Checklist of Important Documents for Education Loans to Study Abroad
To eliminate the chances of getting rejected, the students need to know about the documents required for an education loan application process. Various lenders have their requirements since they want to establish the authenticity of the borrower and co-applicant before entrusting their capital to them.
In this blog, we have discussed the important documents required for student loans, including their significance and more.
Why Documents Required for an Education Loan?
- As the cost of education is increasing due to an increase in inflation and several other factors, there has been an immense rise in demand for education loans also occur in recent years.
- This led several financial institutions and banks to come up with attractive loan offers with a variety of benefits, which are constantly attracting students desiring to pursue education abroad.
- However, with the rise in technology, scammers have found their ways to trick customers and lenders to gain financial advantages illegally.
- There are also some cases where large loan amounts have been transferred to illegal elements who pose themselves as students. This has caused huge economic losses to both lenders and the government.
- To overcome these incidents, financial institutions have designed parameters before granting an education loan. Borrowers have to prove their identity, address, economic status, and competency with key documents required for student loans.
Eligibility Criteria for an Education Loan
We have discussed below the eligibility criteria for Indian students desiring to take an education loan for their studies abroad:
For Collateral Education Loan
- The borrower/applicant must be an Indian citizen.
- The minimum age to apply for an education loan should be at least 18 years.
- Applicant must have relevant assets to offer (as listed in the bank’s requirement letter).
- The applicant must have completed their 10+2/diploma studies in any government-recognised school.
- The applicant has to produce the acceptance letter from an overseas university where admission is granted.
- The applicant’s chosen course must have the scope of employment after its completion.
For Non-Collateral Education Loan
- The borrower/applicant must be an Indian citizen.
- The applicant must be accompanied by a co-applicant (either parents, spouse, grandparents, brother or sister) since a co-signer is required for a non-collateral education loan.
- The minimum age to apply for an education loan should be at least 18 years.
- The applicant must have completed their 10+2/diploma studies in any government-recognised school.
- The applicant has to produce the acceptance letter from an overseas university where admission is granted.
- The applicant’s chosen course must have the scope of employment after its completion.
What Documents are Required for an Education Loan?
Below is a list of documents required for education loans in India, serving as a guide for students to understand their significance before applying for a loan:
| Type of Documents | Applicant | Co-Applicant |
|---|---|---|
| KYC Documents | Yes | Yes |
| Passport size photo | Yes | Yes |
| Academic Documents | Yes | No |
| Financial Documents | No | Yes |
Let’s discuss these sets of documents one by one.
KYC Documents
KYC or Know Your Customer signifies the basic identity details of an applicant and co-applicant. It is an important part of the documents required for student loans since it establishes the identity of both individuals, eliminating the possibility of fraud or scam. KYC documents are also used to verify the address and financial information of the applicant and the co-applicant.
| KYC Documents from Applicant | KYC Documents form Co-applicant(s) |
|---|---|
| Aadhar Card | Aadhar Card |
| PAN Card | PAN Card |
| Passport | Voter ID Card |
| Voter ID Card | - |
- Along with KYC documents, the applicant and co-applicant(s) must submit their 2 sets of passport-size photographs taken within the last 6 months as a part of the documents required for an education loan application.
- If the current address is not updated in the above KYC documents, then the following proof of residence must also be submitted:
Utility bills (gas/electricity/water/house tax, etc.) or House lease agreement.
Academic Documents Required for Student Loan
This includes lending all of the previous academic documents as proof of academic eligibility. This is to be done, especially when a non-collateral education loan is to be taken. Following is the list of important academic documents:
High School or Std. X
- Marksheet
- Certificate of passing
- Extracurricular certificate (if any)
Intermediate or Std. XII (10+2)
- Marksheet
- Certificate of passing
- Extracurricular certificate (if any)
- Other academic transcripts (if any)
Undergraduate (Bachelor’s)
- Semester wise Marksheet
- Certificate of passing
- Final Marksheet (if available)
- Extracurricular certificate (if any)
- Other academic transcripts (if any)
Foreign Institution’s Entrance Test Result
- SAT
- ACT
- GMAT
- GRE
- University-specific entrance exam
English Language Proficiency Test Results
- TOEFL
- IELTS
- Duolingo
- PTE
- Proof of Admission to Foreign Institute (Admission letter or letter of acceptance from the foreign institute on its letterhead with address)
- Statement of study cost/estimated cost of study with expenses schedule (It should include the major areas of funding for the loan)
- Course and university’s prospectus (if available)
- Gap Certificate (if required)
Financial Documents Required for Education Loan
Whether applying for a secured education loan or an unsecured education loan, the lender evaluates the financial status and history of the co-applicant thoroughly to eliminate the risk of losing its capital due to potential chances of failure in repaying the loan from the co-applicant to. Below, we have provided the list of financial documents required for an education loan. Lenders assess these financial documents to check the trustworthiness of the co-applicant.
