Everything to Know About a Co-Applicant’s Role in Education Loan!

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It is quite difficult to get an education loan because of many requirements that are prescribed by lenders. A crucial element of student loan eligibility is the co-applicant.  A co-applicant who does not meet the necessary eligibility conditions is one of the major reasons that many loan applicants struggle to receive an education loan from a reputable lender.

If you are planning to take a student loan and want to know about the role of a co-applicant in education loans, then this blog will help you greatly. Keep on reading further to know more! 

Why Apply for an Education Loan? 

Education loans offer lower interest rates, flexible repayment alternatives, and longer repayment terms than other loans because they are expressly created for higher education. Tax advantages and the absence of security or guarantors are two further features of education loans. When you take out a student loan, the lender provides you time (a “moratorium period”) to focus on your studies and choose a career before you begin making payments on it. Other loans, such as personal loans, home loans, etc., do not provide such flexibility. 

Also Read: Types of Education Loans for Indian Students 

Who is a Co-Applicant in Education Loan? 

A co-borrower who signs the loan application and loan agreement with the primary loan applicant is known as a co-applicant who is also known as a co-signer. An education loan requires a co-applicant since the financial institution will turn to them if the primary applicant is unable to repay it in the event of unforeseen circumstances. 

Also Read: 5 Things to Keep in Mind to Apply for an Education Loan

Types of Co-Applicant 

There are two types of co-applicants – Primary co-applicant and financial co-applicant, which are discussed in detail below: 

Primary Co-Applicant – Students or parents are the primary co-applicants in education loans irrespective of their financial profile. For their foreign school loan, students can list their parents as the major co-applicant, even if they are retired pensioners or don’t have a steady income. 

Financial Co-Applicant – The blood relative of the co-applicant is referred to as the financial co-applicant. He or she may be a first cousin, a sibling, an uncle, or an aunt on either the paternal or maternal side. Only when students are unable to list somebody with a stable income as their primary co-applicant in their student loans for studying abroad is a financial co-applicant required. 

Also Read: Expenses Covered in Education Loan

Eligibility Criteria for Co-Applicant in Education Loan 

Having a co-applicant in an education loan is an important part of completing the loan process. An individual needs to fulfill some eligibility criteria in order to be a co-applicant.

  • Income Tax Return (ITR) Document – It is the most important prerequisite for an international education loan. Banks and NBFCs are only two examples of financial lending firms that are stringent with regard to IT return submissions. ITR documentation must be submitted in order to qualify for an unsecured loan for international schooling. 
  • Income Proof – If a co-applicant is employed in a corporate sector then they need to produce the last six months’ salary slips. On the other hand, if the person is a business owner then they need to provide the following documents to prove  their income:
  1.  Profit or loss statement of the business 
  2. Vendor bills 
  3.  GST registration proof
  4. Financial statements of the business accounts for the past six months 
  • CIBIL Score – A CIBIL Score is a phrase used to describe the benchmark credit score given to people based on their prior financial behavior. The co-applicants’ CIBIL score is taken into account by financial lenders before processing an international education loan. A CIBIL score of 685 or higher is excellent. 
  • Income Amount – When processing a loan to study abroad, a person’s yearly salary is also taken into account. A person must have at least INR 30,000 in monthly income for the co-applicant, excluding any other debts. 

Must Read: What are the Student Loan Eligibility Criteria for Studying Abroad?


Can there be two co-applicants in an education loan?

Most lenders permit up to two or three co-applicants for a student loan. However, based on the lender’s policy and the loan amount, the number of co-applicants may change.

What is the role of the co-applicant?

In a joint loan, a co-applicants main function is to provide financial security; in the event that the primary borrower defaults, it is his responsibility to make the repayments. The combined income of you and the co-applicant is used to calculate even the loan amount.

What is the difference between a co-applicant and a guarantor?

A guarantor is someone who agrees to pay back a borrower’s debt if the borrower is unable to make loan payments. Guarantors used their real estate as collateral for the loans. Co-applicants participate in the loan underwriting and approval procedure with a borrower.

We hope you liked our blog, where we tried to cover extensive information about co-applicant in education loans. Worried about the financial hurdles you are facing in order to fulfill your study abroad dreams? Let Fly Finance help you and make your dreams come true! 

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