The dream of studying abroad is not just exciting, but also challenging when it comes to finances. With the rising cost of tuition fees and living expenses abroad, students often struggle to arrange the required finances. This is where Education loans step in to ease the financial challenges associated with studying abroad.
However, lenders assess multiple factors to approve an Education Loan. That is the reason why not every Education Loan application gets approved.
But worry not, in this article, we will guide students on how they can enhance their chances of an Education loan for abroad studies.
Want a Study Abroad Loan? Here’s How to Boost Your Chances Instantly
Build a Strong Academic Profile
A student’s academic profile is one of the first things that lenders check to approve an Education loan. Building a strong academic profile can increase students’ chances of getting an Education loan.
A consistent academic performance with good grades in the 10th, 12th classes, and graduation, if applicable, can double the loan approval chances. A good academic performance can demonstrate the student’s ability to succeed in higher studies as well.
This ensures lenders the employability chance of a student and the repayment capacity associated with it, which reduces the risk to the respective lender.
Choosing the right Country and the Course
Lenders do not just consider the academic performance of the student, but also look into the country and the course the student is opting for. This is done to access the employment opportunities in the respective country and with the chosen course.
Countries such as the US, UK, GERMANY, AUSTRALIA, and CANADA, etc, with potential job opportunities post-study are usually preferred by lenders.
STEM courses are favoured by the lenders to issue Education loans as they feel the employment opportunities are high. Lenders feel confident and consider the ROI to be high for loans on these courses.
Strong Co-applicant or Collateral
A strong co-applicant or pledging collateral can double the chances of loan approval. This reduces the risk to the lender for obvious reasons.
A co-applicant, ideally parents, siblings, etc, is someone who equally shares the responsibility of repaying the loan. A strong co-applicant with good credit history with stable income can strengthen the student’s profile.
Loans against collateral are easily secured, and the Education loan interest rate is also lower compared to a no-collateral loan. Pledging collateral enhances the loan approval as it reduces the repayment risk.
Apply to a Reputed University
Students applying to a well-recognized university can increase their chances of loan approval.
Universities with high placements, research orientation are considered to be the top priority for lenders to issue loans.
The rankings of the universities are based on various factors such as the kind of research they are involved in, the placement opportunities they provide to students, etc. Often times this choice can positively influence the Education Loan Interest rates as well.
Applying to these universities can assure the future earning potential of students to lenders. This indeed ensures the repayment capacity and reduces the risk to lenders.Thus, applying to a high-ranking university can positively influence the loan approval chances.
A good Credit Score for the Applicant and the Co-applicant
Lenders check the credit scores of the applicant and co-applicant to assess eligibility for the education loans. A good credit score for the applicant and the co-applicant is essential to make the education loan process simple.
Especially for an unsecured loan, this is one of the primary concerns for lenders. The lender checks the past credit history and consider the repayment capacity of the aEducation loan.
The credit history can significantly impact the Education loan eligibility of the students.The better the credit score, the greater the chances of loan approval.
Keep all the Documents Handy
Documents are the primary essentials for any loan process. Keeping all the necessary documents ready can make the loan process simple and hassle-free. Lenders ask for various documents based on different aspects of the loan.
If the student is opting for secured/collateral loans, all the necessary documents of the collateral required by the lender are to be submitted. For unsecured loans the documents of the financial co-applicant such as salary slips ,bank statements etc.are required.
Lenders require all the necessary legal and valid documents to approve the Education loan.lenders thoroughly access all the loans and approve the loan.Thus it is important to keep them handy to double the chance and to avoid last-minute hussle.
Choose the Right Lender
Choosing the right lender can make a big difference in getting Education Loans. Many lenders are offering Education Loans. However a proper research can help students find the right lender that matches the requirement of the student.
Many Public sector banks, Private sector banks, and NBFCs offer education loans to students. Students can compare various factors such as interest rates, loan amount ,repayment terms etc,before applying for an Education loan.
Public banks such as SBI, BOB, BOI et,c are a few of the top lenders offering Education loans.
In the private sector, banks such as ICICI, HDFC, IDFC, AXIS, etc, are the primary lenders offering education loans for students.
In the NBFC category, AVANSE, AUXILO, INCRED, CREDILA, etc, are the top lenders offering Education loans.
As previously discussed, proper research on all the available lenders can make the loan process simple and stress-free.
Eligibility Criteria for an Education Loan
To get an Education Loan, students have to meet the eligibility criteria set by the lender. This criterion is influenced by various factors such as the type of loan the student is applying for, the course, the country, the lender, etc.
However, the following is the basic eligibility that every applicant has to meet, irrespective of the above-mentioned factors.
Citizenship: The applicant and co-applicant must hold indian citizenship.
Age: students typically aged between 16 and 35 are eligible to apply for an Education loan.
Co-applicant: A co-applicant is mandatory for many Education loans. Usually parents, siblings, in-laws and first cousins are allowed to be co-applicants However this again varies from lender to lender.
Admission: Students must secure admission from a recognised university to proceed further with the Education loan process.
Collateral requirement: If the student is choosing a secured education loan, collateral is required to be pledged.This even reduces the interest rates of the Education loan.
Academic profile: Students are expected to have a good academic profile for an Education loan. An average of 60% in all grades is ideally recommended for students for a better loan process.
Course: The selection of a course can significantly impact education loans. Choosing STEM courses has a high chance of Education loan approval.
Documents Required for an Education Loan
There are many documents required to process an Education loan. However, below are the basic documents asked by lenders for an Education loan.
KYC Documents: Documents proving the identity of the applicant and co-applicant, such as
- Aadhar card, voter ID, driving license, etc.
- PAN CARD
- Passport
Admission letter: An admission letter from a recognized university
Loan Application Form: Students are required to submit a duly completed loan application form seeking an Education loan
Academic records: Students are required to submit all the necessary academic records, such as 10th grade, 12th grade, and graduate certificates, if applicable.
Test Score: If the student has taken any entrance test such as GRE, TOEFL, IELTS, CAT, etc…score card of the respective tests.
Collateral Documents: if the student is applying for a secured/collateral loan, all the legal and valid documents required by the lender are to be submitted.
Apart from the above documents, additional documents as per the request of the lender are to be submitted.
Conclusion:
Education loans are a great source of funds for students to pursue higher education abroad. However getting an Education loan quiet challenging amid rising competition. This article covers the factors that students need to focus on to increase the chance of loan approval. We also covered the eligibility criteria and the documents required to secure the Education loan. Expert advice is always recommended for students to navigate the Education loan process effortlessly.
