Education Loan

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Education Loan
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13 Rejection Reasons for Education Loan
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• Educational loan is a good business for lending
  institutions as cost of pursuing studies in India
  or abroad has risen significantly. Because of
  this more and more students take help of
  educational loan to fulfill their dream. But at
  the same time, to a bank, there is a risk
  associated with it because it is not possible to
  keep a track of students after they complete
  their studies especially those who default on the
  loan which increases the non-performing assets of
  the banks. So before approving any loan, banks
  scrutinize the application very minutely and then
  take decision to approve or deny.

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So listed below are the reasons for rejection of
education loan.

• CIBIL Score of Student One of the most important
  factors taken into consideration by any credit
  lender is the CIBIL score. A good score will
  create no hindrance for you and chances of
  getting a loan of any type (education, home, car
  etc.) are higher. But at the same time, a poor
  CIBIL score will go against you and there is a
  higher chance of educational loan getting
  rejected. Lenders verify your previous repayment
  history in order to decide on whether to approve
  or reject the loan application. So if you have
  frequently defaulted on payment of any type of
  credit card or loan then be prepared for the
  denial. Although students who are fresh out of
  their college do not have any credit record but
  still there are students who start earning while
  studying and buy credit card and spend heavily
  and do not pay monthly bills on time. But they do
  not realize the fact that failure in making
  regular due payment is affecting their credit
  score. So when such students apply for
  educational loan for pursuing further studies
  then their credit score creates a road block.
  Read more on improving credit score in India.

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• CIBIL Score of Parent While taking educational
  loan banks also check CIBIL score of parent since
  they are the guarantors who will repay the
  education loan in case student is ineligible to
  pay. So as mentioned above, if your parent also
  has a poor CIBIL score then also educational loan
  can be denied.
• Poor academic performance If you have got
  admission in a reputed college but under
  management quota due to poor academic performance
  then you may not be fit into the eligibility
  criteria of the bank. This is because banks
  assume such applicants would be non-perfomers in
  the future as well and may not earn enough money
  to repay the loan EMI.
• College Recognition If you are planning for an
  admission in a college which is not well
  recognized and has poor placement record then
  denial chances increases. So if you get an
  admission into reputable institution such as
  IIMs, IITs, NITs and other good colleges than you
  have got a higher loan approval chances.

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• Course applied for If you apply for engineering,
  medicine, management and other courses from which
  earning potential after completion is assumed to
  be high then you have higher chance of getting
  loan approved. On the other hand, if you apply
  for loan for pursuing courses such as arts then
  you might face a rejection, as income is
  considered to be on a lower side after course
  completion.
• Fake documents If you provide fraudulent
  documents to the banks such as marksheets,
  degree, college approval letter then straight
  away your application will get rejected. You may
  also bear legal consequences for your act.
• Type of course (Full time/part time) Most of the
  banks will deny the application if you apply for
  education loan for distance learning/part-time/cor
  respondence course. Lending institutions ideally
  offer loans to students who are applying for full
  time course only.

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• Loan amount Collateral of suitable value and
  joint borrower are must when applying for a loan
  amount greater than 7.5Lacs. If you are not able
  to submit the same then banks will disapprove
  your application. This is because failure in loan
  repayment will force the bank to sell the
  security for recovering their lost money. However
  if the loan amount is less than 4 Lacs then there
  is no need to submit any kind of collateral but
  parent/guardian are required to be your joint
  borrower. For loan amount ranging from Rs. 4
  7.5 Lacs, collateral and joint borrower is must.
• Income of parent Your chances reduce when
  parents income is less. Because as mentioned
  above, when a student fails to repay the loan
  amount then banks will ask parent to repay the
  money.
• Service area of bank If applicants residential
  address is not in the service area of the bank
  then also the application can be rejected.
  However RBI has asked banks to not consider this
  as a mandatory condition and not reject the
  educational loan.

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• Citizenship If you are an NRI or student from
  foreign country then banks will deny your
  application. Only Indian citizens are offered the
  loan.
• Age limit Although this is surprising as many
  individuals apply for a education loan after
  taking industry experience but still banks many a
  times set a age criteria to less than 30 years.

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Source http//www.allonmoney.com/educational-lo
an/why-it-gets-rejected/
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