Factors that Affect Education Loan Eligibility Criteria
These days the cost of higher education is very high due to which education loan in India is one of the highest appreciating domains, and it requires a substantial quantum of funds. Recently, loan against property for education has emerged as the most financially prudent solution for numerous individuals who want to fund their children’s education at some of the top institutions in this country.
In recent times, the demand for study loans in India has expanded substantially, thanks to greater opportunities at overseas universities and an overall increase in the cost of quality education. While many aspire to study in the premium educational institutions in the country or abroad, only a few can afford the accompanying expenses.
Consequently, most aspiring students and their parents often resort to this borrowing option. As per data from CRIF High Mark,
- Almost Rs.11,000 crore loans were disbursed between September 2019 through 2020.
- More than 3 lakh new borrowers signed up for a new loan between March and October 2020.
Although education loan demand is on the rise, availing this fund can often be troublesome if borrowers cannot satisfy the requisite eligibility criteria. Hence, before applying for the credits, they need to understand the factors that affect their loan eligibility.
Factors affecting education loan eligibility
A study loan can be of two types, secured and unsecured. While traditional loans to fund one’s higher studies are available in abundance, in India, a loan availed by hypothecating a property can also be utilised to this end. These loans against property are available without any end-use restrictions and can not only be utilised to fund one’s academic fees but also meet other accompanying expenses of living abroad like travel fare, food, lodging, etc.
Following are some of the factors that affect the eligibility of this credit in both cases.
- Age of the applicant
The age or date of birth of an applicant plays a crucial role in determining the education loan against property eligibility. Generally, any student of 16 years and above is eligible for a study loan in India. However, in that case, he/she needs to have a guarantor to avail the loan.
Parents availing a LAP loan for education need to fulfil the minimum age criteria. The age limit depends on the employment type of the borrower. For instance, a salaried individual needs to be between 28 and 58 years, and a self-employed borrower needs to be between 25 and 70 years of age to be eligible for a loan against property.
- Academic background
Lenders need to ascertain that after completing the academic course, the student will be able to repay the loan with a high-salary job. Hence, a sound academic record will help to acquire a substantial amount. They also need to provide designated mark sheets as proof of their merit.
Since the loan amount is determined depending on this aspect, students often fail to avail the quantum required to fund their studies.
Alternatively, to acquire a substantial amount, a student’s parents can opt for a mortgage loan. Since the loan amount here depends on collateral, a loan against property acts as a better way to finance a child’s education.
- Education institution
The fees of educational courses vary with different institutions and the type of course opted for. For instance, the course fees would not be the same for postgraduate courses in American universities as undergraduate courses in the UK.
Education loans are often disbursed based on the reputation of the educational institution one has qualified for. For instance,
- An applicant can enjoy loan approval only if he/she has secured admission in a facility affiliated with the government/AICTE/UGC, etc.
Individuals, however, will not need to comply with any such criteria while seeking an education loan against property or checking for education loan eligibility.
- Credit profile
Individuals opting for a loan against property as a study loan need to consider their credit score before applying. In case a student is applying for the fund with a parent as co-applicant, the credit score of the parent will be taken into consideration.
Also one should check for documents Required for Education Loan On Property:
- Identity Proof
- Income Proof
- Address Proof
- Bank Statements
- Property Papers
Depending on this factor, lenders determine the property loan interest rate.
Selected HFCs offer a high value loan against property to eligible candidates against a competitive interest rate.
Such institutions also extend pre-approved offers that make loan availing straightforward and prompt. Such offers are available on a range of financial products like loan against property, home loan, etc. You can check your pre-approved offer by entering your name and contact number.
The mortgage loan rates also depend on the collateral pledged. For instance, a high-value asset like residential property in a good location can derive a substantial amount.
To facilitate ease of repayment, borrowers can use a LAP EMI calculator and apply accordingly.
While an education loan is an excellent option to manage finances better while studying abroad, individuals need to consider the factors that affect the eligibility to avail it. They should also compare different lenders to get the best rate on a study loan, alongside relaxed eligibility requirements.
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