With the rising cost of education all over the world, many students rely on education loans to fund their higher education in India and abroad. These loans make education more accessible by helping students cover expenses such as tuition fees, living expenses, purchase of books, etc.
Getting an education loan approved depends on several factors that many students don’t know about. This article explores the key information about education loan approval, including the factors that affect it and tips on how you can improve your chances of loan approval.
Before learning about education loan approval, let’s understand what an education loan is. Education loans are offered to students to finance their higher education in India and abroad. These loans are offered by various financial institutions in India, such as Public sector banks, Private banks, and NBFCs. Students can use the funds provided by an education loan to cover their tuition fees, living expenses, cost of books and supplies, etc.
These loans are mainly divided into two types: collateral and non-collateral education loans. Collateral education loans, such as the SBI education loans, require students to pledge their property as collateral for the loan. Whereas, private student loans like the Credila education loans can be processed without any collateral.
An education loan approval is crucial for funding the education of many students. However, students often struggle to get their loans approved without the right guidance. This is why WeMakeScholars provides complete education loan assistance to students applying through them. Their team is dedicated to helping students receive education loan approvals on time. Since WeMakeScholars is an organization funded and supported by the Ministry of IT, Government of India, they offer their services completely free of cost for students.
Education loans are mainly classified into two types based on the collateral requirement of the loan. They are:
Education loans that require applicants to pledge collateral, such as a house or land, as security for the loan amount are collateral or secured education loans. These loans are mostly offered by the Government/Public banks in India. And the interest rate on secured loans from public banks, such as the SBI education loan Interest rate is relatively low compared to private lenders.
The eligibility criteria of collateral education loans are relatively more flexible compared to unsecured loans. Including collateral in the education loan increases the chances of loan approval.
Education loans that do not require applicants to pledge any collateral as security in the loan are called non-collateral or unsecured education loans. These loans are offered based on the income and creditworthiness of the financial co-applicant. Private Banks and NBFCs in India are known for offering unsecured education loans with flexible terms. The Credila education loan offers higher loan amounts without collateral.
Private lenders have strict eligibility criteria for non-collateral education loans. Lenders thoroughly assess the income and credit score of the co-applicant to approve an unsecured education loan.
What is an Education Loan Approval?
An education loan approval refers the when the lender officially agrees to offer the loan to the student. Lenders thoroughly assess the eligibility, documents, and the co-applicant’s profile before approving the education loan. The process to get an education loan approval includes choosing a lender, applying for an education loan, meeting all the requirements of the loan, and getting your loan approved.
Factors Affecting an Education Loan Approval
The approval of an education loan majorly depends on the following factors:
Eligibility Criteria for Education Loans
One of the major factors that affects the education loan approval is the eligibility criteria of the lenders. It varies by bank. However, the basic criteria laid by the banks for approving education loans include:
These are the basic eligibility criteria laid by the banks for approving an education loan.
Documents Required for Education Loans
Oftentimes, students don’t know what documents are required to get an education loan. This significantly affects their chances of loan approval. The following documents of the student and their co-applicants are required by the lenders for an education loan:
How to Improve Chances of Education Loan Approval
Getting approval is crucial when you’re planning on taking an education loan for your studies. The following are a few tips you can use to improve your chances of approval for an education loan:
Education loans have become the primary source to fund higher education for many students. Knowing about the factors affecting the education loan approval is essential for students while applying for an education loan.
In this article, we have learned what an education loan approval is, along with the factors affecting it. We also covered tips on how to improve the chances of education loan approval.
