With the rise in the cost of education every year, education loan is the only solution for students who are interested to pursue studies abroad. Education loan gives them the financial support to study at a good university in India or abroad. But, students make some common mistakes while applying for an education loan, leading to a loan rejection by the banks. So, it is advised to students to make sure that they apply for the loan in the correct manner. This will increase their chances of getting an approval, and will also help them chase their education dreams.
Here’s a checklist of reasons that can cause your education loan application get rejected and a look at how you can avoid them.
CIBIL score of guarantors
While granting an education loan, banks also check the CIBIL score of parents or the guarantors who will repay the education loan in case student is not in a situation to pay further. If the parents or the guarantors have a poor CIBIL score, then there is bigger chance that the education loan might get rejected. Maintaining a good CIBIL score, hence, is crucial to avoid education loan rejection.
Income of parents
While sanctioning an education loan, banks require parents’ financial documents including the IT returns and bank statements. This is a prime requirement. Parents’ financial standing is considered in the evaluation process of the education loan. If banks find the parental income is not up to the mark, then the chance of getting your education loan approval is less.
Past academic performance of student
Academic performance plays a crucial role so far as education loan is concerned. If you have got admission to a reputed college but under the management quota due to poor academic record, then there is a chance that banks might deny you the education loan. This happens, because banks feel that such applicants would be non-performers in the future and may not earn enough money to repay the loan EMI.
Recognition of college or institute
If a student is planning for admission to a college or institute which is not well recognized and has poor placement record, banks might decline the education loan. You need to apply to a well-recognized institute to get your loan approved. If you get admission to institutions such as IIMs, IITs, NITs and other good colleges, then you have a higher loan approval chance.
Incomplete and fake documents
Not submitting the correct documents can lead to cancellation of education loan. It is crucial to pay attention to the loan application guidelines before submitting documents. It is always wise to adhere to the list of documents that you need to submit and keep a checklist handy to ensure that you don’t miss out on any. Another very important reason for education loan denial could be submitting fake documents. If you provide fraudulent documents to the banks such as mark sheets, degree, and college approval letter etc, then the chance is higher that your application may get rejected. You may also have to face legal consequences for that.
Apart from identity and income, banks look for many other criteria for a student to be eligible to apply for an education loan. One such crucial criteria is the right age of the candidate. Apart from that, you must also be in a city that the lender operates in to get the loan. Since these factors are out of your control, your best bet is to choose a well-known lender that offers pan-India coverage.
Course applied for
There is more chance of getting the education loan approved, if students have applied for courses such as Engineering, Medicine, Management and other courses from which earning potential after completion is assumed to be high. On the other hand, if students apply for the loan for pursuing courses such as Arts or Commerce, then the chance is comparatively less of getting an education loan.
Hence, students need to pay careful attention while applying for an education loan so that their effort is not getting wasted.