What Documents Are typically Required When Applying For an Education Loan

What Documents Are typically Required When Applying For an Education Loan

 

What Documents Are commonly Required When Applying For an Education Loan.Yes, education is the key that unlocks doors towards realizing our career aspirations; but the cost of that education is not always cheap. Due to steeped up prices of education, more so for higher education/training and foreign education, education loan has become a viable financial tool for students. However, application to an education loan has several procedures one of which is documentation that matters.

In this article, let us discuss the nature of documents that are tendered when one is applying for an education loan. They are very relevant particularly when it comes to assessment of your qualification to undertake any project or ability to repay the loan in the bank or the financial institution.

Why Documantation is Required for an Education Loan

You must also go through a credentials check to determine your identity, financial position, and education before a lender can advance you a loan. Accurate documentation also confirms that the borrower qualifies for the facility, they can afford to pay back the loan and that the institution they attend is real. It also assists the particular lender to understand the degree of loan which tends to be payable by you and in addition if there exists an importance of any security or even a warranty.

Documentation usually can be very different depending on the country and the lender as well as the type of education loan there is. However, most lenders always tend to ask for related types of documents as listed below Though.

Credit Requirements For Education Loan: Types of documents

1. Identity Proof

The type of document that lenders first usually request is an identification document. It also assists in confirming the identity of the borrower and is also the key obligation under the KYC policy. The following documents are commonly accepted as identity proof:

Passport
Aadhaar Card (India-specific)
Voter ID
Driver’s License
PAN Card (India-specific)
Social Security Number (if the loan is registered in the United States only).
Make sure that the id card produced is also genuine and relatively current as well. Usually, submission of one or two of the above documents has been deemed satisfactory.

2. Address Proof

I think they have to confirm where you live because it assists them in finding the borrower in any case of communication or legislation. Acceptable documents for address proof include:

Telephone bills, electricity, water or gas bills
For the address I am requesting the bank account statements.
Passport
Aadhaar Card
Voter ID
Driver’s License
These should also be recent documents that display your current address as the one you intend to use on the identity proof.

3. Academic Records

Creditors will wish to look at your results when you are in school before giving you a loan. It is useful to them to assess your capability of mastering the course and finding a job to repay the loan. Common academic documents required include:

Application forms (for undergraduate or graduate loans)
Certificates for undergraduate degree (for postgraduate loans)
Letter of admission or offer from the educational intuitions
Mark sheets and certificates of previous examination
GRE/GMAT if one is applying in a foreign university or TOEFL/IELTS if one is applying for admission in a foreign country.
This is especially true when admission or offer letter are issued, because they state that you are accepted for learning in a recognized institution.

4. Course Fee Structure

In addition to your admission details, lenders will require details of your breakdown of fees for the course. This makes it easy for them to decide on the amount of money they need to loan to the client. This fee structure may either be included in this document depending on the institutions or in the offer letter. The fee structure typically includes:

Tuition fees
Laboratory or library fees
Hostel or dormitory fees
Examination fees
Other miscellaneous charges (transport, books and stationery, etc.)
Using this information the lender calculates the total cost of education in order to ensure that you owe the right amount from the loan.

What Documents Are typically Required When Applying For an Education Loan

 

What Documents Are typically Required When Applying For an Education Loan
What Documents Are typically Required When Applying For an Education Loan

 

5. Income validation – co-signer or guarantor

Many education loans, especially those granted to students, are secured for a co-signer or guarantor because for the most part students do not have regular income or financial history. This is usually a parent or a guardian of the child in need of such treatment. Their financial data assists the lender to determine what to do when the student is unable to pay back the loan. Common income documents required include:

Pay stubs (Last three to six months)
The latest and authentic source documents related with the co-signer/guarantor includes atleast the income tax returns (ITR) of the co-signer/guarantor for last two to three years.
Bank statements for the last 6 months
Form 16 – India specific document generated by the employer.
Employment verification letter, or employment offer letter
The individuals who made their guarantees for those self-employed guarantors may have to produce other documents including the business license, balance sheet as well as any other methods of proving income.

6. Additional documents / Supporting documents / Exhibits / Enclosures / Proof documents / Legal documents/ Other documents (where necessary)

For loans are above a specific amount, mainly where the loan is meant for foreign studies, the credit facility may be backed by warranty. Some of the collaterals that the lender can accept include land, building, fixed deposit and among other valuable security. Lastly, when expected to offer collateral for a loan you will be required to attach documents showing that you own the asset and its current market value. Common collateral documents include:

Legal documents (ownership document, title document and sale contract).
Fixed deposit certificates
Furthermore, insurance policies which contain surrender value
Here, non agricultural land documents refer to all documents that relate to the use and transactions of non agricultural land a aspect which the traditional methods of recognizing land documents failed to capture.
It is usual that the lender will value the commercial asset to its satisfaction before extending credit.

7. Bank Statements

Apart from the income proof, the credit lenders may demand with the current bank statements of the borrower if he is a wage earner, and with the bank statements of the co-signer/guarantor. Most of the time you will be requested to submit statements for the past six to twelve months. The bank statement helps lenders:

Co-signer should be of good credit standing to enable him/her meet your requirements in case you fail to meet your obligations on the loan.
Evaluate the borrower’s tendency towards the management of money
Make sure that there is adequate funds required when such other expenses occur like, the fees for processing where necessary
8. Passport-Sized Photographs

The majority of lenders will require the borrower and the co-signer or guarantor to submit several passport sized photographs. These may be demanded for the application form and other processes in the application of the process.

9. Loan Application Form

While not strictly a document it is the Loan Application form, which must be completed and be as truthful as possible. The form collects details such as:

Identification data (name, age, contact data and other).
Education details
‘Course information and Institution Information
Loan amount required
Co-signer/guarantor details
Ensure that entire details provided in the application form matches all the other documents that are attached.

Supplementary Papers for the Intention to Study Overseas

When you are seeking an education loan for overseas, the lenders often need some more proof of your visa & your travel plans. These can include:

Valid student visa
Documentation of bookings (flight tickets)
Health Insurance when it is necessary if the country of visit has legislation on such insurance.
These documents assist the lender to ensure you meet all the requirements to start the study in the foreign country.

How to Get Your Education Loan Right

Organize your documents: Multiple required documents are always to be kept in a clean and properly arranged manner in various folders. Timely create many copies, paper and digital, in case, they are lost or misplaced intentionally.
Double-check for accuracy: Make sure you stick to what you have written in all your papers. There can always be some inconsistency which may cause the delay of your loan.
Submit everything in one go: The best time to turn in all your documents is at once, not in sections, to avoid the paperwork taking a long time.
Consult with your lender: But then lenders have their ways of doing things and might have different conditions and policies from one another. Regarding this, for the other documents which you require to attach, better to consult with the bank or any of the other relevant financial organizations.

Conclusion

It can be rather challenging to go through all the formalities related to the application for an education loan; however having all the documents ready will make the process easier. They are usually accepted documents of identification proof, residential proof, educational credential, proof of income of co-signer or guarantor and course fees structure. In targeted credit operations, which are usually large without any pledge, a guarantee or assets may be needed. Documents do matters in any processes, so if you hope to keep paperwork into consideration and focus on what is important—studies and future, organize your documents properly and submit them in a proper manner.