| Salaried Co-Applicant | Self-Employed Co-Applicant |
|---|---|
| Last 6-8 months bank statements | Last 2 year's Income Tax Returns |
| Income proof of co-applicant | Last 2 year's certified financial statements or provisional financial statements duly certified by C |
| Latest 3 months' salary slips or salary certificate on Employer's Letterhead | Proof of office (any one of the following: lease deed, utility bill, title deed, GST Certificate, MSME Certificate) |
| Last two year's Form-16 from employer or last 2-3 year's Income Tax Returns | Certificate of qualification for professionals like CA and doctors, etc. |
Also read – Ways to Fund your Overseas Education
Collateral Documents Required for an Education Loan
Collateral documents are most important for secured education loans as the education loan is entirely valued against the collateral provided. Below are lists of collateral papers required for a secured student loan.
| Type of Collateral Security | Required Documents |
|---|---|
| Immovable collateral asset | Property title deed 7/12 extracts in case of land Registered sale agreement along with society share certificate Original registration receipt for the above agreement Allotment letters by Municipal Corporations/authorised government authorities Like MHADA, CIDCO, etc. The previous chain of sale deed establishing the title The latest maintenance bill, along with receipts issued by the builder/ society, Latest property tax bill, along with receipts, NOC for the mortgage from society/builder, Approved building plan Encumbrance certificates as on date, etc. |
| Moving collateral asset | For fixed deposits- A FD Certificate For insurance policy - Policy paper and Surrender Value Certificate For government bonds - A bond certificate |
Post-Sanction Documents Required for a Student Loan
Once the lender approves the loan application process, students are required to obtain the following documents from them to proceed with the loan process. Below, we have listed the important post-sanction documents for the education loan for study abroad:
Documents for Disbursement
These documents are made available by lenders when the file for loan sanctioning moves forward and is about to reach the stage of disbursement. These documents need to be reviewed thoroughly by the applicant and co-applicant before signing.
- Education loan sanction letter
- Loan agreement letter
- Loan disbursement request letter
- University fee demand letter
- Applicant’s previous academic progress report
Documents for Repayment
These documents are also made available by lenders which signifies the terms and conditions related to loan repayment. It also contains some other documents, as mentioned below:
- Repayment instructions
- Government interest subsidy claim record
- Eligibility record for the tax rebate according to Income Tax Act 1961 and Section 80E
- Tuition fee rebate from taxable income under Section 80C
- Record of the due principal amount of the loan, along with the number of EMIs.
Conclusion
It is important to go through the terms and conditions related to an education loan for which the application process is to be made. Since financial bodies have adopted several steps to curb the risk of financial fraud and capital loss, applicants are required to present the particular set of documents needed for an education loan application. These documents include KYC, academic, and financial documents, which establish the eligibility as well as the identity of the borrower.
The set of documents may vary depending on the lender or specific need, so it is advisable to explore the documents needed for the particular lender before proceeding with the loan application.
FAQs
In what way loan repayment can be made?
The loan can be repaid in Easy Monthly Installments or EMIs once after the moratorium period ends. The repayment schedule is generally designed with the help of an amortisation table.
How many months is a bank statement required for an educational loan?
The co-applicant is needed to submit at least 3 months’ bank statements while supporting the applicant in making the loan application process.
What should be the minimum salary of a co-applicant?
The minimum salary of either the parent or any close family member who wants to become a co-applicant should be in the range of INR 25,000-30,000 per month.
If you are an aspirant looking to study at your dream university, book an appointment with AdmitX today and start your applications early to avail yourself of all the benefits.
