As you look to plan your child’s career and consider their higher studies in a good institute in India or overseas, the question that most parents ask themselves is, how hard is it to get an education loan?
Today, education in India has become quite expensive from the school level onwards. Given the rising inflation rate, fees across the board for higher education in reputed Indian and international universities are going up yearly.
In this scenario, if you are serious about sending your child to an excellent Indian institute or abroad for higher studies, chances are high that you will be required to take an education loan.
Taking an education loan for a four-year undergrad engineering course from a private institute in India can cost you upwards of Rs. 12 lakhs in tuition fees. The same course in an international university can go up to Rs. 60 – 70 lakhs, with travel and stay extra.
Most parents today opt for an education loan to fulfill their child’s educational and career aspirations.
That brings us to the topic of this article: how hard is it to get an education loan? To understand the challenges, you must understand what the lenders look for in an education loan application.
What lenders look for while reviewing education loan applications
There are several education loans available, as RBI promotes these extensively. So most nationalized banks will offer you these loans. Here is the list of factors they consider when reviewing an education loan application:
1. Financial history of the borrower and co-borrowers
Especially in the case of undergraduate courses, parents as co-borrowers must have an excellent credit rating and must show the financial capability to meet the need for repayment, should the need arise.
2. Co-borrower or Co-applicant
While international lenders may not ask for a guarantor, most public sector/govt lenders do. They require a guarantor or co-applicant, especially if the loan is for a significant amount.
Again, the guarantor’s credit history will be scrutinized while sanctioning the loan.
3. Collateral
Public sector/nationalized banks and several private lenders need collateral to issue an education loan if the amount is enormous. The value of the collateral is worked out in light of the loan required and varies depending on the lender, but collateral is a must. There are various non-collateral options available for students as well. Most of these even offer loan amounts up to 1 crore, but it depends upon the individual and their application.
4. University of your choice
This is another crucial aspect for lenders. Most leading lenders have their preferred list of universities and courses for which they will issue loans.
So, you must ensure that the institute your child is shortlisting is on that list and an accredited educational institute that the banks recognise.
5. The academic record of the student
An excellent academic record goes a long way in assuring the lender of the child’s seriousness toward education and career.
It works as an indicator for them that the student will complete the course for which the loan is being given and will be able to repay the same by building a promising career.
FAQs
Do we get education loans easily?
The easiest way to get an education loan is to connect with EduFund. EduFund helps students by connecting them directly to the right education loan provider!
With EduFund, you can get the lowest interest rates, express approvals, and end-to-end assistance in securing the right education loan for your profile. EduFund experts can also help you avoid hidden fees, get approvals without an offer letter, and ensure a smooth loan disbursement for your future plans. Connect with our experts here!
Do education loans get rejected?
Yes, education loans can be rejected. Banks can reject your loan application if there are any discrepancies in the documents. If your co-applicant does not meet the set criteria, or if you have opted for a course or university that the bank does not recognize. There are many reasons – the best way to avoid rejection is to plan with experts like EduFund, who offer end-to-end assistance.
Why is it difficult to get an education loan in India?
Yes, the loan process in India can be lengthy and tiresome if the candidate is applying on their own. With the help of experts from EduFund, you can avoid the lengthy process of getting in touch with the right providers directly and applying for a loan in no time.
