When it comes to financing higher education, an education loan in India can be a great option. An education loan is a special kind of loan designed to help you fund higher education (graduate or post-graduation) without needing to rely on your own savings or money from relatives.
STEPS TO FOLLOW TO GET AN EDUCATIONAL LOAN
Here’s the step-by-step procedure for obtaining an education loan:
1 – Research and Lender Selection
- Begin by researching and selecting a lender before initiating the loan application process.
- Secure the admission offer letter from your chosen school.
- Decide on the lender and visit them online or in person.
2 – Complete Loan Application
- Access the loan application form on the lender’s website if applying online.
- Follow the guidelines set by the Department of Financial Services, Ministry of Finance, Government of India, by using the Vidya Lakshmi portal.
3 – Attend the Interview
- Expect an interview, whether you apply online or offline.
- Attend a personal discussion with the bank, usually involving the principal student loan applicant.
- Answer questions about academic performance, desired degree, chosen school, potential income, and field of study.
- Bank assesses your suitability for the loan based on the interview.
4 – Document Submission
- Provide required documents as part of the bank’s education loan process.
- Submit your university’s admission offer letter and allow the bank to verify your enrollment.
5 – Loan Approval
- After verifying your details, the bank approves the education loan.
- A parent/guardian of the student may be listed as a co-borrower or guarantor.
- Bank evaluates the credit score of the co-borrower/guarantor.
- Applicant signs a promissory note and other necessary loan documents, committing to repayment.
6 – Loan Disbursement
- Upon completing all formalities, the bank disburses the approved loan amount.
- Disbursement can be partial (semester-wise) or full, as per the agreed terms.
ELIGIBILITY CRITERIA
Here are the essential education loan eligibility criteria for loan approval:
- Residency: Applicant must be an Indian resident.
- Admission: Confirmed admission to recognized institutions in India or abroad is required.
- Age: Age should be between 18 and 35 years at the time of application.
- Education: Pursuing a graduate/postgraduate degree or PG diploma.
- Affiliation: Admission to UGC/AICTE/Govt.-affiliated colleges or universities.
- Co-Applicant Income: Co-applicant must have a regular income source.
- Academic Record: A strong academic record supports faster loan approval.
DOCUMENTS REQUIRED
Ensuring the submission of necessary documents is essential for a smooth Education Loan application process.
Before the sanction of educational loan –
| EDUCATIONAL DOCUMENTS | – Relevant certificates or transcripts for HSC, SSC, Graduation, or Post Graduation
– Copy of the official admission letter provided by the educational institution – Official breakdown of tuition and additional fees provided by the educational institution – Valid proofs of test scores, where applicable |
| IDENTITY DOCUMENTS | – Aadhaar card/PAN card/Voter card/Passport/Driving License for identity proof
– Voter ID card/Utility bills/Rent agreement/Lease agreement/Aadhaar card/ Passport for address proof |
| FINANCIAL DOCUMENTS | Salaried Individuals – Employee ID Card/Employment proof/Salary Certificate (for cash salaried cases) – Most recent three months’ salary receipts – Income tax return particulars for the past two yearsSelf-employed Individuals – Evidence of turnover for self-employed individuals and business owners – Balance sheets of the business for the previous two years – Verification of business ownership – Supplementary documentation for rental or pension income, as appropriate – Financial records from banking institutions |
After the sanction of the loan –
- Payment Guidelines: You can facilitate repayment through registration for Standing Instruction Mandate (SI) or National Automated Clearing House (NACH) mandate. For NACH Mandate, submission of post-dated cheques (PDCs) along with a security PDC is necessary. Specific requirements may differ based on the policies of the lending institution.
- Loan Contract: Both the applicant and co-applicant must thoroughly review and endorse the loan agreement.
- University Fee Request Letter.
After loan disbursement –
- Academic Transcript for the Applicant’s Previous Semesters.
- Institute’s Receipt Copy for the Previous Semester’s Payment.
- Fully Completed Disbursement Request Letter Submitted by the Applicant.
- Copies of Visa and SWIFT Advice for Overseas Education.
REQUIRED DOCUMENTS FOR APPLYING TO A FOREIGN UNIVERSITY
- CAS Letter (for UK student loans).
- I-20 Form (for US academic institutions).
- Proof of passing an admissions exam (GMAT, GRE, IELTS, TOEFL).
- Exchange visitor or student form (nation-specific).
- Entry permission (if required for the respective country).
NOTE – Additional documents may be requested by the bank as deemed necessary. Prior to advancing with your Education Loan application, it is crucial to have all essential documents readily available. This proactive approach streamlines the application process, resulting in time and cost savings.
CONCLUSION
Obtaining an educational loan opens doors to a world of opportunities for aspiring students. The financial support provided through these loans empowers individuals to pursue their academic dreams without being hindered by monetary constraints. While the process of securing an educational loan might involve meticulous documentation and careful adherence to guidelines, the potential rewards are immense. Education is an investment that pays dividends in knowledge, skills, and personal growth, and educational loans play a pivotal role in making this investment achievable for countless students. As you embark on this educational journey, remember that responsible financial management and a commitment to your academic pursuits will pave the way for a brighter future.