An education loan is an excellent source of funds for students who wish to fund their education in India or abroad. It is a sure-shot way to ensure an unrestricted flow of funds to further their higher education. But how to apply for one?

As there are multiple lenders both public and private who provide education loans to students, students can now also apply for education loans online.

In this article, we'll describe the procedure for both collateral and non-collateral education loans so that you'll know beforehand what to expect during your education loan process.

In this article, we'll go over the steps for both collateral and non-collateral education loans so you know what to anticipate during your loan process. With that, we'll also help you understand the loan jargon and terminologies that you might encounter during your education loan procedure.

Education Loan Options: Secured or Unsecured

When applying for an education loan, you can choose between secured and unsecured loans. Here's a brief overview:

  • Secured Education Loans: Loans secured on collateral - such as property, fixed deposits, or other valuable assets are used for these loans. Public sector banks such as SBI, Bank of Baroda, and others usually provide them. [Read more about secured education loans.]
  • Unsecured Education Loans: The loans are unsecured and are based on the borrower’s creditworthiness and the co-applicant’s financial standing. NBFCs like HDFC Credila, ICICI Bank, and Axis Bank mainly provide them. [Read more about unsecured education loans.]

Important aspects in an education loan process

For you, your education loan process begins the day you start looking for lenders, their education loan schemes, loan amount and interest rates as per your requirement, and so on. There are a few important aspects of an education loan process-

  • Type of education loan- As you may already know there are two types of education loans available, the procedure for obtaining one depends on which one you take (explained the process of both education loans later in this article)
  • Education loan lender- The education loan type paired with a lender will change your entire education loan process. It is preferred to take a secured and unsecured education loan from public and private lenders respectively.
  • Documentation- Both secured and unsecured loans have different document requirements. The unsecured loan process requires less paperwork compared to the secure loan process.
  • Education loan processing time- A secured education loan takes a lot more time than an unsecured education loan. 

Step-by-Step Process for Secured Education Loan

Applying for a secured education loan involves several stages. Below is a detailed breakdown of the process: 

  1. Initial Research and Application:
    • Go to the website of a public sector bank —SBI, Bank of Baroda, or Union Bank of India, or you can also contact WemakeSchoalrs as we are patterned with 14+ banks and financial institutions operating in India.
    • You can then fill out their online education loan application form on their platform
  2. Document Collection and Submission:
    • You need to gather all the needed documents, such as proof of admission, identity proof, address proof, and collateral-related documents.
    • Review these documents at the nearest bank branch. In addition, the bank will share the approved lawyers and valuers for the evaluation of the collateral.
  3. Collateral Evaluation:
    • Get a legal opinion from the approved lawyer on the pledged property or asset.
    • To find out the market value of the asset get a valuation report from the designated valuator.
    • Make sure both reports are filed to the bank by those professionals.
  4. Loan Processing and Verification:
    • The entire set of documents is sent by the bank to its centralized cell for education loan processing.
    • Your loan eligibility is evaluated by a loan officer who thoroughly verifies the documents.
  5. Loan Sanction:
    • After the verification process kicks in, the bank sanctions the loan.
    • You’ll be asked to go to the branch to sign the sanction letter and any other relevant documents.
  6. Post-Visa Formalities:
    • Once you have gotten your student visa, visit the bank to finish the property mortgage process.
    • To start the transfer of funds, sign the disbursement agreement.

Secured Education Loan Processing Time

Especially from public sector banks, education loans may take time to get secured, because of the extensive documentation and collateral verification. The typical processing time is:

Loan Type Processing Time (Without Assistance) Processing Time (With WeMakeScholars Assistance)
Secured Education Loan 45 days to 2 months

15-20 working days (after all documents are submitted)

Step-by-Step Process for Unsecured Education Loan

There are several key steps that you have to take to apply for an unsecured education loan. Unsecured loans are a preferred choice for students who might not have assets to pledge as they don’t need collateral. An unsecured education loan is a step-by-step guide to applying for an education loan, with details on popular banks and financial institutions that provide the loans.

  1. Initial Research and Application
    • There are different banks and financial institutions that give unsecured education loans, so you have to do some research first. You can also use WeMakeScholars to go through your loan and compare options with you on what is the best loan to take, interest rates, and repayment terms. Contact our financial officers to see which providers have the lowest rates, repayment terms, processing fees as well as conditions.
    • Top Banks Offering Unsecured Education Loans:
      • State Bank of India (SBI)
      • HDFC Credila
      • Axis Bank
      • ICICI Bank
      • IDFC FIRST Bank
      • Bank of Baroda (BOB)
    • We are partnered with more than 14+ banks and financial institutions, so you can simplify your process and connect you with the lenders best suited for your profile. 

