Education loans serve as a gateway for students to explore global academic horizons, especially for those venturing abroad for higher education. As an international student, the prospect of studying in a foreign land is made more attainable with the assistance of education loans.
Uncovering the world of study abroad loans shows a realm of financial support and opportunities for aspiring scholars. Discover the essentials of the education loan process, from necessary documents to loan variations, and embark on a journey towards fulfilling your educational aspirations.
Types of Education Loans and the Documents Required for Them
There are 2 different types of loans.
1. Secured Loans
Secured loans are loans that are protected by an asset. For this loan assets like property can be used as collateral to take the loan. The lender or bank hold the original documents that indicate the property’s ownership. Lenders also accept assets like stocks and bonds as collateral. There are many benefits of taking secured loans like lower interest rates, higher borrowing limits, a longer repayment term and so on.
Documents Required by Applicants for Secured Loan
Staring with educational documents applicants need to have their mark sheets or exams like HSC, SSC, Graduation or Post Graduation depending on the level of education you are pursuing. They will also need to provide an admission letter issued by educational institutions that confirms acceptance and provides course details like duration and about the course. A schedule of tuition and other fees outlines the cost of education, including tuition fees, hostel fees and other expenses.
As a proof of income applicants need employee ID card or Salary Certificate along with recent salary slips and income tax returns. This is for salaried employees. For self-employed individuals they need to provide a proof of turnover, balance sheets, business ownership proof and income tax returns to confirm their financial status. When it comes to banking documents, the applicant needs to have recent bank statements from the past 6 months or salary credit statements to verify banking history and financial status. NRI applicants may require providing additional statements for NRE/NRO accounts that show their financial status.
Apart from the academic records and personal identification, students must provide their entrance exam and proof of admission to the educational institution. They also need to write a statement detailing the cost of study and expenses along with the college/course prospectus, that helps the bank assess the financial requirements accurately.
Documents Required by Co-Applicants for Secured Loan
Co-applicants also need to provide certain documents while getting the loan. These include personal identification and residence proof. They need to provide income proof like salary slips, income tax returns or business financial statements to have a secure loan application. Additionally, they also need to provide property or other security documents that are necessary for loan where collateral is required. These are the documents required by co-applicants for an education loan to study abroad.
2. Unsecured Loans
Unsecured Loan or education loan without collateral are loans that are not based on a security. The most common example of an unsecured loan is a credit card. In an unsecured loan, the lender takes more risk as there is no asset to recover if there is a default. This is the reason why the interest rate is higher. An unsecured loan is based on 4Cs that is Character, Capacity, Capital and Conditions.
Documents Required by Applicants for Unsecured Loans
For an unsecured loan, the documents required by the co-applicant include, Academic transcripts, Student KYC, Aadhar Card, Birth Certificate, Fee Structure, 2 Colour Passport sized photos and a Photo ID.
Documents for Co-Applicants for Unsecured Loan
Co-Applicants require documents like PAN Card, Co-borrower KYC and income details like income proof and bank statements. Along with that co-applicants are also required to provide a Photo ID, a relationship proof and 2 coloured passport sized photos.
In wrapping up, the nuances of education loans and their document prerequisites play a pivotal role in students’ financial planning for higher education. Secured loans provide a secure borrowing option with tangible assets as collateral, while unsecured loans present a riskier but accessible alternative.
Ensuring all documentation, from academic records to financial statements, is meticulously prepared is key to a successful loan application. For students seeking study abroad opportunities, engaging with education loan consultants versed in education loan eligibility criteria can offer invaluable insights and assistance in navigating the loan application landscape effectively.
