Documents Required for an Education Loan

It is very difficult and frustrating when you have collected your documents and you’re holding them in your hands, yet you are unsure if they are sufficient or not. What  if the bank requests for more documents? We can understand your dilemma; almost all students applying for an education loan face similar issues. However, from now onwards, you don’t have to worry. This is your final destination in your search for the complete list of documents required for an education loan. In this article, We will provide you with each necessary document and even offer tips if you don’t have all the required paperwork. We’ll guide you on what to do and what not to do in that scenario.

Before moving further, let's first understand the various types of loan that lenders provide. Basically there are two types of loan:- 

1. Secured/ collateralized education loan
   1. Immovable properties (like houses, flats, and land.)
   2. Liquid securities (like FDs, Bond and Life Insurance Policies)
2. Unsecured/ non- collateralized education loan

Getting an education loan requires specific documents, here is the list of common types of education loan documents that are required to ease the process of your loan and get the sanction faster without any complications.

1. Identity/KYC documents 
2. Academic and Work experience documents
3. Financial documents  
4. Collateral documents (if you are opting secured education loan)
5. Common additional documents

1. Applicants KYC documents
   1. Voter ID card (not accepted by all banks)
   2. Driving License
   3. Passport
   4. PAN Card
   5. Government department ID card
   6. Aadhar Card or Aadhar enrolment number
   7. Passport( mandatory for abroad education)
      (Co- applicants KYC documents are same as the above list)
2. Address proof documents
   1. Aadhaar Card
   2. Valid passport
   3. House lease agreement ( Current one)
   4. Valid electricity/water/LPG bill
   5. Magistrate/Gram Panchayat affidavit (not applicable for all banks)
   6. Voter’s ID card (not accepted by all banks)
   7. Updated passbook or bank account statement
   8. Notarized rental agreement
3. Domicile proof documents
   1. Permanent residence certificate issued
   2. Certificate of domicile issued by district magistrate office
   3. Gazetted affidavit (may not be applicable for all banks)

(NOTE- Along with all these documents, applicant and co-applicant must have to submit recently clicked two passport sized photographs and current address proof, some banks may ask for additional documents but no need to worry, you can just simply reach out to WeMakeSchloars financial officers, they will help you out at any point of time)

1. Previous academic documents
   1. SSC/10th Class or equivalent mark-sheet/passing certificate (Minimum 50% or above pass required)
   2. HSC/12th Class or equivalent mark-sheet/passing certificate (Minimum 60% or above pass required)
   3. Graduation/3 year or 4 year degree marksheet/passing certificate (if applicable) - (Minimum 60% or above pass required)
   4. Result of the entrance exam through which admission is being taken (e.g. CAT, GRE, TOEFL, IELTS, etc.)
   5. Diploma certificate
   6. Certificate of past scholarships/awards etc. 
   7. Certificate courses certificate
2. Current academic documents
   1. Copy of the offer letter or admission letter of the Institute
   2. Statement of cost of study
   3. A conditional offer letter is also considered in the case of overseas education.
3. Abroad education academic documents
   1. I-20 form for study in USA and CAS Letter for UK (Please note that for US, i20 is not mandatory for the loan approval in any bank or NBFCs)
   2. Entry permit ( depends on the country )
   3. Exchange student form or exchange visitor form
   4. Result of the entrance exam through which admission is being taken (e.g. CAT, GRE, TOEFL, IELTS, etc.) with prescribed minimum score
4. Work experience documents
   1. work experience letter, last 3 salary slips and ITR copy should be submitted (though it is not mandatory but it helps in getting a better rate of interest)

When you apply for a loan for your education, you might need someone—like your parents, siblings, or other family members—to be your co-applicant or guarantor, depending on the bank and the type of loan.

A co-applicant or primary co-applicant is the person responsible for repaying your loan if you cannot. Generally, banks accept your parents, spouse, parent-in-law, or guardian as primary co-applicants.

If your primary co-applicant doesn't have their own assets to pledge, you can pledge collateral owned by a third party, like relatives or friends, and they become the guarantor.

A financial co-applicant is someone who will be paying the interest to the bank during your study period. For this, the financial co-applicant needs to have a steady income and the necessary proof. When applying for an education loan, you'll need to gather the following documents of your co-applicant.

