Eligibility for Education Loan : Criteria for Loan Applicants
Before beginning any education loan process, it is essential to know your eligibility for education loan. More often than not, students face rejection of their abroad education loan applications way later in the education loan process due to their ignorance about the criteria of eligibility for education loan. One of the major reasons for this is that most of these students are unaware of the exact criteria of eligibility for education loans set by most of the lenders. The education loan requirement for students prescribed by all major lenders is discussed in this article.
The 40th episode of Loanflix discusses some of the important education loan eligibility criteria set by both banks and NBFCs for secured as well as unsecured education loans. This article will give you a detailed explanation of the different factors of the applicant profile for education loan which are crucial to the entire process. A video of the 40th episode of Loanflix has been embedded below, you may watch the video to understand the summary of this article.
Education Loan Options In India: A Brief Overview
Education loans in India are divided into secured loans and unsecured loans, based on the need of collateral security. Secured education loans are provided by all major government banks on the basis of tangible collateral security. This tangible collateral security may involve either immovable property, liquid security or assets belonging to a third party. The criteria of eligibility for education loans set by government banks are more flexible as compared to those of NBFCS. The criteria of education loan eligibility in India depends on the nature of the education loan being lent.
Unsecured education loans are basically education loans which do not involve any tangible collateral security. These loans are purely lent on the basis of a student’s merit, the ranking of their university and nature of the course chosen by them and their co-applicant’s financial records. Due to these reasons, the criteria of eligibility for education loans set by NBFCs are more stringent.
Both government banks, as well as NBFCs, consider certain factors of a candidate’s profile before setting the education loan eligibility criteria. These factors are mostly related to two different timelines, factors related to the past academic records and those related to the future, such as a student’s chances of getting employed post their course. Due to the different natures of these education loans, the education loan eligibility in India greatly depends on the kind of education loan lender chosen by you. Let us take a look at all of the education loan requirement for students and understand how they decide on the abroad education loan eligibility criteria.
Read More about Education Loan Eligibility in India (The complete guide)
1. Student Loan Eligibility: Factors Related to Past Records
When banks look into a student’s past records in order to decide their eligibility for education loan, it is all but obvious that these records are related to that student’s academics or their finances. The following academic details of a student’s profile are considered by banks as well as NBFCs before they are deemed to be eligible for an education loan. It is necessary to have a thorough knowledge of the following academic factors, especially when it comes to the abroad education loan process as a lot of students tend to be rejected only on the basis of these factors.
Factor 1: Percentage of Marks Scored In Their Entire Course of Studies
The percentage of marks scored by applicants is one of the most important factors which contribute to the criteria for education loan eligibility set by most banks. Most government-run banks such as the Bank of Baroda, Canara Bank, PNB, etc. give due preference to students having more than 60% of marks in all of their qualifying exams in the past. As collateral is not involved in unsecured education loans, NBFCs have set a higher benchmark for academic scores for applicants to be able to meet the standards of eligibility for education loan.
The biggest plus point of applying for abroad education loans through WeMakeScholars is that our financial team has been able to help students even with lower percentages qualify for abroad education loans with prominent government banks. So, if your percentage of marks do not meet the standards set by the lender, do get in touch with our financial team for the same.
Factor 2: Backlogs in Academic Records
When students directly approach most government banks for an abroad education loan, many of the bank officials may state that students who have had more than three backlogs are not deemed to qualify for an education loan.
Ideally, it doesn’t matter as long as the student completes his/her course within a stipulated time frame. For example, a typical engineering course lasts for four years. If you have completed your course within that time frame despite having backlogs and wish to study abroad with the help of an education loan, you should not find it difficult to get an education loan.
It is still possible for you to get an education loan even if you were not able to complete your course within the right time frame if you apply through WeMakeScholars. However, this is based on the condition that you have a genuine explanation for this delay in course completion. So, if you happened to finish your B.Tech degree course in a span of 5 years instead of the regular 4 due to genuine reasons, do get in touch with our team for assistance regarding your education loan process.
Factor 3: Gap Years/ Gap in Your Course Duration
Any gap in your academics or in the duration post that will have to be accounted for in order to prove your eligibility for education loan. The abroad education loan eligibility criteria set by most banks require students to explain any gap that may have occurred in the course of their studies or post that period, in a letter. For example, if you had graduated in 2017 and are planning to study abroad in 2020, you will be required to explain what you did in the three years from 2017 to 2019 in a letter. This is just one of the formalities which you may have to complete. Most bank officials do not bother to go into further details of such year gaps unless and until the time duration exceeds ten or fifteen years.
Also read about Abroad Education Loan for Bachelors Studies- Details to know
Factor 4: Work Experience
The abroad education loan eligibility criteria of prominent government banks do not stress much on students having prior work experience as the chances of students getting secured education loans are mostly dependent on the collateral being pledged. However, the criteria of eligibility for education loan without collateral set by NBFCs and private banks encourage loan applicants with such profiles for abroad education loans.
