Step-by-Step Guide to the Education Loan Procedure

• The education loan procedure involves providing funds to students to cover the cost of higher education.
• Proof of identity, mark sheets, and bank statements are among the main education loan documents required during the application process.
• Your education loan eligibility depends on your nationality, age, and academic performance, among other factors.

An education loan provides funds to students to cover the cost of higher education. The loan amount usually covers the tuition fees, accommodation, and living expenses. If you are a student or guardian, you can avail of these loans to prevent the immediate burden of hefty expenses and get easy access to funds.Education loans can be really helpful and valuable if planned and repaid responsibly. In this blog, you will read about the education loan procedure, education loan eligibility, and education loan documents required.

Following are the factors that decide education loan eligibility in the education loan procedure:

• Nationality: Education loans in India are usually granted only to Indian nationals. Non-resident Indians can also avail of education loans if they hold a valid Indian passport.
• Age: The age of the applicant also helps in determining theireducation loan eligibility. Lenders generally provide education loans to students aged between 18 and 35.
• Applicant: Students are the primary applicants in an education loan procedure. If you include your parents or guardians as co-applicants, it improves your chances of getting approval for an education loan for abroad.
• Academic performance: Your academic performance also influences your education loan processing. Lenders may ask for a minimum percentage or grade in your qualifying examinations; for example, at least 60 per cent in your State Board examinations.
• Choice of university: Your education loan procedure may be quicker if you are seeking admission at a well-reputed university.

Lenders may ask you for the following documents to start youreducation loan procedure:

• KYC (know your customer) documents, such as proof of identity (PAN card, voter ID, Aadhaar card); and proof of address (Aadhaar card, voter ID, ration card)
• Mark sheets of the qualifying examinations
• Letter of admission to the chosen college or university
• An estimate of your regular expenses during the college tenure
• Scholarship letter (if eligible)
• Bank statements of last six months of the applicant and co-applicants
• Income Tax Returns (ITRs) of last three years of your parents or guardians who are the co-applicants

A lender may also ask for additional documents at the time of education loan processing. Also Read: Plan a corpus for your child’s future needs with Children’s Funds. Get market-linked returns that are inflation-adjusted.

The education loan procedure can be different for different lenders as well as applicants. Here are some common steps followed if you apply for education loan:

Step 1: Choose Your Lender

The first step involves choosing a bank or lender when you want to apply for education loan. Most banks in India offer education loans. You should check the terms and conditions of the loan agreement, interest rate, and other formalities before you finalise your lender.

Step 2: Check Your Eligibility

It is essential to first check your eligibility before you apply for a loan. The education loan eligibility criteria have been specified above.

Step 3: Fill Out Application Form

When filling out the application form, you will need to submit:

• Age proof
• Two passport-size photographs
• Graduation and high school certificates
• Voter ID
• PAN card
• Aadhaar card
• Income details (parent or guardian)

Sign the application form and submit.

Step 4: Verification And Discussion With Your Lender

After submitting your application form, you can have a one-on-one discussion with your lender about the education loan procedure. The lender will subsequently verify your documents and creditworthiness.

Step 5: Loan Approval or Rejection

Based on your application and creditworthiness, the lender will either approve or reject your loan application. The bank will also require a guarantor before sanctioning the loan.
They will conduct a check of the guarantor’s credit history as well.

Step 6: Distribution of Loan

Once all the formalities are completed, the bank will approve the loan and disburse the loan amount either directly to the educational institution or to your bank account. The disbursement can be in instalments or a lump sum amount.

It is important to note that the application form and the documentation differs among lenders. Hence, you should always remember to check the terms and conditions of the loan agreement, interest rate, and other charges before choosing a lender.The repayment schedule is usually outlined in the loan agreement. Though you generally have to start repaying the loan after completing your studies, you should still plan your repayments in advance.Now that you understand all there is to know about education loans, go ahead and build your career without financial stress.If you want to learn about other financing options, check out personal loans offered by Aditya Birla Capital.