Can we get Education Loan Without Co Applicant?

The one question that applicants frequently hear from lenders during the education loan process is "Who will be your co-applicant?". And most of the time students are clueless about the term and who can be co-applicants in education loans.

But as we said earlier, lenders do ask about the co-applicant. Does it mean you can't get an education loan without a co-applicant?

"Yes, you can get an education loan but without a financial co-applicant not without a primary co-applicant! Don't confuse a financial co-applicant with a primary co-applicant. A primary co-applicant is an indispensable part of an education loan process, whether it's a secured education loan or a private education loan without collateral."

So, it's important to understand what actually an education loan without a co-applicant implies, because you may just as easily be ill-informed about the true process. An education loan without a financial co-applicant is possible but without a primary co-applicant is not. So when we say "an education loan without co-applicant", we actually mean "education loan without a financial co-applicant".

Difference between a primary co-applicant and a financial co-applicant

Before we move on to tell you the ways to get an education loan without a co-applicant, it is important to understand the difference between the two co-applicant types and when they are referred to as primary and financial co-applicant in an education process.

Primary co-applicant -

A co-applicant, co-signer, and co-borrower are all the same thing. Your primary co-applicant is the person (preferably your parents or any immediate family member) who takes the loan with you and shares the responsibility of repaying the loan in due time. And it is mandatory to have a primary co-applicant in your education loan process.

Financial co-applicant -

A primary co-applicant and financial co-applicant can be the same person depending on the type of loan you take. You may also have to add financial co-applicant along with your primary co-applicant as per circumstances.

When you borrow an unsecured education loan from a private lender, you do not get a payment-free moratorium period and so you are required to pay the interest portion to the lender during your moratorium period.

Now, since you'll be abroad for your studies and won't have any income, those payments are supposed to be made by your financial co-applicant. 

Also unlike secured education loans from government banks, where they provide education loans against collateral security which they can use to recover the loan in the event of default, private lenders provide unsecured loans and ought confidence that the loan amount will be repaid by the co-applicant in such an event.

This is why the financial stability of your financial co-applicant like their income, and source of income is taken into consideration by the private lenders and has an additional set of eligibility criteria for co-applicants.

If you have collateral to pledge then Government banks are the best choice since they take collateral as security, they don't bother much about the financial profile of your primary co-applicant. Also since Government banks provide a payment-free moratorium period, you are not obliged to pay the interest during the moratorium period thereby not requiring a financial co-applicant.

But, what if you don't have collateral to pledge and you don't have a financial co-applicant or say you have collateral but the value is too low to fund your education abroad, then don't lose hope, there are still some scenarios where if your profile fits into, you can get an education loan without co-applicant and collateral.

Case 1 - Work experience

• Students should have work experience of 3 years or more
• The last drawn salary should be at least 35k per month
• The university should be present in the list of some top 300 universities worldwide which are there with the lenders
• Students' courses should be MS/MBA
• If students are eligible for case 1, they can get up to 40 lakhs without collateral and co-applicant with a rate of interest of around 10.5 to 11%.
• The CIBIL score of the co-applicant will be checked and it should not be below 685.
• It is to keep in mind that you get an education loan without a financial co-applicant but a primary co-applicant is mandatory for contact purposes only and their financial status will not be checked. Co-applicant should be of your first family i.e. parents, parents-in-law, siblings, and spouse.

Case 2 - Top Universities for Masters / Elitescholars

• This is for students going to the US, UK, Canada, and Germany
• This is only for some top 300 universities in these countries
• STEM/MBA programs will be considered
• Students' past academic records will be considered for this loan scheme
• If students are eligible for case 2, they can get up to 75 lakhs without collateral and co-applicant with a rate of interest of around 11 to 13.5%.
• The CIBIL score of the co-applicant will be checked and it should not be below 685.
• Likewise, in case 1 the financial status of the co-applicant is not important to the lender. This funding comes from the EliteScholars Funding Program and it is a special initiative by WeMakeScholars for Indian students.

Case 3 - Foreign lenders

As the name suggests these lenders are foreign lenders and funds in USD not in rupee unlike in the above two cases of Indian lenders. And also unlike Indian lenders where a co-applicant is mandatory, these USD lenders don't ask for it.

Students opting for master's in the US in top universities are eligible to get an education loan for abroad studies without collateral and co-applicant from these foreign lenders. They can offer up to 80% of the cost of education with a rate of interest of 9-12.5% in USD but this 9% is equivalent to 14-15% in Indian currency. USD loans from foreign lenders should be the last option for any Indian students but with no other options, students can opt for foreign lenders.

• Currency fluctuation with INR depreciation (Ex: 1$ was 64 in Jan 2018 and today 1$ is above 70) Ultimately you repay way higher than what you borrowed today
• No income tax benefits under section 80E

Conclusion:

So if your profile suits any of the above 3 cases, you are eligible to get a study abroad education loan without collateral and without a financial co-applicant. Get in touch with our team to start your education loan process.

You should start your education loan process with us because mostly, lenders simply reject the loan application without collateral and co-applicant. Because they get so many applications from students, they reject the more challenging cases and don't seem to explain the reason why the student loan was denied or offer an alternative solution for that matter.

Our team of financial officers will assist you with your entire education loan process until sanction, disbursement, and beyond. All the services offered by WeMakeScholars are free of cost as this initiative is supported by the IT Ministry, Govt. of India.