Summary
The documentation for education loan or student Loan is a little more descriptive than usual loan as the lender would want to know the academics of the student in order to decide the worth of the loan. The set of documents for different type of student loan can be different. Education Loan upto 4 lakh might not require guarantors and collateral documents. Student Loan from 4 to 7.5 lakh might not require collaterals. Overseas education loan will need Visa and passport copies, which is not relevant for domestic loans.
Lenders are extending money to student in form of Edu Loan. Lenders is extending loan considering that student will complete the course and will repay the money through EMIs as soon the moratorium period end. Banks/NBFC needs to evaluate student and the co-applicant / guarantor / borrower profile, their financials and credit history, existing income, residential details, and several other factors to evaluate risk and ensure there would be no defaults.
Most of the verification can be evaluated basis the documents which are extended to support each parameter. For example – Electricity bill, passport, rent agreement copy or other documents which is legal document to be established as residential proof. In details below, exhaustive check list of documents needed for processing Educational loan are mentioned. It is important to submit all documents in single process, it reduces unnecessary delays and follow-ups with lenders. It helps in getting sanctions and loan disbursed at earliest.
Education Loan Documents Checklist
For Students
- Passport, Pan Card, Driving License, Voter ID, other as permissible by lender
- Application letter filled fully of the Course applied for / Admission Letter from University
- 2 Passport size Photos
- Photo ID Proof (Any one from): PAN card, Aadhar card, Election card, Passport, License
- Address Proof (Any one from): Electricity bill, Election card, Passport, License
- Cost of the Education with break-up to: Tuition fees, stay amount, study material cost etc.
- Previous Academic Documents
- Marksheet or Certificate of 10th and 12th
- Marksheet or Certificate of Graduation and Post-graduation (If Applicable)
- Marksheet of Any Entrance Exam that is required for the course
- Scholarship Documents (If any)
- Visa Approval Letter (In case of overseas education)
For Salaried Co-applicant
- Address Proof
- Identity Proof
- Office Address
- Latest 3 months’ Salary Slip
- Last 2 years Form 16 from employer
For Self-Employed Co-applicant
- Address Proof
- Identity Proof
- Office Address
- Previous 6 months’ Bank Statement
- Last 2 years Income Tax Returns
Collaterals Checklist
List of collaterals
- Residential Property or Plot
- Commercial property or Plot
- Fixed Deposits
- Insurance Certificates
- Non-Agricultural Land
- Stocks
Education loan needs collaterals if the loan amount is greater than 7.5 lakhs for some lenders as per their credit policy. Collateral means any approved assets which can be provided as security to the lender against the loan amount disbursed. Most bankers take 125% of loan amount as collateral.
One important document used currently to evaluate student loan reimbursement risk is individual’s and all applicants credit score. Most lender pulls credit report and the basis the report decides whether to disburse the case or not. Credit report like CIBIL summarizes the complete report to a ranking or score. Better the score, better the chances for loan. Rating or score is a calculated by the bureau by evaluating the financial history like number of bank accounts, loan taken in past, number of credit cards, payment tracks of cards and loans outstanding, all accounts open or closed are included, any default or settlements are negative scoring, timely payments and credit limit are positive scoring and several other computations.