Education loans bridge the financial gap between students and their dream of pursuing higher studies at a reputable university in India or abroad. These loans make education more accessible by helping students cover educational expenses such as tuition fees, living expenses, purchase of books, etc.
However, lenders require a long list of documents from the applicants to process the education loans. The documents required for a secured education loan vary from those of an unsecured education loan. Understanding the documents required for both types of education loans can significantly ease your student loan process. This article covers the list of documents required for both secured and unsecured education loans to help you in your student loan process.
As mentioned, the documents required for an education loan vary from student to student depending on the lender, the loan type, and the student’s eligibility. Contact WeMakeScholars, an organization partnered with over 15 public and private banks, to get a personalized list of documents for an education loan according to your eligibility. They help students get the best education loan deals according to their profiles.
Understanding the Different Types of Education Loans
Before learning about the documents required for an education loan, let’s look at the differnt types education loans. Education loans are mainly divided into two types based on the collateral requirement of the loan. The documents required for an education loan varies based on the loan type.
Education Loan with Collateral:
It is a secured education loan that requires applicants to offer collateral for the loan. Collateral refers to the property of the applicants that is pledged as security for the loan amount. To get a secured education loan, you have to pledge an acceptable property as collateral, according to your lender.
- Banks accept immovable properties and liquid securities as collateral for student loans.
- Applicants should submit collateral documents as specified by their lender to get the student loan.
- These loans offer higher amounts at lower interest rates.
Education Loan without Collateral:
It is an education loan without collateral that doesn’t require any security. This means applicants can get the loan without having to pledge their property as collateral. These loans are offered based on the income and creditworthiness of the co-applicant.
- Applicants should submit the financial documents of the co-applicants to the lender.
- Since there is no collateral involved, these loans are typically processed way faster than secured education loans.
Common Documents Required for Both Secured and Unsecured Education Loans
Now that we have understood the different types of education loans, let’s look at the documents required for one.
The following is a list of common documents required for both secured and unsecured education loans:
- KYC Documents:
Documents proving the identity and address of the student and their co-applicant. They can include:- A photo ID proof (Aadhaar card, Voter ID, Driving license, etc.)
- PAN card
- Passport
- Admission Letter:
Students should submit an admission letter from the university proving their acceptance into the university. - Academic Records:
Students should provide their previous academic records, such as the 10th, 12th, and undergraduate marksheets. - Other Documents:
Lenders can also require other documents such as:- Passport-size photos of the applicant and the co-applicant
- Applicable test score results, such as CAT, IELTS, TOEFL, and GRE
These are the common documents required for both collateral and non-collateral education loans. Now, let’s look at the additional documents for both secured and unsecured education loans.
Additional Documents Required for an Education Loan With Collateral
Apart from the mentioned documents, applicants should submit all the collateral documents as specified by the bank. These documents can vary based on the type of collateral being pledged as security for the loan. Banks accept both immovable properties and liquid assets as collateral for education loans.
Immovable properties are the properties that cannot be moved from one place to another, such as a house, flat, or non-agricultural land. Liquid assets, on the other hand, are the assets that can be easily converted to cash quickly, such as fixed deposits, government bonds, and insurance policies.
Getting a secured education loan can be simple if you have all the required collateral documents. Education loans against liquid securities require a relatively short list of documents. Applicants should submit the documents of the liquid assets as specified by the lender, which vary based on the asset.
Education loan against immovable properties, on the other hand, often require a long list of documents. Below is the list of all the common collateral documents required for secured education with immovable properties.
- Property Title Deed
- Registered Sale Agreement, Gift Deed, or Will
- Original Registration Receipt
- Allotment Letter issued by the Municipal Corporation
- Copy of Municipality-Approved Building Plan or Plot Layout
- The Most Recent Property Tax Bill and Electricity Bill reflecting the same address
- A 30-Year Link Document or a Preceding Chain of Sale Deeds Establishing Title or Encumbrance Certificate (EC) is Required.
What If the Property is a Gift Deed?
If the property is transferred through a gift deed, the following documentation is additionally required:
- The gift deed and the will must be registered.
- The property should be registered in the name of the new owner.
- A No Objection Certificate (NOC) must be obtained from the owners’ siblings or relatives.
- A legal heir certificate and a family tree certificate should be submitted.
- The death certificate of the individual who authored the will must be provided.
- Two legal reports are necessary in the case of a gift deed.
Additional Documents Required for an Education Loan Without Collateral
To get an unsecured education loan, you should also provide the financial documents of the co-applicant in addition to the above-mentioned common documents. These are the documents proving the income and creditworthiness of the co-applicant. These documents can vary depending on whether the co-applicant is salaried or self-employed.
1. For Salaried Co-applicants:
- Last 2-3 years of ITR or Form 16,
- Recent payslips, and
- Bank statements.
2. For Self-employed Co-applicants:
- Last 2-3 years of ITR,
- Business proof,
- Bank statement, and
- Profit & Loss statement.
Conclusion
Education loans for abroad studies help students pursue higher education at a well-reputed university in India or abroad. These loans help students cover their entire educational expenses. We have covered the list of documents required for both secured and unsecured education loans. Understanding the documents required for an education loan is crucial to ensure a smooth student loan process.
