Companies? 

    Non-Banking Finance Companies (NBFCs) have the easiest and the fastest education loan process. It starts with filling up the loan application, submitting the required documents, and ends with a sanction letter in a day. 
    For example - 

    • HDFC Credila education loan sanction letter is issued in a day after the applicant successfully pays the processing fees. On request, HDFC Credila can also issue the letter before the student secured admission to a university. Read about the rest of the process here
    • Avanse issues an in-principle approval through a loan letter 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. Read about the rest of the loan process here.
    • In an almost synonymous manner, Auxilo and InCred also offer Pre-admission education loan sanction letters to students. Auxilo takes approximately 2-3 days to process the loan application and another day to send the sanction letter. You can read about the rest of the process here.
    • InCred takes approximately 5 days to verify and issue the sanction letter. Students will have to pay the processing fee on receiving the provisional loan approval. Read about the process here.

    What is the sanction process of international lenders like Prodigy Finance? 

    Lenders like Prodigy Finance offer education loans to international students without any collateral or co-signer. The lender offers 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, Prodigy Finance issues two types of sanction letters - 

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

    The letters are available on the dashboard of the applicant’s account.
    The rest of the Prodigy Finance Education Loan process is available here

    Now you know the specifics of a sanction letter and an education loan.

    How can GyanDhan help you with your education loan? 

    We equip students with the right information. Moreover, GyanDhan has been working with Indian and international lenders for quite some time now and understands the nuances of the process. We will help you at every step of the process and make it infinitely easier for you to fund your education. All you have to do is check your loan eligibility, and a dedicated Education Loan Counselor will discuss various loan options available to you. Once you have settled on a lender, you can complete the entire process from the comfort of your home. The loan process that usually takes more than a month, will be done and dusted in a maximum of two weeks. 

    We know how expensive abroad education is, and therefore, do not charge anything from the students. GyanDhan is the help you need! So, check your loan eligibility and apply for the loan now.  

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