Know The Guidelines Before Applying For An Education Loan

Education loan

Knowledge is an invaluable resource that cannot be extinguished. The world is full of new technologies, eye-opening events, and digital tools that seem almost too good to exist, and education plays a significant role in achieving the milestones we have reached today.  

Many students in India are inspired by the various advancements of the modern-day lifestyle. They want to explore new horizons beyond their homes and country. Students have dreams, and if education loans can help them realise these dreams, we every reason to support them.

What’s New Now?

Many students have chosen to apply for education loans abroad to pursue their degrees. While some are aware of the intricacies involved, over 80% are not. That’s why we are here—to provide a detailed analysis of this topic and highlight the most important guidelines so students don’t fall prey to scams or offers that do nothing but rip them off in the name of education loans.

Scholarships are everywhere, no doubt. The advantage is that you don’t have to owe anyone anything when you get one, but it doesn’t help much when covering your tuition fees, hostel fees or sometimes your living expenses. This is particularly challenging for students who want to study abroad. Hence, the reason education loans are heavily sought after by both upper-class and middle-class families. 

As long as these loans help ease the financial burden while allowing students to pursue their dreams and achieve a rewarding and fulfilling life in the future, the payback costs are more than manageable.

Who is Eligible for Education Loans?

Let’s now explore the specifics of loan eligibility, which is a vital first step in obtaining the money to support your studies. Here’s what education loan rules you’ll typically encounter:

  • Citizenship and Age: This one’s fairly standard. Most lenders require you to be a citizen of India and above 18 years old. If you’re under 18, a parent or guardian will likely need to co-sign the loan.
  • Academic Credentials: Banks like to see a strong academic track record. Good grades in your previous studies showcase your commitment and ability to succeed in a demanding academic environment.
  • University Acceptance: This is a big one. Lenders need to be confident that you have a confirmed seat at a reputable overseas university. Provide an official acceptance letter to solidify your case.
  • Financial Standing: Since they’re taking a risk, lenders assess your financial situation—often considering your co-applicant’s income—to ensure you can comfortably manage repayments. 
  • Collateral: For larger loans, some banks might ask for collateral, like property, to secure the loan. This minimises their risk if you need help to repay.
  • Entrance Exams: For specific programs or universities abroad, proof of qualifying scores on standardised tests like GRE, GMAT, IELTS, or TOEFL might be required.

Documents Required

If you’re taking out a domestic or overseas education loan, you need to keep these documents in hand. 

  • Completed Application Form: Fill it out meticulously and attach passport-sized photographs.
  • Identity Proof: A government-issued ID like an Aadhaar Card, PAN Card, Passport, or Voter ID card (photocopies will usually suffice).
  • Proof of Residence: Match your ID with documents like utility bills, rent agreements, or your Aadhaar Card (again, photocopies are generally accepted).
  • Academic Records: Shine bright with your academic prowess! Provide attested copies of mark sheets from your 10th, 12th standard, and any undergraduate degrees (if applicable).

Domestic Loan Specific Documents:

  • Admission Documents: For domestic loans, this could be an offer letter or prospectus from your chosen college/university, along with the fee structure.

Overseas Loan Specific Documents:

  • Admission Documents: This becomes even more crucial for overseas loans. Present an official acceptance letter from your chosen overseas university and a detailed fee structure.
  • Statement of Expenses: Be transparent about the financial battlefield. Provide a breakdown of all education-related costs, including tuition fees, living expenses specific to the foreign country (accommodation, food, etc.), travel, and books.
  • Entrance Exam Results: If your program (domestic or overseas) requires standardised tests like GRE, GMAT, IELTS, or TOEFL, submit certified copies of your scorecards.

For the Co-applicant (usually a parent/guardian):

  • Proof of Income
  • Identity and Residence Proof
  • Asset Proofs (if applicable)

Remember: For the most recent and detailed requirements, always check the website of the particular lender or get in touch with them directly. 

What To Look Out For

If you read between the lines, you will learn that education loans are like weapons, and like all weapons, they could turn against you if you’re bad at using them.

There’s no need to get scared. The moment your education loan has been granted, you have a very powerful tool in your hand, and if you handle it correctly, it could take you places and make your dreams a reality. So, keep your eyes peeled for before signing on the dotted line and watch out for:

  • High Interest Rates & Repayment Terms: Don’t go for the first loan provider you see and push the green light. Look around and compare interest rates from different lenders. Consider the loan repayment period and monthly instalments (EMIs) to ensure they align with your future earning potential.
  • Hidden costs: Watch out for sly costs! Examine all associated costs carefully, including any processing fees, prepayment penalties, or late payment fees.
  • Eligibility & Collateral Requirements: When you apply for a loan, a lender will also review your eligibility. They may require details about your educational history, current study plan, and co-applicant profile. Be mindful of any collateral requirements; certain lenders may need property as security, particularly for larger loans.
  • Exchange Rates and Living Expenses: Take into account how changing exchange rates may affect student loans for study abroad. To make sure your loan fully covers living expenditures, research the costs of living in the nation of your choice.
  • Borrow Only What You Need: Education loans are a serious commitment. Don’t be tempted to borrow more than you need. Create a detailed budget outlining your education and living expenses to determine the appropriate loan amount.
  • Don’t Rush the Process: Carefully research and compare loan options before making a decision. Don’t feel pressured to accept the first offer that comes your way.


An education loan is an investment in your future. If you tackle it carefully and correctly, you may turn it from a financial burden into a platform for a successful and rewarding career. With this, you can easily secure the financial fuel you need to propel your academic journey and realise your dreams!

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