Co-applicant's Eligibility Criteria For an Education Loan

✓ Basic Co-applicants Requirements For Education Loan

✓ Preference for Co-applicants

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Table of content

  1. What is Co Applicant in Education Loan?
  2. Who can be an Education Loan co-applicant?
  3. Co Applicant’s Eligibility Criteria for Education Loan
  4. How to get an education loan
  5. FAQ's
  6. Need Help? Ask Here!

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Did you know that each year, several education loan applications get rejected, not because the students do not meet the eligibility criteria, but because their co-applicants don't?

Yes, lenders (especially private lenders) scrutinize your co-applicant profile thoroughly before approving any application for an education loan, and so they have laid some co-applicant education loan criteria as well. 

If you are searching for answers to questions such as Who is a co-applicant? Who can be a co-applicant for an education loan? What is the eligibility criteria? and Can a friend be a co-applicant for an education loan? you are at the right place. Keep reading to know more.

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What is Co Applicant in Education Loan?

A co-applicant who can also be referred to as a co-borrower or co-signer is a member of your family (ideally your parents) who co-signs the loan application and bears responsibility for repayment if for any reason you couldn’t. And also banks need someone here in India to contact for any due diligence while you are abroad.

Now, many students get confused between a primary co-applicant and a financial co-applicant. In one of our previous articles- "Education loan without co-applicant"- we have properly explained the differences between the two which you can read to clear any sort of confusion. 

In short, having a primary co-applicant is mandatory while taking an education loan whether from public lenders or private lenders. On the other hand, private lenders (private banks and NBFCs) ask for a financial co-applicant in the loan process, and a primary co-applicant and financial co-applicant can be the same person. 

Also to know when you need a financial co-applicant? read the article mentioned above.

What Role do Co-Applicants Play in The Education Loan Process?

In the Education Loan process, co-applicants play a significant role, they sign the loan application and agreement with the primary loan applicant, and the financial lender may turn to them if the primary applicant fails to repay the loan due to unforeseen circumstances. Having a co-applicant with a stable income and good credit score can increase the chances of loan approval, reduce the interest rate, and enhance the borrower's creditworthiness.

 

Who can be an Education Loan co-applicant?

It is a must that you have a co-applicant in the education loan procedure. Not everyone from the family can be a co-applicant because there are certain eligibility criteria for co-applicants set by lenders (which is discussed later in the article). 

Here is the table on who is accepted as a co-applicant by different lenders (preference-wise):

Lenders

Accepted as co-applicants

Government banks

Parents / Parents-in-law, Siblings, Parents siblings, Spouse, First cousins

Private banks

Parents / Parents-in-law, Siblings, Spouse

NBFCs

Parents / Parents-in-law, Siblings (preferable brother over sister), Spouse, Brother-in-law, Parents siblings, First cousins

watch the 39th episode of our LoanFlix series below which is on the subject "Co-applicant's Eligibility Criteria For an Education Loan"-

Comment - Are you still confused about the co applicant’s requirement? Comment down your query

Co Applicant’s Eligibility Criteria for Education Loan

The education loan eligibility criteria for a co-applicant set by most of the government banks are not as rigid as those set by private banks and NBFCs. This is mostly due to the type of loan these lenders provide to students.

Government banks provide collateral education loans for loan amounts above 7.5 lakhs whereas private lenders can provide up to 75 lakhs without needing collateral i.e. education loans without collateral

This is why the requirements of a co-applicant for a collateralized education loan from a government bank and a non-collateralized education loan from a private lender differ.

The following parameters form the basis of the education loan co-applicant requirements of all types of lenders-

1. CIBIL Score

A CIBIL score refers to the benchmark credit score allotted to individuals based on their previous financial activities. An individual’s CIBIL score is taken into consideration by all lenders before processing education loan applications. 

The nominal CIBIL score that all individuals who are most likely to be named as co-applicants are required to maintain is 685 to be considered eligible.

Private lenders are pretty strict when it comes to CIBIL scores and do not usually accept scores below that. However, since government bank education loan is lent based on collateral security they can accept a CIBIL score as low as 591 if it is due to legitimate and pardonable reasons.

But if the reason behind a low CIBIL score is a loan write-off, a loan settlement, etc., then even government banks may reject an education loan application.

Read more about : How the CIBIL score affects your education loan?

2. Last 2-3 years IT Returns Documents

ITR documents are one of the most important requirements of the education loan process. All lenders, private lenders, in particular, are very strict about education loan co-applicants submitting their ITR documents to get an education loan. 

Government banks still accept co-applicants who do not possess all two years’ ITR documents. However, it is extremely difficult to get an unsecured education loan without the relevant ITR documents in place.

The WeMakeScholars team is well-experienced with even the smallest education loan co-applicant requirements and hence will be able to guide and assist you in the end-to-end process of securing abroad education loans despite your status. 

Read our article-" Education Loan Documents Required by Private and Government Banks" to know what documents are required of a salaried and self-employed co-applicant.

3. Income Proof/Business Proof

The income proof to be submitted by co-applicants who are salaried are limited only to their salary slips or bank account statements of the previous six months reflecting the timely salary transactions. However, co-applicants who are self-employed often have trouble submitting legitimate income proofs. This is especially applicable to education loan co-applicants who run small-scale businesses.

  • Co-applicants running a small-scale business, for example, selling sarees from their own homes and have not registered their business, can provide some documents to the lending banks as proof of income such as:-
  1. Photographs of the stock being sold by them
  2. Vendor bills
  3. Receipts of the business transactions

(You can contact with WeMakeScholars team, they will provide you the list of all acceptable documents by the banks as proof of income)

  • Co-applicants who run well-established businesses are required to submit the following documents in order to get education loans:-
  1. GST registration
  2. Shop registration
  3. Profit/Loss statements of their business
  4. Financial statements of their business account for the past six months.

