Education Loan Process

Applying for an education loan can seem like a daunting task. To make the process easier, many lenders offer online application processes. You can also scan and submit the required documents online and get the loan from the comfort of your home. A systematic approach can help simplify the application process for you. Let’s understand the nuances of an education loan application process in detail:

Here is how the education loan application process works:

Choose a University

Start by selecting a university that offers the course you wish to pursue. This education institute can be in India or abroad. However, ensure that the institute is recognised and has a good reputation. This can help you get the loan faster without any disputes. Also, check whether you meet the university’s requirements and can secure admission. Get an unconditional offer letter from the university, for further loan proceedings. Ask the institution about the tuition fee, study material, examination fees, etc. This will help you get an estimate of the loan amount you may require. 

Research Lenders

Once you have selected an institute, reach out to different lenders. Check the education loan interest rates, tenure, moratorium period and other loan terms. Compare offers to find the option that best suits your needs. Consider customer reviews and testimonials when making the decision. You can also use education loan EMI calculators to check the impact of different terms on your EMIs. 

Check Eligibility

The loan amount you can get is determined on the basis of certain criteria. Once you have selected a lender, check the eligibility criteria set by them. Some common factors usually taken into account when determining your eligibility are:

• Academic achievements and track record

• Choice of course and university 

• Professional work experience

• Projects and internships

• Income and employment status of the co-borrower

 

The specific requirements may vary among lenders. Discuss and get a complete understanding of the criteria before applying. Also, check the eligibility criteria that your co-applicant would be required to fulfil. 

Collate the Required Documents

You and your co-borrower may also be required to submit some documents when applying for the loan. Be sure to keep these handy before applying them to enjoy a seamless application process. Some common documents required are as follows:

• Academic documents

• KYC documents

• Income documents

• Collateral-related documents(if any)

• Unconditional offer letter from a university

• Sanction letter from NBFC (if applicable)

• Form I-20 and valid proof 

 

Ensure to get a complete list of the documents beforehand. This can help you avoid any delays in the approval process. 

Fill out the Application Form

Once all the preparations have been made, visit your chosen lender’s branch office. Alternatively, you apply online through the lender’s official portal. Fill in the application form provided by the lenders. Enter your personal and academic details. Provide all the documents you collated earlier. Cross-check all the data before submitting. This ensures that there are no hurdles in the verification and approval process.

Wait for Loan Approval

Once you have applied, the lender will go through the information provided. This process can take some time. Based on the information provided your eligibility is determined by the lender. If you meet their criteria, the lender may approve the application and provide an offer. The offer provided will be on the basis of your eligibility and the lender’s policies. 

Check the Loan Agreement

Read the fine print carefully to understand the loan terms. You can also consider negotiating for lower education loan interest rates or longer tenures. For this, try to highlight the stable income and credit history of your co-borrower. Check for hidden charges like prepayment penalties, processing fees, and so on. Also, assess the repayment options available. Pay close attention to the moratorium period. Once you agree to the terms, sign the agreement. Following this, the lender will disburse the loan amount in tranches as per the set schedule.

Here are some factors that can affect your education loan:

• Visa Approval

Visa is not a major requirement for the loan application to be approved. In fact, many lenders provide conditional sanction letters. These are quite useful when getting a student visa. However, note that the visa does play an important role in the disbursement of funds. If your visa is rejected, chances are that your loan application may be rejected as well. Thus ensure that you have your visa approved beforehand to avoid any delays.

• Academics and the Chosen Course 

Your academic achievements play a major role in determining your eligibility. A good academic record indicates that you are serious about your education. It shows that you are likely to complete the selected course successfully. Furthermore, the course you opt for is also considered when determining your eligibility. For example, you must apply for a bachelors or masters degree to be eligible for an education loan on Bajaj Markets. This helps the lender determine your future earning potential. It assures them of your loan repayment capabilities.

• International or Domestic Education

The costs associated with studying in India and abroad can be quite different. Depending on your choice, the loan amount and eligibility criteria may change. For example, if you are considering studying in the USA, you may have to provide Form 20-I. Similarly, the requirements can change from one country to another. Consider these details when applying for an education loan. 

• Financial Stability of the Co-signer

When applying for a study loan, the co-signer's income and credit history are assessed. Ensure that your co-applicant has a robust credit score and a steady source of income. If you are also earning through internships or freelance work, declare your earnings. This will improve your loan eligibility helping you to get the required funds easily.  

• Co-applicant’s Citizenship and Residence

It is essential that your co-applicant is an Indian citizen and resides in the country. This can help you avoid complications in the loan approval process. So, choose your co-signer wisely. 

• Geo-political Events

In case of an unforeseen geo-political event, the application may not be processed. This is because such events can affect your course completion. If the loan has been approved and you have to return, the tranche disbursements may be stopped. 

Here are some things you can do to ensure a smooth education loan application process:

Compare Lenders

Research and compare the loan terms provided by various lenders to find the right offer.

Apply Early

It is important to apply for the loan sooner as the admission process and visa approval can take time. Get the loan sanctioned early on so that you can pay the tuition fee on time.

Utilise Collateral

If possible, consider submitting your assets as collateral. This can help you get a lower interest rate and more flexible repayment options. Some collaterals usually  accepted by education loan providers include:

• Residential house or apartment

• Non-agricultural land

• Commercial property 

• Fixed deposits

Check for Hidden Charges

Note the processing fee, documentation charges, and other fees before signing the agreement. Check if any currency exchange fees are applicable in the case of an international study loan. Ensure that you are well aware of all the charges associated with the loan prior to accepting the offer.

Plan Your Repayments

Create a complete loan repayment plan. Plan the EMI payments, opt for auto payments, and avoid missing the deadline. Also, consider options like prepayment and foreclosure to become debt-free sooner. You can also refinance the loan or transfer it to another lender. This can help you enjoy lower interest rates and flexible repayment options. Always have an emergency fund that can help you repay the loan in case of any financial emergency. Creating a comprehensive plan ensures smooth repayment which does not strain your finances. 

Negotiate Loan Terms

Thoroughly discuss your requirements and preferred loan terms with your lender. Highlight your potential earnings and the financial stability of your co-borrower. Also, make sure that your co-applicant has a good credit history. If you have any additional source of income, show it to the lender. It will boost your loan eligibility. You can also consult financial advisors who can help you make a convincing case before your lender. 

Follow these simple steps to apply for an education loan:

• Click on the ‘Apply Now’ option on this page

• Provide your personal and educational details as requested

• Enter the required loan amount and preferred tenure

 

Following this, a representative will reach out to you for further proceedings.