Co-applicant's Eligibility Criteria For an Education Loan

The education loan eligibility criteria for a co-applicant set by most of the government banks are not as rigid as those set by private banks and NBFCs. This is mostly due to the type of loan these lenders provide to students.

Government banks provide collateral education loans for loan amounts above 7.5 lakhs whereas private lenders can provide up to 75 lakhs without needing collateral i.e. education loans without collateral. 

This is why the requirements of a co-applicant for a collateralized education loan from a government bank and a non-collateralized education loan from a private lender differ.

The following parameters form the basis of the education loan co-applicant requirements of all types of lenders-

1. CIBIL Score

A CIBIL score refers to the benchmark credit score allotted to individuals based on their previous financial activities. An individual’s CIBIL score is taken into consideration by all lenders before processing education loan applications. 

The nominal CIBIL score that all individuals who are most likely to be named as co-applicants are required to maintain is 685 to be considered eligible.

Private lenders are pretty strict when it comes to CIBIL scores and do not usually accept scores below that. However, since government bank education loan is lent based on collateral security they can accept a CIBIL score as low as 591 if it is due to legitimate and pardonable reasons.

But if the reason behind a low CIBIL score is a loan write-off, a loan settlement, etc., then even government banks may reject an education loan application.

Read more about How the CIBIL score affects your education loan.

2. Last 2-3 years IT Returns Documents

ITR documents are one of the most important requirements of the education loan process. All lenders, private lenders, in particular, are very strict about education loan co-applicants submitting their ITR documents to get an education loan. 

Government banks still accept co-applicants who do not possess all two years’ ITR documents. However, it is extremely difficult to get an unsecured education loan without the relevant ITR documents in place.

The WeMakeScholars team is well-experienced with even the smallest education loan co-applicant requirements and hence will be able to guide and assist you in the end-to-end process of securing abroad education loans despite your status. 

Read our article-" Education Loan Documents Required by Private and Government Banks" to know what documents are required of a salaried and self-employed co-applicant.

3. Income Proof/Business Proof

The income proof to be submitted by co-applicants who are salaried are limited only to their salary slips or bank account statements of the previous six months reflecting the timely salary transactions. However, co-applicants who are self-employed often have trouble submitting legitimate income proofs. This is especially applicable to education loan co-applicants who run small-scale businesses.

• Co-applicants running a small-scale business, for example, selling sarees from their own homes and have not registered their business, can provide some documents to the lending banks as proof of income such as:-
  • Photographs of the stock being sold by them
  • Vendor bills
  • Receipts of the business transactions

(You can contact with WeMakeScholars team, they will provide you with the list of all acceptable documents by the banks as proof of income)

• Co-applicants who run well-established businesses are required to submit the following documents to get education loans:-
  • GST registration
  • Shop registration
  • Profit/Loss statements of their business
  • Financial statements of their business account for the past six months.

However, if your education loan process is at a standstill due to the absence of the relevant income proofs, do get in touch with our financial team for assistance.

Comment- Are you still in a dilemma about whether your co-applicant’s income proof will be acceptable? Please comment below with your doubts.

4. Income Amount

The income of your co-applicant doesn't matter for a collateralized loan from government banks. However, as with private lenders (except international lenders), the income of a co-applicant is of great importance as they are required to initially pay the accrued interest during the moratorium period.

Individuals earning at least INR 30,000 per month are considered eligible to be named as education loan co-applicants. Lenders do consider individuals who earn lesser monthly salaries as co-applicants. However, INR 30,000 is the recommended minimum monthly salary. A few private banks also have education loan schemes given solely based on your co-applicant's income.

5. Age, Retirement Status

Private lenders are reluctant to accept individuals of old age (around 60) or a retired person or even a farmer as a co-applicant, while government banks have no such issue.

Students can name individuals who are retired professionals, farmers, and those who do not have a stable income, as primary co-applicant for education loans in government banks. Again, you need to have the collateral to be pledged as security.

Must read: Government Bank Education Loan Benefits for Students

A lot of students are unaware of the important aspects of an education loan when they begin the process. Such students are very easily misguided about various education loan terms by lenders when they try to apply directly. One of the major reasons behind this phenomenon is that these bank officials are themselves not aware of the exact provisions laid out by their respective organizations with regard to abroad education loans.

This is why students who apply for their abroad education loans through WeMakeScholars are at an advantage and get their education loans sanctioned way earlier and in a hassle-free way as compared to the others. The financial team of WeMakeScholars consists of professionals who have had the experience of handling even the most complicated education loan applications for the past four years. The expertise and knowledge gained from this experience are what students get to avail themselves of when they register with us for their abroad education loan process. 

So, if you are looking for the right kind of guidance and assistance for your abroad education loan process, do get in touch with us.