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Documents Required for Student Loan Applications

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Documents Required for Student Loan Applications

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For the average Indian wanting to go abroad an study, tuition fees at the top universities abroad could be the biggest deterrent. It’s incredibly expensive to study in Europe or the USA, unless you’re able to secure an education loan. Availing of a loan should make any of the best courses accessible, but at a cost. Before you go ahead an apply for an education loan, make sure you’re aware of the repayment terms, and the document requirements.

This blog should have you covered.

Documents Required for Education Loan Before Sanction

Identity Documents (From the Student and Co-Applicant)

Identity Proof

Like all loans, education loans also require KYC documents. Copies of any government-issued photo-identity card, i.e. your Aadhaar Card, PAN Card, Voter’s ID, or driver’s licence, are considered valid.

Note that as the applicant, you will also need to furnish two passport-size photographs and proof of age (birth certificate or class 10 board registration certificate).

Address Proof

Your lender also needs to validate your residency. As such, you and your co-applicant will need to submit certain valid address proof documents, which may be copies of your Aadhaar Card, Voter’s ID, utility bills, municipal tax receipts or any other document deemed valid by the lender. 

Admission-Related Documents 

Letter of Admission

Most lenders only grant student loans in India after the applicant has been accepted to the selected college or university. To this end, your letter of acceptance is essential. The letter of acceptance must be printed with the institution's letterhead and should clearly state the address of the institution.

For some lenders, conditional offer letters, the counselling seat allocation certificate or any bonafide certificate issued by the institution also work. However, the acceptance rates of these documents will vary depending on varying lender policies. 

Fee Structure

Since the lender will cover all education-related expenses, you have to submit a cost break beforehand to ensure the lender is aware of these expenses. For this, you need to submit the detailed fee structure of the programme, including term/semester-wise tuition fees, overheads, etc. 

Academic Records

Academic records are considered essential education loan documents since they give the lender insights into your merit as a student.

Academic records for a student loan can be classed under the following headers: 

  • Marksheet of SSC, HSC or any other equivalent mark sheet
  • Graduation mark sheet or certificate (if applicable)
  • Diploma certificate (if applicable)
  • Training or specialised course certificates (if applicable)
  • Scholarship documents (if any)

Foreign Academic Proofs (Only for Students Applying Abroad)

  • Entrance exam results (IELTS, GMAT, GRE, TOEFL, etc.)
  • Form I-20 for studies in US institutions (required to proof of admission confirmation)
  • CAS letter for applicants to institutions in the UK
  • Any other valid entry proof depending on the norms of the selected country 

Collateral Papers

Depending on the loan amount, student loans can be secured or unsecured. A collateral deposit is only required when the loan amount is more than ₹7.5 Lakhs. To acquire a secured education loan, you will need the following collateral documents: 

Immovable Property Collateral

  • Property deed 
  • Chain of Sales deed
  • Registered Sale Agreement, Will papers 
  • Municipal Corporation allotment letter
  • Municipal Corporation approved plot plan or building plan 
  • Latest property maintenance and tax bills 

Liquid Asset Collateral 

Any one of the following liquid assets can be used as collateral:

  • Original FD receipt 
  • Original LIC certificate
  • Government bond certificate 

Financial Documents (For the Co-Applicant)

For Salaried Co-Applicants 

  • Salary account bank statements for the last 6 months 
  • Form 16 for the last two years
  • ITR returns for the last two years

For Self-Employed Co-Applicants 

  • CA-verified ITR records for the last two years
  • Proof of turnover (GST return statements/ sales tax statements)
  • Audited balance sheet for the last two years
  • Bank statement for the last 6 months

Documents Required for Education Loan After Sanction

While the above list highlighted the documents you need to submit before the application is processed, we now cover the documents required for student loans after they are sanctioned. 

  • Duly signed loan agreement by the applicant and co-applicant 
  • Academic fees demand a letter from the educational institution 
  • Post-dated cheques or Automated Clearing House mandates (depending on the preferred payment mode)

Other Documents 

Some lenders only sanction student loans for foreign aspirants after the Visa arrives. Thus, you might have to present Visa approval papers along with the aforementioned documents. Some lenders may even demand a brief run-through of the borrower’s assets. 

To Conclude 

Given the long list of documents needed for an education loan, the application process may seem daunting to some. Keeping these documents in place makes the process exceptionally simple. Alternatively, you can apply at your existing bank to reduce the KYC burden. 

Frequently Asked Questions

Do student loans require proof of income?

Yes. Like all loans, student loans also require income proof. However, since the applicant might not be gainfully employed when applying for the loan, income proof has to be furnished by the co-applicant (like a parent). The co-applicant needs to submit copies of her/his salary slips (last 6 months), ITR records (last 2 years), bank statements (last 6 months), and any other income proof deemed necessary by the lender.

Do student loans look at parents' income?

Yes. If your parents are listed as co-applicants on the loan, the lender will assess their income. Lenders generally have a minimum monthly income slab in place to make such assessments. However, if you’ve listed your sibling or guardian as a co-applicant on loan, your parents’ income won’t be considered in the evaluation process. 

What can stop you from getting a student loan?

While student loans generally have a high approval rate, there might be certain reasons for application rejection. Firstly, applications can be rejected if you don’t have the documents required for the education loan. If you’re unable to furnish any of the listed documents, your application might be rejected. Secondly, applications may be rejected if your co-applicant has a poor credit score. Credit scores of more than 750 are considered ideal for loans. Thirdly, your application can also be rejected if you have applied to an educational institution deemed unreliable by the lender. 

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