The ever increasing cost of education can create a roadblock in your way to achieving your academic success. Did you know that education inflation in India alone is ~12%? Furthermore, tuition fees of overseas universities have increased by a whopping 16% over the last decade. Education loan bridges this wide gap between you and quality education. So, if you are planning to finance your education independently by opting for a student loan, here are a few things that you must know.

1. Documentation and application 

As per the AISHE report, Gross Enrolment Ratio (GER) in the higher education arena in India has increased by 11.4% between 2016 and 2020. Whereas, a recent study conducted by RedSeer suggests that the number of Indian students studying abroad is estimated to rise from 7,70,000 in 2019 to 1.8 million by 2024. This surge in demand points out the tough competition. Imagine having perfect academic scores and entrance exam scores but still missing the university seat because you did not submit the necessary documents during the education loan process. 

So, it is extremely important that you have all the documents in place to ensure a swift application process so that your education loan gets sanctioned without any hiccups. Once you have shortlisted the student loan provider, ensure you meet the eligibility criteria and follow the education loan procedure as suggested by your lender. 

2. Factors that influence student loan approval 

When you apply for an education loan, financial institutions will evaluate your loan application based on several criteria. These criteria will vary depending on the lender. However, your academic scores, the chosen course, continuity in education, entrance exam scores, ranking of the university etc., are some of the factors that will be evaluated to determine your employability potential. So, selecting a well-ranked university and an excellent academic score will increase your loan approval chances.

3. Apply well in advance 

When you apply for an education loan, your lender will take some time to complete the pre-sanction procedure, verify your documents and complete the education loan process. The turnaround time to sanction the loan will vary depending on the financial institution. Also, it would be best if you start the student loan process well in advance to avoid the last-minute rush.

4. Research 

Most students unknowingly commit a common mistake by selecting the education loan provider based only on low-interest rates. We understand that interest rates are important, but you have to consider a lot of other aspects before shortlisting the education loan provider. For instance, you should avoid applying through any apps you find suspicious and conduct thorough research before applying for a student loan. You may also consider aspects such as customer service, customer reviews, hidden costs, if any, expenses covered and more.

5. Credit score is important 

You will require a co-applicant to apply for an education loan. Co-applicant could be a parent, sibling, legal guardian, or relative. The credit score of your co-applicant is evaluated to determine if the loan can be approved. Hence, the financial health of your co-borrower is important too.

6. Keep the repayment strategy ready 

Opting for an education loan is a prudent choice, and so is responsibly repaying it. Although a student loan comes with a moratorium period which is like a grace period where you are exempted from paying your EMIs, it is wise to pay simple interest or partial interest during this period. Secondly, set aside some amount as an emergency corpus so that you can continue making the repayment even during emergencies. Please remember that repayment will impact your credit score, and hence it is imperative that you have your repayment strategy in place.

So, these are some important aspects that you must know before applying for an education loan. At Avanse Financial Services, we are committed to partnering with students like you to help you achieve your academic aspirations. Hence we offer several benefits such as 100% finance, customized loans, fastest sanctions within 72hrs*, and more. If you want to know more, please remember we are just a call away. All the best!