How to Get Another Educational Loan if You Already Have One?

    Updated on: 25 Sep 2023

    What if a student who has already taken an education loan to finance their undergraduate education wants to take another education loan to pursue their post-graduation? Is it possible to take a second loan in this case? This question often comes up in the mind of students who wish to pursue further education, in India or abroad, but are not sure if they will get one. 

    Table of contents

    1. What is a second education loan?
    2. Eligibility criteria for second education loan
    3. Second education loan from the same bank
    4. Second education loan from another bank
    5. Unsecured second education loan
    6. Frequently asked questions

    What is a second education loan?

    A second education loan is borrowing money to finance higher education expenses. In other words, if a person has already taken out an education loan for their first degree or course and then decides to pursue further education, they might need additional funding to cover the costs of the new educational program.

    Eligibility criteria for a second education loan

    1. Any student who has secured admission to a recognised university/college.
    2. These loans are offered to postgraduate students.
    3. The student should have maintained a good academic record during the tenure of their previous education loan.
    4. The collateral value should be more than the loan amount.
    5. The co-applicant must have a steady income and CIBIL score.
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    Borrowing a second education loan from the same bank: Secured education loans

    A student may visit the same bank from where they had taken their first education loan and explain the additional requirements for a second education loan. A student who has taken a secured education loan needs to ensure that the value of the collateral they had pledged for the first loan is enough to cover both the loans. This will enable them to get their second loan sanctioned easily. In case the collateral value is not sufficient, they need to check whether the bank allows them to pledge new collateral (of a family member or even a non-family member) for the second education loan.

    A student applying for a second education loan will fall under either of the following two categories - 

    1. Repayment has not started - This situation is applicable to students who have just finished their undergraduate studies and are about to start their post-graduate program in a month or so. Students can immediately apply for a second loan during the moratorium period. Once the second loan gets sanctioned, the moratorium period of the second education loan will start. This way, the student will be able to get a loan holiday, for both loans.
    2. Repayment has begun - In this situation, the borrower will have to continue to repay the EMI for the first education loan as agreed. As a thumb rule, the second loan amount that a student can take will be the maximum limit minus the outstanding amount of the first loan. 

    For example, a student who was eligible to take an education loan of 30 lakhs took 20 lakhs for his first education loan and has repaid 15 lakhs. This means that his outstanding loan amount for the first education loan is 5 lakhs. So, he would now be eligible to take a second education loan of 25 lakhs ( 30 lakhs - 5 lakhs). This can however vary from bank to bank.

    As it is evident from the above discussion, it is wiser to plan and apply for a second education loan before repayment for the first education loan starts. 

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    Borrowing a second education loan from a different bank: Secured education loans

    What if the bank from where you had taken your first education loan is unwilling to sanction a second education loan? Well, don’t worry and approach another bank. For this, there are two options - 

    1. Take a fresh loan from a different bank.
    2. Students can also transfer their first education loan to the new bank and then apply for the additional second education loan from the new bank. The student will incur some loan transfer charges, but that would be a minuscule amount.

    Borrowing a second education loan: unsecured education loans

    Students who went for an unsecured education loan for their first education loan will need to look beyond government banks for a second education loan and apply to private banks or NBFCs for the same. These lenders do not require collateral rather they need a financially sound co-applicant. So, if you have a co-applicant with a good financial record, getting a second education loan from private banks or NBFCs should be relatively easier. 

    Second education loans can be invaluable tools for those seeking to further their education and career prospects. They enable individuals to embrace new opportunities, adapt to evolving industries, and stay ahead in the professional game. However, careful consideration of eligibility, loan terms, and financial implications is essential. Before diving into a second education loan, conduct thorough research, compare lenders, and make an informed decision that aligns with your educational and financial goals.

    For a seamless and hassle-free experience, consider GyanDhan, a leading education financing platform that connects students with suitable lenders, streamlining the application process. With our commitment to transparency, competitive interest rates, and personalised assistance, we can be your guiding light through the complexities of second education loans. To start your education loan journey with us, check your loan eligibility.

    Also read:

    Frequently asked questions

    Can I get another education loan if I already have one in India?

    Yes, it is possible to get another education loan in India even if you already have one. Many banks and financial institutions offer multiple education loans to students who wish to pursue further studies. However, your academic records, CIBIL score and previous repayment schedules play a significant role.

    Can I apply for a second education loan if I haven't finished paying off the first one yet?

    Yes, you can apply for a second education loan if repayment is outstanding. However, lenders will consider your current outstanding debt, credit score, and repayment history before approving the second loan.

    Can I apply for a second education loan if I am still enrolled in my first-degree program?

    Certainly, it's possible to request another education loan even if you're currently studying in your first-degree program. Yet, the lenders will consider your ongoing academic performance.

    How can I manage to pay off two education loans at the same time?

    If you have two education loans to pay back, it is important to remember your payment schedule, make timely payments and set automatic repayments or consolidate the loans to simplify the repayment process.

    First published date: 10 Feb 2021

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About author

Vishakha Bhagia
Interest in Finance with a flair for writing, Vishakha has written on education loans and the study abroad field for the last two years with articles published in Times of India, Outlook India, The Hindu, and many more publications.

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