The price of higher education both in India and overseas has increased over the past few years. Hence, most people consider taking student loans to cover their study costs. Before applying for a student loan, knowing the eligibility criteria can enable students as well as their families to prepare in an informed manner. Lenders typically determine a number of factors, like educational history, course information, applicant profile, and repayment ability, before considering a student loan application. The article provides an overview of eligibility criteria for student loans considered by lenders in India.

Understanding the Eligibility Criteria for Student Loans

Eligibility for student loans generally depends upon several factors, some of which are stated below:

Academic Eligibility

Eligibility for student loans generally starts with academic qualifications. The majority of lenders prefer that the applicant has secured admission to a known institution. The admission could be based on entrance tests or merit-based selection, depending on the course. In most instances, loans are offered for professional, postgraduate, and graduate courses. These could be engineering, medical, management, and other degree courses. Unrecognised or short-term courses are generally not covered in the eligibility criteria. Candidates might be asked to provide their mark sheets, confirmation of admission, and course structure when applying. 

Course and Institution Eligibility

The loan for students generally covers full-time courses pursued in approved institutions. To study within the country, the course and institution are generally expected to be recognised by the relevant Indian authorities. For students who wish to study abroad, the lender might examine the reputation of the university and the type of course. Technical and employment-oriented courses often tend to qualify for student loans. Institutions may be reviewed individually based on internal evaluation standards set by the lender.

Applicant’s Age and Nationality

Student loan eligibility typically involves age and residency terms. The applicant is generally required to be an Indian citizen. Minimum age is typically 18 years at the time of application, but this may vary based on the lender’s internal policies and the type of course. For students under the age of 18, the loan is usually taken out by a parent or a guardian in the name of the student. Proof of nationality and age is commonly verified through government-issued documents.

Co-applicant Requirement

In India, student loans are generally offered with a co-applicant structure. A co-applicant is someone who agrees to share the responsibility of the loan. This individual is usually a parent, guardian, or spouse. The financial documents of the co-applicant are reviewed to assess their ability to repay the loan, especially during the moratorium period when the student may not be earning. A consistent income history and a positive credit profile of the co-applicant often support the loan application. 

Collateral or Security

For loans above a certain limit, lenders may request collateral. Collateral may include residential property, fixed deposits, or government-approved securities. The type and value of the collateral are evaluated before sanction. In some cases, unsecured loans may be offered without collateral, depending on the applicant’s academic profile and the co-applicant’s financial background. The presence or absence of collateral may influence other terms of the loan, such as the interest rate or repayment tenure. Applicants who wish to understand how tenure or collateral may impact repayments often refer to an education loan EMI calculator for clarity.

Credit and Income Requirements

Although student applicants are usually not expected to have a credit history or income, the co-applicant’s financial standing is generally reviewed. Lenders may assess the co-applicant’s credit score, existing liabilities, and monthly income to evaluate repayment capacity. A well-maintained repayment record and low existing debt often contribute positively to the application. Some lenders may also consider the academic performance of the student as part of the risk assessment, especially when determining loan amount or terms. Salary slips, bank statements, and income tax returns are typically required as supporting documents.

Other General Conditions

Apart from academic and financial criteria, applicants are expected to meet a few general conditions:

• The total loan requirement should be in line with the cost structure provided by the educational institution.
• The applicant should be able to submit all required documents such as identity proof, residence proof, academic records, and admission confirmation.
• Loan terms may also depend on the course duration and expected employment prospects.

Conclusion

Student loans often support academic progression for individuals who meet the required eligibility standards. The approval process usually involves a detailed review of the student’s academic standing, the institution’s credentials, the course structure, and the financial background of the co-applicant. Preparing the required documents in advance and understanding the conditions may help applicants experience a more structured application process. Clarity on the eligibility criteria also allows students and families to assess whether they meet the general expectations before submitting a loan request.