Top Mistakes Students Make While Applying for Education Loans

Education Loans are a lifeline for many Indian students who aspire to study abroad. These loans serve as great financial aid to students with higher academic goals. However, the process is not an easy road. Many students often make mistakes while applying for Education loans, which may even lead to loan rejection.

In this article, we will explore the top mistakes that students make while applying for Education Loans. We will also cover the eligibility criteria and the documents required for Education loan approval.

Not Researching Loan Options Properly

There are many types of Education Loans in the Education Loan market. Students must conduct thorough research on the available loan options. Many students rush into applying for Education loans with just one lender, even without comparing with others.

Obtaining loans without proper research can cost a student a lot. Proper research on interest rates, available lenders, repayment terms, and moratorium period can help students save a lot of money on Education Loans.

Hence, it is advised for students to do a thorough research on the available loan options in the Education Loan market.

Overlooking the Eligibility Criteria

This is one of the major factors that many students often overlook and face troubles while applying for Education loans.The eligibility criteria are one of the main factors that lenders consider to offer Education Loan.

Each lender has different eligibility criteria to offer an education loan. Students are required to meet the eligibility criteria prescribed by the lender to get an education loan. These include credit scores, co-applicant requirement etc..

Students often ignore these requirements and face issues during the Education Loan process. Thus, Eligibility criteria are one of the main concerns that should not be overlooked for a successful Education loan process.

Applying for a Higher Loan Amount

A proper understanding of the loan requirement can reduce the financial burden on students. It becomes an obvious tendency for students to borrow more than the required loan amount, considering the living expenses, miscellaneous expenses, etc.

However, excess borrowing can make students fall into debt, which adds extra pressure to students after graduation. To understand how EMIs are calculated based on the loan amount and interest rates, use the education loan EMI calculator.

Incomplete/Incorrect Documents

Duly filled applications and proper documents are necessary for any Education loan approval. Oftentimes, students submit outdated and improper documents, which may delay the loan process or even lead to rejection of the loan.

The lender requires detailed and updated documents from the students to evaluate the loan eligibility of the student.

Choosing the Wrong Loan Type

This is one of the major issues where many students often make mistakes and face problems later. Choosing the right Education loan is a game-changer in the process of Education Loans. Oftentimes, students are confused about choosing the Education loan type and opt for the wrong one. This indeed becomes a financial burden to the students as well as their families.

Many times, students opt for unsecured loans when a secured Education loan is offered with better interest rates. Thus, this is one of the major mistakes that students make while applying for an education loan.

Not Understanding Repayment Terms

Oftentimes, students sign loan agreements without understanding the repayment terms. This puts an extra burden on students while repaying the loan. It is crucial to understand the moratorium period and the interest rates before signing the loan agreement. Timely coordination with the lender and understanding the repayment terms and conditions can reduce the financial burden on students.

It is highly recommended for students to evaluate the total repayment using a Loan EMI calculator and check if it matches the future income of the student to ease the loan burden.

Applying to Unapproved Universities

Lenders have a specific list of colleges that are categorised based on certain factors. Students must ensure that the selected university they are going to is on the lender’s list. Failing this may lead to loan rejection. Lenders do this to reduce the risk associated with offering Education loans.

Eligibility Criteria required for an Education Loan

The eligibility criteria to get an education vary from lender to lender and depend on various factors. However, the basic eligibility criteria lenders generally ask for education loans are as follows.

Citizenship: Both the applicant and co-applicant must be Indian citizens.

Age: The student’s age should range from 18-35.

Co-applicant: lenders generally ask for a co-applicant while offering an education loan. This strengthens the student profile and makes them eligible for the loan.

Academic performance: Students are required to have a decent academic background. This enhances the chance of loan approval.

Admission: A student must secure admission to a recognized university.

Course: lenders also consider the course that the student is choosing. STEM courses have a high chance of approval for Education loans

Documents required for an Education loan

Below are the documents required to get an Education loan. Lenders thoroughly assess the applicant and co-applicant documents before approving an Education loan.

KYC Documents: KYC documents proving the identity of the applicant and co-applicant

Photo ID (Aadhaar, Voter ID, driving license, etc.)
Passport
PAN Card.

Loan Application Form: The student is required to submit the loan application form to apply for an Education Loan.

Admission Letter: An admission letter from a recognized university serves as proof of acceptance from the university.

Academic Records: The student must produce all the necessary documents that demonstrate their academic track record required by the lender. Documents such as 10th, 12th, and undergraduate.

Test Score: If the student has taken any entrance test such as GRE, TOEFL, IELTS, CAT, etc…score card of the respective tests.

Collateral Documents: Students have to submit the respective documents of the collateral if opting for a collateral Education loan.

Conclusion

The education loan process seems complex; however, with proper planning and guidance, one can effortlessly navigate the process. This article covers the top mistakes students make while applying for education loans, along with the eligibility criteria and the documents required for an Education loan. Expert guidance is always a game changer when it comes to making decisions on Education loans.

Author Profile

Adam Regan

Deputy Editor

Features and account management. 3 years media experience. Previously covered features for online and print editions.

Email Adam@MarkMeets.com