Education loan application rejected? Perhaps these are the reasons | Photo credit: Getty Images
New Delhi: Education, especially higher education, has become very expensive over the past decade. Nowadays, many are unable to finance their child’s higher education, and under circumstances like these, student loans have become popular. Some children who wish to pay for their higher education on their own to ease the financial burden on their parents also choose student loans to help them.
Student loans are readily available these days and most people have no problem borrowing money from NBFC banks for their education or that of their children. However, students who are already using credit and have a bad credit history find it difficult to get a loan approved in the first place because bad credit casts doubt on the borrower’s ability to repay.
Student loan application can also be rejected due to low income. If a person tries to take out a loan that is disproportionate to their income, the chances of their application being rejected are higher. Having higher borrowing risks due to other simultaneous loans and not being able to provide the collateral required by the lender are other reasons for rejecting the application.
For students who are new to credit, the lender is considering looking at factors other than their credit history. The lender may consider the applicant’s academic background, type of course, future employment prospects, repayment capacity after placement, value of collateral offered, reputation / rating of the relevant educational institution, etc. It can also look at the income and credit profile of parents. / tutor who is the co-borrower or guarantor when evaluating a student loan application. If your request was rejected, it is likely that this is the reason above.
According to loan experts, education loan lenders typically require a margin of 5% for study in India and 15% for study abroad. While no collateral / collateral is required for education loans up to Rs 4 lakh, most lenders also require tangible material collateral for loans over Rs 7.5 lakh. A third party guarantee may be required for student loans ranging from Rs 4 lakh to Rs 7.5 lakh. If you are considering applying for a student loan, you must obtain the required margin money, collateral, or guarantor before submitting their education loan application, or your application may be rejected.
Another factor that a lender takes into account when evaluating loan applications is the evaluation of educational institutions and courses offered. If the college or university where you want to continue your studies is not highly rated and does not have a good reputation, your loan application may be rejected because the lender sometimes thinks that a college education will not allow you to ” get a well-paying job. which will ultimately prevent you from repaying the loan on time.
In addition to the creditworthiness of the applicant, student loan applications are sometimes rejected for technical reasons. If there are problems or errors in the application form or if the educational institution for which the loan is requested does not have the necessary accreditation with the UGC or the AICTE, or if the course is not eligible for funding under the terms and conditions of a lender, the loan request may be rejected. Students should check the loan eligibility criteria before applying to ensure that the chances of their application being rejected are low.