  2. Document Collection and Submission

    • Prepare and submit the necessary documents for loan application:

    • 10th, 12th, and graduation mark sheets

    • University admission letter

    • University fee structure

    • Aadhar, PAN card, and Passport as identity proof.

    • Residence proof

    • Salary slips, ITR, bank statements of the co-applicant

  3. Loan Processing and Verification
    • The documents submitted by the applicant, academic details, and financial profile of the co-applicant will be verified by the bank. Verification may be telephonic or home visits.
  4. Loan Sanction
    • After successful verification, the bank will approve the loan and issue a sanction letter detailing:
    • Loan amount
    • Interest rate
    • Repayment terms
    • Moratorium period

  5. Disbursement of Funds
    • After the loan agreement is signed, funds are disbursed to the university or to the student's account at the university’s direction.

Unsecured Education Loan Processing Time

Loan Type Processing Time (Without Assistance) Processing Time (With WeMakeScholars Assistance)
Unsecured Education Loan     15-20 working days 7-10 working days (after all documents are submitted)

Loan Disbursement Process

After your loan is sanctioned, the next important thing is the disbursement process. That is when the lender releases the sanctioned funds for your educational expenses. The process involves the following steps:

  1. Signing the Loan Agreement:
    • When the loan sanction is over the borrower is required to sign the agreed loan terms & conditions that consist of all the conditions of the loan.
  2. Requesting Disbursement:
    • The lender then requires the borrower to submit a disbursement request form to the lender, where the amount required, and the reason for the disbursement is specified.
  3. Verification by Lender:
    • Once the amounts that you request are verified with the listed details in the form request, then the lender verifies that you comply with the terms contained in the loan agreement.
  4. Release of Funds:
    • The funds may be disbursed directly to the educational institution to pay the tuition or to a borrower’s account for living expenses, depending upon your stated agreement.
  5. Disbursement Schedule:
    • The institution usually schedules loan disbursements in installments along with the academic calendar of the institution.

Key Points to Note:

  • The first disbursement normally includes tuition fees for the first semester/year.
  • The loan can be used to cover living expenses if such expenses are covered periodically.
  • Borrowers must record disbursement receipts for future use.

Repayment and Post-Loan Services

Repaying an education loan can be overwhelming, but with WeMakeScholars (WMS), you receive post-loan services designed to make it simple. Here’s how WMS can assist you:

  1. Flexible Repayment Options:
    • WMS partners with lenders to find you suitable repayment options, such as longer tenures and flexible EMI schedules that suit your financial position.
  2. Loan Monitoring Tools:
    • WMS offered tools to students to use to keep tabs on loan repayment schedules, remaining balances, and interest accrued.
  3. Interest Rate Negotiation Support:
    • After loan disbursement, WMS still haggles with lenders to get better interest rates or cancel certain fees for eligible borrowers.
  4. Prepayment Assistance:
    • Guidance on partial or full prepayment of a loan to reduce the amount of interest that will be paid over the life of the loan.
  5. Dedicated Post-Loan Support:
    • Financial Officer dedicated to responding to you and solving your problems concerning repayment, loan restructuring, or refinancing. Contact WeMakeScholars now.

Why you should apply for an education loan for abroad studies through WeMakeScholars

  • There are very few organizations that work for the benefit of students. Wemakescholars is one of them. We are funded and supported by the Ministry of IT, Government of India. So the first benefit of applying through us is that our services are free of cost.
  • We are affiliated with 10 plus Government banks, private banks, and NBFCs. So we can help students in finding the right lenders as per their requirements.
  • No hassle of visiting the bank again and again with different documents. Our financial officers walk you through the list of required documents and you can submit them in one go.
  • We work with PAN India digitally, therefore we can assist students across India.
  • Last but not least, you get a companion in the form of a financial officer who will be available for you at all times, assisting you throughout the loan procedure till repayment

So now let me tell you how can you apply through us:

  • First, request a callback on the official website of WeMakeScholars
  • Within 1-2 working days of submitting your request, you will receive a call from our financial officer.
  • Your financial officer will be able to assist you in selecting the right lender for you after receiving some further information about your education loan requirement.
  • You will then be given a secured link to a portal by your financial officer, where you are required to upload the documents online. We request you not send any documents to any other source as the confidentiality of the documents is jeopardized. Therefore, only upload the documents on the portal provided to you by your financial officer.
  • Once you've uploaded all of the necessary documents, your financial officer will connect you with numerous lenders that are most suited to your needs and assist you in getting the best offer possible
  • Our financial officer also negotiates the rate of interest offered by the respective banks and processing fee on your behalf.
  • As soon as the student is ready with the agreement, he/she heads towards the payment of the processing fee and gets the sanction letter.

