Eligibility Criteria :Education loan eligibility criteria mainly depends on the Course, Country of University, Financial Institute, and the type of loan. Given below are some important points to understand eligibility:
ü Course/Program Eligibility: Education loans are generally available from universities of repute and list of such eligible institutions with educational degrees / other programs for eligibility of loan
ü Admission: Banker / FI require mail / letter as admission confirmation proof for any eligible educational institution while considering EL application.
ü Academic Performance: Some Banks / FI also verified past track of academic performance as part of the eligibility criteria for EL.
ü Co-borrower or Guarantor: Some Banks / FI asks for a co-borrower or guarantor (usually parent or guardian), who will share the responsibility of repaying the loan if you are unable to do so. This also helps in improving eligible amount, depending upon income of both.
ü Credit History: Credit score (normally CIBIL) of student, co-borrower/guarantor's is a significant point affecting and determining eligibility for EL. Good CIBIL score helps improve your chances of approval of EL with some and may lead to more favorable loan terms.
ü Loan Amount: The loan amount that may be sanction depends upon above points, and repayment term and capability.
ü Inclusion: The Loan amount may cover, besides course fee, admission fee, hostel charges, living expenses air-travel expenses, insurance, cost of Laptop or other equipment based on the course being chosen.
ü Collateral or Security: Collateral security may be asked for by Bank / FI depending upon loan amount. Property, investments, or other valuable assets may be acceptable. Scholarship, if available may improve the chances of approval and better terms.
Documents Required to Apply for Education Loan
Documentation: All Banks require various documents for processing of loan application, viz. Identification proof, Confirmation of admission from College/University, Full details regarding Course, Passport/Visa for foreign universities, income related documents (ITRs), for both Student as well as the Guarantor or co-borrower.
- Student-Applicant
- Co-applicant/Guarantor
- Income Proof for Salaried Co-applicant/ Guarantor
- Income Proof for Self-employed Co-applicant/ Guarantor
Interest Rate: Linked to Loan Amount and credit score. However, some Banks offer subvention on timely repayment of interest during moratorium period ( Course duration + 6m – May very)
Before repayment starts, if monthly interest is repaid regularly, at the time of beginning of repayment, interest rate subvention is available at several Banks/FI.
Term / Period for Repayment : Normally, the repayment starts after 3 to 5 months or on getting job after completion of course, whichever is earlier. Say if it is a 24 m course, repayment may start from 28th or 31st month from date of loan or getting job before this.