- Co-applicant CIBIL score of 700+ is now mandatory for education loan approval, with scores above 750 securing better interest rates.
- Interest rates on education loans range from 7.15% to 14% per annum depending on the lender, loan amount, and collateral offered.
- Section 80E provides unlimited tax deduction on education loan interest for 8 consecutive years, significantly reducing your overall repayment burden.
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.Â
- 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.Â
- However, with the rise in technology, scammers have found their ways to trick customers and lenders to gain financial advantages illegally.Â
- 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.Â
- 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.
- Many banks now accept applications from 16 years old.
- 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 (typically parents or guardians; in case of married candidates, spouse or parent-in-law may also be considered).
- The co-applicant must have a stable income source and a good CIBIL score (minimum 700, preferably 750+)
- 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 |
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:Â Utility bills (gas/electricity/water/house tax, etc.) or House lease agreement.
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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. |
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
- Section 80E: Deduction on interest paid on education loan (no upper limit, available for 8 consecutive years from the start of repayment). Only the interest component qualifies, not the principal amount. Applicable only under the old tax regime.
- Section 80C: Separate deduction for tuition fees paid directly to educational institutions in India (up to ₹1.5 lakh combined limit under Section 80C). This is different from the education loan and can be claimed for up to two children per taxpayer.
- Record of the due principal amount of the loan, along with the number of EMIs.
Key Takeaways
Education loan applications demand precise documentation to prevent rejection and ensure smooth approval. Indian banks and NBFCs require identity proofs, academic records, financial statements, and collateral papers (for secured loans). Loans up to ₹7.5 lakh typically don’t need collateral, but larger amounts ranging from ₹10 lakh to ₹1 crore depend on your co-applicant’s CIBIL score (minimum 700, ideally 750+) and stable monthly income of ₹25,000-₹30,000.
Interest rates currently range from 8% to 14% per annum, with public sector banks like SBI offering rates starting at 7.15%. Students benefit from moratorium periods covering course duration plus 6-12 months post-completion, allowing time to secure employment before EMI payments begin. Tax benefits under Section 80E permit unlimited interest deduction for 8 consecutive years under the old tax regime, significantly reducing your repayment burden.
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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.
What is the moratorium period in education loans?
The moratorium period covers your entire course duration plus 6-12 months post-completion, during which you don’t pay EMIs but interest continues accruing.
Which tax benefits are available on education loans?
Section 80E offers unlimited interest deduction for 8 years, whilst Section 80C provides ₹1.5 lakh deduction for direct tuition fee payments.
What are the current education loan interest rates in India?
Interest rates range from 7.15% to 14% per annum, with public sector banks like SBI offering lower rates starting at 7.15% for secured loans.
Can I prepay my education loan without penalty charges?
Most public sector banks allow prepayment without penalties, but private banks and NBFCs may charge 2-4% foreclosure fees on the outstanding amount.
What is the maximum loan amount available for studying abroad?
Banks offer up to ₹1 crore for overseas education under schemes like SBI Global Ed-vantage, depending on co-applicant income and collateral.
How soon should I apply for an education loan before my course starts?
Start the application process 3-5 months before your course begins to ensure adequate time for processing, approval, and disbursement.
Can I make partial interest payments during the moratorium period?
Yes, paying simple or partial interest during the moratorium significantly reduces your total repayment burden and overall interest accumulation.
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.