However, if your education loan process is at a standstill due to the absence of the relevant income proofs, do get in touch with our financial team for assistance.

Comment- Are you still in a dilemma about whether your co-applicant’s income proof will be acceptable? Please comment below with your doubts.

4. Income Amount

The income of your co-applicant doesn't matter for a collateralized loan from government banks. However, as with private lenders (except international lenders), the income of a co-applicant is of great importance as they are required to initially pay the accrued interest during the moratorium period.

Individuals earning at least INR 30,000 per month are considered eligible to be named as education loan co-applicants. Lenders do consider individuals who earn lesser monthly salaries as co-applicants. However, INR 30,000 is the recommended minimum monthly salary. A few private banks also have education loan schemes given solely based on your co-applicant's income.

5. Age, Retirement Status

Private lenders are reluctant to accept individuals of old age (around 60) or a retired person or even a farmer as a co-applicant, while government banks have no such issue.

Students can name individuals who are retired professionals, farmers, and those who do not have a stable income, as primary co-applicant for education loans in government banks. Again, you need to have the collateral to be pledged as security.

Must read: Government Bank Education Loan Benefits for Students

A lot of students are unaware of the important aspects of an education loan when they begin the process. Such students are very easily misguided about various education loan terms by lenders when they try to apply directly. One of the major reasons behind this phenomenon is that these bank officials are themselves not aware of the exact provisions laid out by their respective organizations with regard to abroad education loans.

This is why students who apply for their abroad education loans through WeMakeScholars are at an advantage and get their education loans sanctioned way earlier and in a hassle-free way as compared to the others. The financial team of WeMakeScholars consists of professionals who have had the experience of handling even the most complicated education loan applications for the past four years. The expertise and knowledge gained from this experience are what students get to avail themselves of when they register with us for their abroad education loan process. 

So, if you are looking for the right kind of guidance and assistance for your abroad education loan process, do get in touch with us.

How to get an education loan

If you have doubts about “how to get an education loan” or “how to apply for an education loan”, follow these steps to process your student loan:- 
Step 1: Fill out the Student Loan Common Application form or request a callback 

Step 2: You will receive a call from your financial officer, to check your eligibility. Provide all the required information.

Step 3: Compare and choose your lender bank from all the lender options as per your eligibility and education loan policies.

Step 4: Submit your documents in the bank or upload your documents on the WeMakeScholars secure document portal, as per the documents checklist shared by your financial officer

Step 5: After document submission, your file will be logged in. You will receive a student loan decision within 2-6 days for Private banks like Axis, and ICICI and within 15-20 days for Govt. banks.

Step 6: After the sanction, you can sign the education loan agreement and collect your sanction letter.

Education Loan FAQs

  • Is it possible for a co-applicant with a lower income to qualify for an education loan?

    Although a co-applicant with a lower income may still be able to qualify for an education loan. Lenders consider the co-applicants income and creditworthiness while evaluating the loan application. A low-income co-applicant may need to provide additional documentation to prove their ability to repay the loan, such as their past employment record, savings, or assets.

  • How many co-applicants are allowed for an education loan?

    Most lenders allow up to 2-3 co-applicants for an education loan. However, the number of co-applicants may vary depending on the lender's policy and the loan amount. The co-applicants need to fulfill the eligibility criteria and provide their financial details and documents for the loan application.

  • Can the age of the co-applicant affect the loan tenure for an education loan?

    Yes, the age of the co-applicant can affect the loan tenure for an education loan. If the co-applicant is nearing retirement, the loan tenure may be shorter. Lenders prefer to sanction loans to co-applicants who have a stable source of income and can repay the loan within the repayment period. If the co-applicants age exceeds the lender's specified age limit for loan repayment, they may ask for additional collateral or a higher interest rate to compensate for the risk.

  • What are the advantages of having a co-applicant for an education loan?

    Having a co-applicant for an education loan can increase the chances of loan approval, reduce the interest rate, and enhance the borrower's creditworthiness. A co-applicant with a stable income and good credit score can strengthen the loan application and improve the chances of getting approved for the loan.

  • Does the employment status of a co-applicant impact the approval of an education loan?

    Yes, a co-applicant's employment status and income stability are essential factors for the approval of an education loan. A steady job and income can increase the chances of loan approval, as it indicates the co-applicant's capacity to repay the loan. Lenders may require the co-applicant to submit their income tax returns, bank statements, or salary slips to verify their income and employment status.

  • Can a friend be a co applicant for education loan?

    Your friend can be your guarantor in education loan but co applicants can only be your blood relatives. The list is given the above article and check out who can be a co applicant for your education loan.

  • Who can be an SBI education loan co applicant?

    The co applicant acceptance for SBI is the same as other public banks. The co-applicant for the loan can be a parent, spouse, parent-in-law, or sibling over 18. In cases where none of these are available, SBI also allows a guardian as the co-applicant.

Our Education Loan team will help you with any questions

2 Comments

  1. Kavita Virkar

    as i don't have parents or siblings as co applicant , can my cousin or friend become co applicant ?
    18 Jan, 2024 at 06:03 AM REPLY
    1. Sneha Krishna

      Hi Kavita,

      Greetings! A co-applicant is typically someone who is responsible for repaying the student's loan in case the primary borrower is unable to do so. Commonly accepted co-applicants include parents, spouses, parents-in-law, or guardians. As you are already in touch with your Financial Officer, Ruchi Kumari, please reach out to her for guidance and any assistance regarding your education loan.

      Additionally, could you please inform us if you have applied for any scholarships in the past?

      20 Jan, 2024 at 12:24 PM REPLY
Abhinav Raj
WeMakeScholars- supported by IT Ministry, Govt. of India.
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