How does My Academic Performance or Program Of Study Affect My Eligibility For An Education Loan

How does My Academic Performance or Program Of Study Affect My Eligibility For An Education Loan

How does My Academic Performance or Program Of Study Affect My Eligibility For An Education Loan.In the hope to obtain an education loan has always been necessary especially to students who would like to pursue their studies in India or abroad. However, one does not think getting an education loan is as easy as applying for it. When applying for a loan application in any bank or financial institution several conditions are considered in ensuring that they approve the loan and two of the important factors are the academic performance and program of study.

In this particular blog post, I am going to provide a step-by-step guide on how your GPA and the program for which you’re applying predicts your education loan eligibility. We will also look at issues to do with choosing a recognized institution and all the other factors that determine whether or not one is qualified for a loan.

1. The rationale for Academic Achievement

Gautam (2012) has stated education loan sanction, bank or financial Institution’s first filter is the academic credential. It can also be noted that reports indicating the background check for the student’s records will often work in favor of the student while the poor grades may result in rejection or high self-imposed interest rates.

a. Merit-Based Loan Offers

Some of the banks have merit based loan schemes where students with good performances can borrow loans with easier repayments and attract lower interest rates. This too helps to decrease the chances of borrowing, and if the awards/ grants depend on academic achievements, then you will have a better financial status.

For instance, those with high results on average throughout 10th, 12th or an undergraduate program are considered low risk by the banks. This means that they are capable of finishing their course successfully and thereby enhancing their repayment capacity after gaining that degree.

b. Admission in a recognized Institution

It is noteworthy that even if you were not an excellent student in the past, getting a place in one of the best academic institutions will practically guarantee you an education loan. Credit seekers, particularly students, can easily secure loans from financial institutions especially if they attending university or college departments that were ranked high, or departments that are known to churn out graduates that are readily employed shortly after graduation.

c. Future Earnings Potential

Academic performance is used by banks as a benchmark of future revenues of the client. A student who gets better grades is believed to have better prospects of getting better paying jobs after her or his graduation. This make the chances of loan repayment higher hence making the student a less risk investment to the loan giver.

d. What if your over-all academic performance is low?

So if you fail to maintain good grades you are not washed out from the possibility of getting an education loan. One is still able to get a loan but would require to give more security or get a guarantor so as to reduce on the risks as per the perception of the lender. Some of the banks also provide special consideration to students who may have performed poorly at one time but who have since improved their performance, perhaps due to commitment to their studies.

How does My Academic Performance or Program Of Study Affect My Eligibility For An Education Loan

How does My Academic Performance or Program Of Study Affect My Eligibility For An Education Loan
How does My Academic Performance or Program Of Study Affect My Eligibility For An Education Loan

2. Your Program of Study – Its Effect

This is also true that the grades you earn in your academic program have a lot to do with your eligibility to repay the education loan, but another important factor that is considered by banks is the type of the program of study that the borrower has opted. It is important to understand that different programs have different degrees of employment and income opportunities and this plays a big role in the terms and granting of loans for education.

a. Professional and Non-Professional Programs

This group includes engineering, medicine, law, management and other technology courses that attract student’s preference among the banks. These courses are generally inclined to provide graduates a higher chance of grabbing a job and better pay (starting salaries), which makes the prospect of repaying the loan bright.

Literate or non-professional courses like literature, sociology etc popularly, called liberal arts still qualify for education loans but with slightly higher interest rate or conditionality. This is so because the perceived earning power in non-professional courses is little, thus these students are credit risks to the lenders.

b. Undergraduate Programs and Postgraduate Programs

In general, post graduate programs, particularly MBA, MSc or any other master’s degree programs are more welcomed by banks. Graduate students are normally more responsible and professional and have a better understanding after they graduate from the university as to what they want. Banks regard this as stability and reliability of either the business thus issuing credit facilities easily.

On the other hand, undergraduate courses are considered to be more-with more risks and uncertainties because students are relatively younger, and have less discernment, that is, they may have less definite vision of their career path.

c. Courses on which job- market demand is high

Its common that many banks consider the market demand of specific courses at the time of estimating fees. For example, the tech discipline such as data science, artificial intelligence, computer engineering, biotechnology and health care, jobs are several and graduates in those programs are well marketed. This improves one’s chances of acquiring education loan at even better terms in the market.

However if your course falls in low demand area; banks will consider it as high risk to loan money hence charge high interest or offer to take your property.

3. Institution’s Reputation and Association

In addition to the student’s academic achievement and the course of the program of the institution he or she attends matters a lot in the approval of education loans. Since taking security on these loans, banks and financial institutions avert offering loans to the students attending any recognized and renowned institution only.

a. Tier-1 vs Tier-2 Institutions

Education loans for students getting into these elite institutes like IITs, IIMs, AIIMS or other reputed international University offers an added advantage of availing low interest education loan. This is because such institutions attracts high employment graduates thus high chances of repaying the loans.

Those students, who belong to Tier-2 or some unknown institutions, especially those who have no proper placements, will likely face some problem to get loans. Banks check the institutions record of placements and the industry connections the schools have before giving out the loans.

b. Accreditation

Check that your institution/learning institution and the program you want to pursue have a recognition by an accrediting body. Employability is well valued by banks and many of them include accreditation as among the most important factors as it demonstrates that the program offered meets specific educational standards that are expected in the workplace.

4. Guarantees and Other Conditions Including the Use of a Co-Signer

It is agreed that, academic standings, program of study, and the result of such greatly influence the approval of education loans; however, this is understated. Besides, it is more common for banks to demand collateral for a higher level of loans (at least certain amount), and a co-applicant is expected to be a student with poor performance or participating in a less accredited university.

a. Collateral

Concerning specific loans which can be needed to obtain by students or their families, in case of an amount that surpasses some limit, students have to provide collateral such as property, fixed deposits or any other valuable things. A proper collateral should be equal to the amount of the loan and in some cases even higher. This helps to lower the probability of loan defaults because it is obvious that some borrowers may at some point in time default on their loans.
b. Co-Signer

The party that gives guarantees for the debt is the co-signer who acts as guarantor for repaying the loan for the buyer. The co-signer takes the responsibility of repaying the amount in case the student defaults with month-end contributions. This is is true even for education loans where a financially sound co-signer with a good credit rating can help even overcome other odds against you.

5. Conclusion: How to get an Education Loan

The basic criteria in getting an education loan are your academic results, as well your choice of course of study. Indeed, having initial academic achievements in a particular (preferably ‘hard’) specialties and getting into the base curriculum of a prestigious university remarkably amplifies an applicant’s chances; though, one must not lose sight of the general perspective. THIS WE BELIEVE ARE; collateral, co-signers and the general credibility of the banking institution we, at times, apply for the loan from.

If you are deficient in any of the mentioned criteria, it advisable to consult other experts in financing, work harder to improve your academic performance or select the program with higher chances of getting a job to increase the chances of securing an education loan. Fortunately however, it is consoling to know that your urge to further your education is not unachievable for you or to hard to come by.