We understand how confusing and daunting an education loan process can be. We make every effort to make the process as simple as possible for you. Request a callback and get in contact with us right away!

FAQ

Can I apply for an education loan before securing admission?
Yes, you can take into consideration applying for a provisional education loan before you know where you wish to take your course or university. Most lenders allow students to start the loan process based on the offer letter or when the application is underway. The final loan sanction, however, will usually require proof of admission, such as an acceptance letter from the university. Early application helps you understand your financial options and meet deadlines for tuition payments. WeMakeScholars platforms help banks simplify the pre-admission application process with us and get faster approvals once students' admission is confirmed. For students who need to compete with the best and those attending universities that exact the most from students financially, this approach can be very useful.

How long does it take for an education loan to get approved?
It depends on the type of loan and your lender, but education loan approval takes time. The onus of collateral verification and legal procedure often takes 45 days to 2 months to complete, making secured loans from public sector banks. On the other hand, private lenders or NBFC loans are quicker, taking 7 to 10 days if you have completed the documentation. Processing secured loans using these services such as WeMakeScholars takes 15-20 working days, much less than the conventional time of 6 months. Getting documents out early and being proactive with lenders are both key to avoiding delays. Depending on how the applicant adheres to documentation requirements, it should also vary by how the bank works internally, on its processing time.

Can I apply for an education loan online?
Of course, most of the banks and financial institutions do allow you to apply for education loans online. It provides user-friendly interfaces in online platforms where students can apply, upload documents, and track their loan status. WeMakeScholars makes this process even better by linking students with multiple lenders and helping with documentation and negotiations. With online applications, you save time and don’t need to go to the bank so often. For secured loans though, the physical presentation of collateral documents and the in-person legal and valuation processes may still be required. Students who live in remote areas or don’t have enough time to visit the bank branch every now and then can opt for online loan applications as it is transparent and convenient. 

What happens if my loan application gets rejected?
If your education loan application gets rejected, you must find out the reasons why this happens, such as incomplete documentation, low credit scores, or less collateral value. If these problems are addressed quickly, you will be more likely to be approved in future applications. In addition, you may find yourself applying with another lender or seeking other funding, such as scholarships or partial loans. WeMakeScholars provides professional reviews of rejected applications, helps students find good lenders, and negotiates better terms. If the bank is rejecting your application then you can often turn it around with proactive communication and assistance from a financial advisor to resolve the lender’s concerns.

Are education loans available for all types of courses and universities abroad?
Generally, education loans are available for a range of courses and universities abroad, undergraduate, postgraduate, and doctoral programs. Eligibility criteria offered by different lenders, however, depend on the course’s credibility, the university’s ranking, and the earning possibilities after graduation. Public sector banks often favour funding into STEM programs at recognized universities, whilst private lenders and NBFCs are more flexible and support non-STEM streams and unrecognized universities. Some courses or institutions in the niches might have regulations. WeMakeScholars services help students find a lender who fits their academic needs, so they can expand the coverage for different courses and universities.

What are the common reasons for delays in the loan process?
Education loan process delays are frequently caused by the absence of, or error in, documentation, delays in collateral valuation and legal opinions, or internal processes in banks. Among other things, it is other factors like holidays, understaffed bank branches, or pending approvals from centralized processing units. The complexity with which collateral can be verified also contributes to delays for secured loans. However, such problems can be overcome by borrowers checking that all documents are complete and accurate and then by regularly checking in with their loan officer. WeMakeScholars platforms allow bank officials to work simultaneously with the banks same-day documentation is made with the proper documents and bottlenecks are solved efficiently reducing the delays.

How can I track the status of my loan application?
Lenders ensuring most of them have mechanisms to suggest where you can check the status of your education loan application like online portals, mobile apps, or customer care helplines. These platforms stand out by allowing the applicants to see updates on processing stages, document verification, and approval. Status updates for secured loans may be collateral verification and a legal opinion phase. Real-time updates can also be availed by borrowers by visiting the bank branch or calling the loan officer directly. WeMakeScholars services facilitate a dedicated financial officer who guides and keeps the applicants updated at every stage and this has resulted in transparency and timely follow-ups. Regular tracking and talking in the lead to issues can resolve issues quickly and fasten the loan process.