The primary requirements for an education loan must be checked and understood properly before applying for the loan. Studying abroad the high cost of international education often makes an education loan a necessity. With proper planning and understanding of the requirements, securing a loan can become a straightforward process. Here’s a detailed guide to the requirements for an education loan for Indian students who wish to study abroad.
Table of contents
What are the Requirements for Education Loan?
The basic requirements or eligibility criteria for an education loan include the applicant being an Indian citizen, aged between 18 and 35 years. The admission must have been confirmed the course should be job-oriented. The course should lead to a professional or technical degree/diploma, enhancing future earning potential. Check some of the requirements for an education loan below:
- The student must be an Indian citizen and the age should be a minimum of 18 years (some banks may offer loans if the student is 16 years old.
- The admission must have been confirmed admission to a recognised university or institution abroad.
- The maximum age of the student shall not exceed 35 years.
- A co-borrower or guarantor (parent, guardian, or spouse) is mandatory.
- The CIBIL score of the co-applicant must be good.
Also Read: Check here all about How Much Does it Cost to Study MS in Australia
Documents Required
Documentation is one of the major requirements for an education loan. You will need to provide a comprehensive set of documents to support your loan application. Here’s a breakdown:
Academic Documents
- Previous academic records (10th, 12th, undergraduate mark sheets).
- Admission letter or offer letter from the foreign institution (unconditional/conditional).
- Scorecards of standardized tests like TOEFL, IELTS, GRE, or GMAT (if applicable).
Financial Documents
- Income proof of the co-applicant (salary slips, IT returns, or bank statements).
- Asset and liability statement of the family.
- Collateral documents (for secured loans).
Personal Identification
- Passport-sized photographs.
- A valid passport.
- Aadhaar Card, PAN Card, or any other government-issued ID.
Other Documents
- Loan application form.
- Fee structure of the course.
- Statement of estimated expenses, including tuition fees, accommodation, and other living costs.
Also Read: Check this blog and understand what is the process of education loan
Collateral Requirements for Education Loan
There are two major types of education loans: (a) Secured Education Loan, and (b) Unsecured Education Loan. There are many advantages and limitations in both the loans and you can choose any one of them based on your requirements. You need to know the difference between secured and unsecured education loan before applying. Check the details below:
Secured Loans
- Secured education loans require collateral such as property, fixed deposits, or insurance policies.
- Offer higher loan amounts and lower interest rates.
- High approval chances as less risk is involved
- Banks offer up to INR 2 crore secured loans
Unsecured Loans
- In an unsecured education loan, there is no collateral required. Education loan without collateral are offered by all banks.
- Higher interest rates and limited loan amounts (up to INR 40 lakhs in most cases).
- A higher CIBIL score is required as the lender sees high risk.
- As per the IBA Model education loan, only INR 7.5 lakh can be taken without collateral.
Applying for an education loan might seem like a tough process, but with proper documentation and clarity, it becomes manageable. Check some FAQs based on the requirements of education loan below:
FAQs on Education Loan Requirements
To apply for an education loan, you must be an Indian citizen aged 18-35, with confirmed admission to a recognized foreign university. A co-applicant (parent/guardian) is mandatory.
You need academic records, an admission letter, ID proof, co-applicant income proof, collateral documents (if applicable), and a detailed cost breakdown of the course.
No, collateral is required only for secured loans. Unsecured loans, which do not require collateral, are also available but typically have lower loan limits and higher interest rates.
Education loans cover tuition fees, accommodation, travel, exam fees, study materials, and living expenses, depending on the lender and loan type.
Interest rates typically range from 7% to 14%, with public banks offering lower rates than private banks and NBFCs.
Repayment usually begins after the course is completed, with a moratorium period of 6-12 months post-employment. The tenure ranges from 7 to 15 years.
Lenders typically fund courses with good career prospects at recognized universities. Confirm with your lender about eligible institutions and programs.
A co-applicant can be a parent, guardian, or spouse. Their financial stability is crucial for approval.
Most lenders offer loans only for full-time courses. Part-time or short-term courses are usually ineligible.
Loan processing can take 2-4 weeks, depending on the lender and the completeness of the submitted documents. Ensure all paperwork is accurate to avoid delays.
To know more about education loans, the best bank accounts for students, forex and banking experience for global students or international money transfers, reach out to our experts at 1800572126 to help ease your study abroad experience.
