✓ Basic Co-applicants Requirements For Education Loan
✓ Preference for Co-applicants
Did you know that each year, a number of 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 requirements for the education loan co-applicant as well.
This article discusses the requirements in detail which have to be fulfilled by any particular co-applicant for an education loan. You can also watch the 39th episode of our LoanFlix series below which is on the same subject -
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.
It is a must that you have a co-applicant for your 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)-
Accepted as co-applicants
Parents / Parents-in-law, Siblings, Parents siblings, Spouse, First cousins
Parents / Parents-in-law, Siblings, Spouse
Parents / Parents-in-law, Siblings (preferable brother over sister), Spouse, Brother-in-law, Parents siblings, First cousins
The 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-
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 are 685 in order 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 on the basis of 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 does CIBIL score affects your education loan?
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 in order 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 all documents are required of a salaried and self-employed co-applicant.
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.
(You can contact with WeMakeScholars team, they will provide you the list of all acceptable documents by the banks as proof of income)
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.
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.
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.
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 them.
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.