Make college memories that last a lot longer than your student loan payments.

What Makes You Eligible for an Educational Loan?

Educational loans have a big market with students interested in pursuing their education and higher studies. Banks offer these loans to meritorious and deserving students who require finance to continue their studies. These loans have helped boost careers and given people a chance to pursue higher education which they wouldn’t have otherwise been able to afford. But not everyone is eligible for an educational loan. Banks set certain criteria for applicants to meet before they loan money for any purpose.

Factors taken into account:

When banks receive an educational loan application, the main factors they would consider are:

  • The academic background and qualifications of the student. The track record of marks, credits and achievements will be considered.

  • The course for which the loan is being sought. Courses should be accredited and worthy of studying. They should have a good chance of placement and job prospects so that the applicant can repay the loan.

  • The institution at which the course will be studied will also play a role. The university, school or college should be accredited and of good repute.

  • Whether or not the applicant can offer collateral on the loan. The bank will take into account what kind of collateral is offered and the value of it.

  • Whether or not parents, guardians or an acceptable third party are co-borrowers or guarantors of the loan. They will also check the job profile and credibility of the co-borrowers.

Courses eligible for Educational Loans:

Banks offer loans for students to study almost anything provided that the course and the institution are accredited by the concerned authorities or are of good repute. Students can avail of loans for the following courses.

  • Undergraduate degrees/diplomas and special courses.

  • Postgraduate degrees/diplomas and special courses.

  • PhDs and Doctoral Programmes.

Banks also offer loans for specialised courses, training and diplomas. Not all banks will extend finance for these courses, but an applicant can do research and find a bank that will offer them a loan especially if there is a prospect of a job, or an enhancement in current employment. Some of the courses include:

  • Computer certificate course

  • Engineering diploma

  • Certificate courses from ITI

  • Data entry operator course

  • Nursing/Teacher Training certificate courses and B.Ed.

  • Agri diploma

  • Veterinary diploma

  • Any job-oriented diploma or certificate course

  • Degree or diplomas for aeronautics, pilot training, shipping held by recognized regulatory bodies for the purpose of employment in India or abroad

  • Vocational courses run by a government organization or department

  • Courses run by State Skill Missions, State Skill Corporations, or National Skill Development Corporation

Eligible Institutions:

Banks will also consider the institution you have selected to pursue your studies. They will not lend money to just any course and any university. The bank needs to make sure that you will be able to complete your course and get a good job when they are giving you are loan. Most banks have a list of reputable and pre-approved universities. They also have a list of blacklisted universities for which they will reject your application.

In India:

Some of the universities that are preferred for studies in India are listed below.

  • Universities or colleges recognized by UGC, Govt., AICTE, AIBMS, IMCR, etc.

  • Approved polytechnic institutions

  • Reputed foreign schools/universities in India


  • Universities of good repute and standing.

  • CPA in USA, CIMA-London, etc.

Documents required for an Educational Loan:

For students seeking a loan for studies within the country, they can provide the following documents.

  • Duly-filled application form.

  • 2 passport size photographs.

  • Graduation, Secondary School Certificate, or High School Certificate or mark sheets

  • KYC documents that include ID, address, and age proof.

  • Signature Proof

  • Income Proof of parents or guardian

  • If collateral is required, documentation for Immovable property, FDs, etc.

For students interested in a loan to study abroad, they will need to provide the documents below.

  • Duly-filled application form.

  • 2 passport size photographs.

  • KYC Documents that include ID, residence and age proof.

  • A copy of statement of marks or certificates of last examination passed.

  • Proof of admission to the university and the course

  • Schedule of course expenses

  • If you have received a scholarship, a copy of the scholarship letter is needed.

  • Copy of Foreign Exchange permit if you have it.

  • Bank account statement for last six months of the borrower, parents or guardian.

  • Last 2 years’ Income Tax assessment of the borrower, parents or guardian.

  • For loans with collateral, the details of security offered must be furnished. You might also be required to provide an advocate’s search and report about its marketability, mortgage ability, etc.

  • Proof of the source of margin is required.

Educational loans is a sector which is promoted as it gives students the opportunity to study further. It enhances the growth and development of the citizens and the country. Educational loans are an investment into the future, so it is important to do your research and take your time. Government and banks also offer subsidies and lower interest rates to promote education for all.


  1. What are the different factors that are considered when lenders provide an educational loan?
  2. The different factors that lenders consider when providing an educational loan are mentioned below:

    • Details of the borrower and co-borrower.
    • The collateral and the type of collateral that is being offered.
    • The university and the course.
    • The student’s academic background.
  3. Is it possible to avail an educational loan without a guarantor?
  4. Usually, lenders require a guarantor when providing an educational loan. However, depending on the course and profile, a guarantor may not be needed.

  5. Is it possible to change the educational loan interest rate to a floating rate from a fixed rate?
  6. Yes, the educational loan interest rate can be changed from a fixed rate to a floating rate.

  7. Is it possible to change from repo rate to MCLR?
  8. No, it is not possible to change from repo rate to MCLR.

  9. Does the repo rate change every year or will it be the same?
  10. The repo rate is provided by the bank every month. The repo rate is usually reset every three months.

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