Students often require financial assistance for higher education. An education loan can be useful in such situations. The education loan can be used to cover expenses like tuition fees, accommodation, library fees and other related costs. It is necessary for students who want to go for higher education to understand how to apply for an education loan so that they can begin preparations early and avoid delays. The article lists the steps involved in applying for an education loan.
Step 1: Understanding What the Loan Covers
An education loan provides financial support to eligible students, helping them achieve their academic goals. The loan provided by several lenders may cover tuition fees, living expenses, examination fees, cost of study materials and travel expenses for students looking to study abroad. Depending on the lender, the loan for education can be applied for funding undergraduate, postgraduate, professional or vocational courses. However, lenders may only offer loans for courses in recognised institutes.
Step 2: Check the Lender’s Eligibility Criteria
Before applying for an education loan, students must check if they meet the eligibility criteria set by their lender. Some of the common criteria are as follows.
- The borrower must be a citizen of India
- The students must have secured admission to an institution that conducts a merit-based entrance process
- The co-applicant of the student (parent or guardian) must have a stable income
- Age of the student and their past academic performance are also taken into account.
The eligibility criteria may differ among various lenders. Borrowers must therefore visit the lender’s office or the eligibility section of the lender’s website for clarification.
Step 3: Choosing a Lender and Loan Scheme
Various banks and Non-Banking Financial Institutions (NBFCs) provide education loans with varying features and terms. The common features that students must compare before choosing a lender are:
- Interest rate.
- Repayment tenure of the total loan amount
- Loan application processing fee
- Moratorium period (the time during which applicants don’t have to repay the loan amount).
Several lenders may also offer loans that fall under different government schemes. These schemes may offer concessions for specific categories. On the other hand, the documentation of NBFCs may be flexible with a faster processing speed.
Step 4: Understanding Documentation Requirements
Along with the loan application form, you will need to submit various documents. These documents help the lender check your eligibility and assess your creditworthiness. While the exact documents list may differ, the common documents required for education loan are as follows.
Aadhaar card, PAN card, passport or voter ID for identity proof
Utility bills or a rental agreement for address proof
Mark sheets of the 10th and 12th grades. Degree course certifications, if applicable
Detailed fee structure of the institution you are admitted
Salary slips, bank statement and income tax returns for income proof of the co-applicant.
If you are applying for studies abroad, the lender may request copies of your passport and visa. Additionally, if your loan is secured, you may have to submit collateral documents. Borrowers must make sure all the documents are updated and match the details that they provide in the application form.
Step 5: Submission and Awaiting Verification and Sanction
Lenders may provide you with the option to complete the application online or offline. In the online mode, you will have to fill in your details, upload all the necessary documents and track your application on the lender’s website or app. In the offline mode, you will have to visit the nearest branch of the lender, submit physical documents and submit a signed application form. You may be asked ot attend a short verification session, if required.
The verification can take a few days. Once your application is approved, the lender issues a sanction letter. This letter includes details about your loan amount, applicable interest rate, repayment tenure, moratorium period and other terms and conditions. After agreeing to these conditions, you must keep a copy of the signed agreement for future reference.
Conclusion
The education loan application process consists of several steps. Understanding each step is important to avoid delays in the application processing. The borrower must understand the expenses covered by the loan, check if they are eligible, choose the right lender, check what documents are required, and wait for the loan sanction. Whether you are securing admission in a domestic or international education institution, preparing early and staying informed can simplify the education loan application process.
