The most common question that comes into any student’s mind is regarding education loan eligibility and its requirements. It is important that students segregate facts from assumptions and conclusions before coming to a judgement on education loans. Let us look at some of the important questions

Student Loan Eligibility basic criteria

  • Should be an Indian National
  • Secured admission to professional/ technical courses in India or Abroad through Entrance Test/ Merit Based Selection process

What parameters are considered by the banks before approving an educational loan?

  • Academic Performance of the student
  • The University/College of admission
  • Security/Collateral (for secured loans)
  • Profile of Co-applicant (for unsecured loans to non-premier Institutes)

This by far would be the biggest concern for all the students and an area where they have the least information. So let’s clear the air and get some things sorted:
Every education loan requires a co-borrower to be present. The co-borrower is generally the parents of the concerned student. The credit score/income of the co-borrower has no bearing on the status and eligibility of the student in securing the education loan as per the law.
Education Loans up to 4L require no third-party guarantee nor collateral security
Education Loans ranging from 4L to 7.5L requires a third-party guarantor to vouch for the student applying for the loan. This can be a relative/unrelated person. The third-party vouches for the mentioned party and in case of a default agrees to pay on behalf of the student,
Education loans above 7.5L for non-premier institutes in India require collateral security to be placed with the bank. Collateral refers to property/land/FD/Gold which has monetizable and liquidity value in case such a situation arises for recovery.

Again, the collateral norms are waived off for students securing admissions into premier institutions or not-applicate in case of unsecured loans.

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