Bank Documents:
Bank passbook copy/bank statement (last 6 months or more)

Academic Institution's Letter:
Academic fees demand letter (issued by the institution)

For Self-Employed/Business/Pensioners Co-Applicant:

Income Tax Related:

• IT (Income Tax) returns verified by a Chartered Accountant (at least 24 months)
• IT returns for the last 6 months to 2 years (if applicable)
• TDS Certificate (Form 16A)

Business Documents:
Proof of turnover (latest Sales Tax/Services Tax/GST return statements/MSME certificate/utility bill))
Audited P&L (Profit and Loss statement) for the current and previous financial year

Pensioners:
Proof of retirement and pension certificate (from requisite authority)

Self-Employed Professionals:
Proof of qualification like CA, doctor, and other professionals (if required by the bank)

For Employed/Government-Non-Government Service/Salaried Co-Applicant:  

• Salary slips for the last 3 months
• Copy of Form 16 or IT Returns for the last 2-3 years
• Bank statement for the last 6 months
• Brief statement of assets & liabilities

If the business is small, you need to focus on things like shop registration or vendor purchase receipts. Occasionally, there are really tiny home businesses, like selling saris from home. In these cases, banks might accept photos of the stock as proof. But if your co-applicant's business is well-organized, it means better chances of getting the loan approved.

In summary, it's important to have at least one person with the listed documents to secure an education loan without collateral. It's best if this person is a close family member, such as parents, siblings, parents-in-law, parents’ siblings- as in your father’s brother or Mother’s
Brother.

In this section, we'll cover the necessary documents, which might seem complex due to technical terms, but they are highly beneficial. It's crucial to follow along to avoid confusion.

One primary cause for government bank loan rejections is related to property legality or incomplete documentation. Grab a pen and paper to jot down these details.

As discussed in our previous blog, collateral falls into two categories: Immovable Properties or Liquid securities. Let's begin with the paperwork required for Immovable properties like houses, flats, and land.

Documents Needed for Immovable Properties:

Property Title Deed and Registered Sale Agreement:

• Original registration receipt for the above agreement is necessary.

Allotment Letter from Municipal Corporation or Authorized Govt. Authority:

• Required for properties allotted by authorities like MHADA, CIDCO, HUDA, etc.

Chain Deed or Link Document or Encumbrance Certificate (EC):

• This document is crucial and should cover a 30-year period. It displays property transaction history within this timeframe. If the property ownership exceeds 30 years, the sale deed of the previous transaction suffices.

Latest Property Tax Copy or Electricity Bill:

• Proof of property tax payment or recent electricity bill.

Municipality Approved Building Plan or Plot Layout:

• Copy of the approved building plan or plot layout by the municipality.

Completion and Occupancy Certificates (For Constructed Properties):

• Required for flats or constructed properties. Banks might accept under-constructed properties without these certificates, although it's uncommon. In such cases, a commencement certificate is necessary.

Documents Needed for Liquid Securities:

Fixed Deposit (FD) as Security:

• An FD in the same bank where the loan is applied. No additional documents are required.

Insurance Policy as Security (Maturing Policy):

• Documents needed are the policy paper and surrender value certificate.

Gold as Security:

• The gold needs to be deposited in the bank along with purchase proofs.

Government Bonds:

• Only the bond certificate is required.

Pledging liquid securities accelerates the education loan processing time as legal and valuation reports are unnecessary.

For Maharashtra:

• NOC (No Objection Certificate) from the builder/society in the bank’s required format. The WeMakeScholars team can provide this format.
• All transaction payment receipts to the builder or seller.
• Index II document.
• Share certificate issued by the society.
• Conveyance Deed of the society.
• Certified copy of board resolution or Power of Attorney from the Builder.

For Karnataka, especially Bangalore:

• Khata extract and Khata certificate are needed.

For Telangana:

• LRS (Layout Regularisation Scheme) for lands and BRS (Building Regularisation Scheme) for buildings.

These terms might sound unfamiliar, but they're not as complex as they seem. Get in touch with our team. They will guide you properly on each step of the education loan process.

1. Demand Letter for academic fees (issued annually or per payment cycle as requested by the institution)
2. Copies of receipts confirming academic fees payments made through the education loan
3. Affidavit attested by the academic authority for additional academic needs (such as equipment, laptop, two-wheeler, research, academic tours, etc.)
4. Transcripts displaying the applicant's academic progress
5. Outward remittance request for study abroad education loans
6. Loan agreement letter signed by the institute/university
7. Sanction letter duly signed
8. Education loan disbursement request form signed by the applicant
9. Receipts as evidence of margin money paid to the institute/university
10. Bank statement reflecting the aforementioned transactions
11. Form A2 signed (for overseas institute)