Abroad education is a dream for many Indian students for obvious reasons. It opens doors to innumerable opportunities, especially for students who are dreaming big. However, with the rising costs, abroad education has become significantly expensive.
Worry not, Education loans come to the rescue to ease the financial burden. A well-planned approach can simplify the education loan process. Having a checklist can ease the loan process and oftentimes avoid loan rejection.
In this blog, we will discuss what are the things that students must consider, along with the complete checklist that students must have before applying for an education loan.
Identify Your Need
Before applying for an education loan for abroad studies, students must have a clear idea of the course that they want to pursue, the university they want to apply to, and the country they want to pursue their higher education in. Calculate how much your abroad education costs, including course tuition fees, living expenses, stationery, travel expenses, and other miscellaneous expenses.
Having clarity on this can help students make informed decisions in the education loan process.
This helps students easily navigate the abroad education loan journey and avoid last-minute hassle.
A Thorough Research on Available Lenders
Many lenders are available who offer education loans for students. Not all education loans are the same. Each education loan is different in its way. Many public banks, private banks, NBFCs, and some international lenders also offer education loans to students. Thorough research on this can help students find the right lender.
Choose the Right Education Loan Type
Different types of education loans are available in the education loan market. Collateral and Non-collateral education loans are the most common types of Education loans. Each loan type has its advantages and disadvantages. Secured loans come with a slightly lower rate of interest compared to unsecured education loans.
However, not every student can pledge collateral and get a secured education loan. Unsecured loans are the best alternative for them. Knowing this can help students choose the right education loan type.
Compare the Interest Rates
Each lender has different interest rates. These are influenced by various factors such as loan type, lender, students' profiles, etc. A single percentage change in the education loans can save lakhs of hard-earned money.
It is recommended that students compare the interest rates with all the available lenders and choose the lender that is suitable for them.
Check Eligibility
Each lender has different eligibility criteria that students must meet to get education loans. Lenders offer education loans considering various factors such as the course students choose, the university they are going to, and the country they prefer to study. Some loans are strict with collateral requirements, while others are particular about the co-applicant's financial status.
This is done to ensure that their loan amount is repayable. Therefore, students must check their eligibility and apply for education loans.
Collect Required Documents
This is a crucial checklist that many students make mistakes on and then face loan rejection. The requirements of documents vary from lender to lender and often depend on the education loan type. Some loans required collateral documents.
Students can ask the lenders to provide a checklist of the documents that are required to get an education loan. This will ensure that students provide all the necessary documents for a smooth education loan process.
Loan Application Process
It is important to fill in the education loan application form with accurate details. Scanned copies of all the required documents are also submitted. Lenders check the creditworthiness and also evaluate the eligibility of the applicant and the co-applicant.
After which, the loan amount is calculated, and if everything is as per the lender's norms, they sanction the education loan.
Repayment Terms
It is highly recommended that students verify the loan terms and conditions and sign the loan agreement. Each lender has different repayment terms. Some lenders have flexible terms, while others do not have flexible terms. Checking with these terms can help the student during the repayment period.
Eligibility Criteria to Secure an Education Loan
The eligibility requirements may vary slightly based on various factors. However, the general eligibility requirements may include:
- Nationality: The applicant and co-applicant are required to be Indian citizens.
- Admission Status: The student must secure admission from a recognised university or college.
- Co-applicant: Most of the education loans require a co-applicant. A strong co-applicant can enhance education loan approval chances.
- Age limit: Generally, students aged between 18 to 35 are eligible to apply for education loans
- Collateral: For secured loans, the student is required to pledge collateral to secure the loan amount.
The Documents Required to Get an Education Loan
The documents list to secure an Education loan vary based on the education loan scheme, type of education loan, students' profile, etc. However, the basic documents list is as follows.
Complete Application Form: As we discussed, the loan application form provided by the bank is to be filled out completely by the student.
Identity Proof: KYC Documents confirming the identity of the applicant and the co-applicant.
- PAN card
- Adhaar card
- Passport etc
Admission Status: A document confirming the admission of the student from a recognized university.
Academic Records: Previous academic records of the students, such as 10th, 12th, graduate, post-graduate, etc.
Test Scores: Score cards of the entrance test, such as GRE, GMAT, TOEFL, and IELTS, etc.
Co-Applicant Financial Proofs: Lenders check the credit history and financial status of the applicant and the co-applicant. A minimum CIBIL score of 700 has to be maintained to get an education loan.
Collateral Documents: If the student is opting for a collateral education loan, the necessary collateral and other related documents as requested by the banks are to be submitted.
Passport-Sized Photographs: Two recent passport-sized photographs of the applicant and the co-applicant.
Summing Up
Education loans are an incredible financial support for students to fund their education abroad.
However, it is important to have a prior checklist for an easy education loan process. In this blog, we have discussed the checklist that students must keep prepared with before approaching a lender for an education loan. This increases the education loan approval.