Insights of Student Education Loans

For many students in India, procuring a higher educational qualification can be a daunting task considering the huge monetary investment needed. Several banks provide education loans at low-interest rates, but students need a sharp acumen, and a proper plan to take and repay the loan.

Students and their parents face a lot of problems in getting their loans approved in the first place, this is mainly because of lack of information on the application process. Here is what one should keep in mind while applying:

Eligibility to apply for Education Loan

A student, who has duly qualified for and enrolled in a course, is eligible for a loan. Ranjit Punja, CEO and co-founder of tells Education Times that the most important thing to note while applying for loans in a bank is to look at from the point of view of a lender. Thus, students opting for a much-in-demand course from a prestigious institute stand a bigger chance to get a loan.

“Lenders have a classification of institutes based on their reputation and viability of the course. Past academic performance is also a factor that affects a lender’s decision,” he adds. Students generally apply for a loan with their parents or relatives as their co-borrower. It becomes essential for the co-borrowers to have a steady job profile and a decent credit score.

Suitable borrower profile

Prashant Bhonsle, CEO, education loans, InCred, lists the most important qualities that make a borrower ideal:

  • • A good academic record, and healthy credit score/history of co-applicants
  • • The quality of institute and course with future employability potential
  • • Adequate documents

Weight age of the Loan

An education loan covers the full course fee payable to the university or institute, which includes examination fee, library and laboratory fee, hostel fee. Few education loans include travel expenses to study abroad. A loan can be availed for most of the graduate, postgraduate and degree courses offered by duly accredited universities. For students who wish to study abroad, education loans can be availed for MS, MBA and MCA courses from reputed institutes.

Repayment and denial scenario

A loan may be denied to the student if his/her application has a deficiency, which under most circumstances can be done away with. “The most common reason for the banks to turn down education loans is when the applicant opts for an unrecognized institute,” says Punja. “The final status of the application also depends on the default history of any previous loan,” Bhonsle adds.

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