Private banks like, for example, the ICICI Bank, allow students with more than three years of work experience to borrow abroad education loans without naming a co-applicant. However, having a work experience of the said number of years is one of the criteria of eligibility for education loan from such banks.
Criteria of Eligibility for Education Loan: Future Prospects
Certain factors of a candidate’s professional future play a very important role in fulfilling the criteria of eligibility for education loan laid down by lenders. Most of the terms mentioned here have a lot to do with the unsecured education loan process of private banks and NBFCs. The abroad education loan eligibility criteria of government banks have more to do with the collateral being pledged rather than a candidate’s future career prospects. These factors will be explained in great detail in the following paragraphs.
Factor 1: Country of Higher Studies
As mentioned in the previous paragraph, NBFCs do pay close attention to the chances of employability offered by laws of the countries in which candidates plan to study. The profiles of students who wish to pursue their higher education in countries like the USA, Canada, Germany, France, Ireland, etc. are mostly considered for unsecured education loans by NBFCs. The abroad education loan eligibility criteria of government banks have more to do with the university’s ranking rather than the country in which students wish to study. Most of these government banks, like the Bank of Baroda, SBI, PNB, etc. have segregated international universities into different categories based on their worldwide rankings.
Factor 2: Nature of The Course (STEM or Non-STEM)
Again, the criteria of eligibility for education loan of NBFCs specifically state that the nature of the course chosen by loan applicants does play an important role in determining their qualification for unsecured education loans. Most NBFCs and private banks are more keen to lend education loans without collateral to students who have enrolled in courses belonging to the STEM category. A few of them may still consider the applicant profile for education loan of students who have enrolled in courses belonging to the Non-STEM category under certain conditions only.
The abroad education loan criteria of government banks, however, allow students to borrow secured education loans for such courses provided that the ranking of their university falls within their requirements. In order to get to know the correct list of criteria for student loan eligibility, do get in touch with the financial team of WeMakeScholars.
Factor 3: Degree Level (Undergraduate/Postgraduate)
The criteria of eligibility for education loans of most lenders are mostly decided on the assumption that most students would be needing an abroad education loan to pursue postgraduate level courses. However, with a rise in the number of students opting for undergraduate courses abroad, a lot of lenders have started providing abroad education loans. Again, since the main requirement of government banks for abroad education loans is based on the value of the collateral being pledged, many of them do provide secured education loans to candidates who need abroad education loans for their undergraduate courses abroad.
Again, the abroad education loan eligibility criteria of NBFCs are based on the needs of students who wish to pursue their postgraduate courses abroad. In fact, it is more difficult to fund undergraduate courses abroad with the help of non-collateral education loans from NBFCs and private banks. Hence, if you are looking to fund your higher studies abroad with the help of abroad education loans, go for collateral-based education loans.
Factor 4: Qualifying Test Scores
If you plan on studying in the USA with the help of unsecured education loans from NBFCs, do keep in mind that having a good GRE score (above 300). If your GRE score exceeds the said figure, your chances of getting unsecured education loans at lower interest rates from NBFCs become better. When it comes to language-based qualifying exams such as IELTS and TOEFL, it is always better to maintain a decent score, however, the grades of these exams are not the major deciding factors for unsecured education loans. The scores of none of these exams matter when it comes to secured education loans from government banks.
Why Approach WeMakeScholars For Your Education Loan Process?
When students directly approach banks for enquiries regarding abroad education loan process, most of them are given only partial information regarding the same. The financial team of WeMakeScholars has sufficient knowledge about the abroad education loan process due to their experience of tackling even the most complicated cases. As a result, close to 3000+ students have benefitted from their services. In the abroad education loan process, most students who have planned their higher studies in countries like Germany and Canada are mostly concerned about their pre-visa disbursements from government banks as many of these banks are often not aware of the education loan provisions for these countries and as a result, delay the pre-visa disbursement. When you apply through WeMakeScholars, our financial officers ensure that this does not happen and often try their level best to get such loans sanctioned well in time. So, if you are confused on how to go about the abroad education loan process, do get in touch with our team now.
With this point, we come to the conclusion of the eligibility for education loan stated by various lenders. This article also marks the end of Season one of the Loanflix web-series. Do stay tuned for the next Season of Loanflix, as we plan to tell you about more exciting topics of discussion related to abroad education loan process.
Note: WeMakeScholars is an organization funded and supported by the Government of India that focuses on International Education finance. We are associated with 10+ public/Pvt banks/ NBFCs in India and help you get the best abroad education loan matching your profile. As this initiative is under the Digital India campaign, it’s at free of cost. The organization has vast experience dealing with students going to various abroad education destinations like the US, Canada, UK, Australia, Germany, Sweden, Italy, China, France among others