FAQ

The application could get reviewed anytime between 2 days to 30 days. The same is dependent on the process of the financial service provider. It is also dependent on the convenience tracker by Eduloans that tracks the turn around time.

The financial service provider can ask for the additional documents to justify the details provided for the preapproved sanction limit. These could include the following -

• Supporting documents for Family Income - The service provider can look to ask for additional IT returns, CIBIL Score as well as the bank statements. In many cases, the IT returns do not provide the true picture of the net income of the family. The bank statement would show the inflow and outflow of funds for consumption, in case the IT returns of the parent are low.
• Documents for business: The financial service provider can look for proof of business for which the parent/guarantor will have to provide the ghumasta license, trade membership documents which can better ascertain the length and stability of the business. The same is especially true for the diamond merchants, the traders etc.

The application can be declined by the service provider, which means the financial service provider is not very comfortable in providing the loan to the applicant. In most cases, the financial service provider would not specify the reason for the decline. Eduloans would in this case, try to understand the application scenario and ascertain the reason for decline and look to find better-matched service providers.

We would not want you to get disappointed. We would try to find out the reason for the decline of the loan and ascertain better suited service providers to process your loan application.

The provisional offer is an indicative offer that shows that you are eligible for the loan based on the information and the documents provided. It states the further steps and the terms and conditions for the final sanction of the loan. The final sanction is the actual sanction, with the final terms and conditions of the loan. Final sanction would mainly include covenants under which the loan could be recalled as well as the disbursal documentation.

Financial service providers are generally of two types.

1. Fixed Service provider - The financial service provider provides you a single amount for processing fees, interest rate, loan amount and terms and conditions. These are non negotiable. The fixed provisions are generally provided by banks, overseas financial institutions etc. The final sanction would have the same terms and conditions.
2. Variable Service Providers - These financial institutions provide an indicative rate that can be further negotiated by the applicant. In most of the cases, the financial institution provides the indicative rate over phone, email or on the Eduloans portal. They usually charge a small token amount for the provisional offer, which vary and the applicant would use the offer letter to negotiate further, with more financial service providers.

The following are the points of comparison during the education loan

How do you compare the provisional offer from different financial institutions? The following are the points of comparison during the education loan

1. Interest Rates
   Interest rates are the major financial cost associated while taking a loan. The provisional offer letter would have a current indicative interest rate. The interest rate in India is governed by the MCLR. Banks usually provide a rate of interest based on the cost of borrowing (MCLR) for the bank. NBFC’s would either provide a fixed interest rate or floating rate based on their cost of capital.
2. Processing Fees Processing fees is the amount requested by the financial institution to process the loan. The same can be refundable, non refundable, amortizable or no processing fees.
   • Refundable processing fees signify that the processing fees would be adjusted during the disbursal of the loan. It however, does not signify the return of the processing fees, in case the loan is rejected or the loan is not availed.
   • Non-refundable processing fees are the processing fees that are charged for the process and cannot be returned, irrespective of sanction, denial etc.
   • Amortized processing fees is done by certain financial institutions, in which case, they do not charge any processing fees upfront. However, it is not that there are no processing fees. The processing fees are added as an additional percentage, over and above the interest rate offered per year, during the tenure of the loan. They generally have the concept of Annual percentage rate (APR). Annual performance rate (APR) is the addition of Interest rate plus the processing fees amortized.
   • No processing fee means that there is no charge for availing the loan. However, we would request you to read the fine print as there could be issues for recalling the loan or a fixed lock in period for the loan
3. Loan Amount and concept of Margin Money -
   Loan amount is the maximum loan that can be availed for the purpose of the education. Loan amount entitles your maximum draw down capacity across the years of study. The loan amount has to be considered with regard to Margin money. All financial institutions want to ensure that you have the complete amount to fund your education, use the amount only for the purpose of education loan.
   • Complete amount for education: In case the loan is sanctioned with an amount less than the total cost of study involved the bank requires you to show and fund the remaining amount through your own personal funds. This amount is called Margin money that signifies the self-funds required for the loan. With every disbursal you would be required to put in the margin money (as a percentage of loan amount disbursed). In some cases the financial institutions insist that they require a particular amount to be funded by the student through his own funds.
   • Ensuring end use of the funds: Nearly all-financial institutions would like to ensure that the funds are used for the purpose of education. Hence, in this case, they would want the money to be transferred to the university directly. They would also request the student to provide proof of the expenses for food and living expenses, for verification.
4. Security requested (Physical and Non physical)
   The sanction would require the security requested by the financial service provider for the availing of the loan. The same could be in the following forms -
   • a. Personal Guarantees - The financial institutions can insist on the personal guarantees of the student and the guarantor. Personal guarantee is a document that signifies the person is liable to pay the loan. The same can be recovered through the court of law, by the bank.
   • b. Security Mortgage - The security that is pledged by the bank as a security for the loan would be specified as well as the letter would contain the list of documents related to the property that need to be provided to the bank. The same could include an NOC from the society, legal clearances from other family members etc.
5. Moratorium Period and Interest rate repayment -
   Many financial institutions do not charge interest during the first two years of study. This period when the interest as well as principle is not to be repaid is called the moratorium period. The same would be mentioned in the sanction letter. The financial service provider would specify if you are being granted a partial interest waiver or a full interest waiver. Partial interest waiver is when the financial institutions request you to pay a part of the accrued interest on the loan and adds the remaining interest as the principle outstanding. The complete interest waiver is when the bank does not ask for any amount during the moratorium period. The same is added to the principle outstanding in the loan.
6. 80E Tax Benefit
   80E tax benefits’ is provided to the applicant in case the service provider is registered as an educational service provider with the RBI. Currently, all banks and only one NBFC have this certificate. With this provision, the amount of the interest paid on the student loan in the same year reduces the taxable income. The same is very helpful and reduces the interest cost for the parent.
7. Disbursal Requirements –
   Many financial institutions have special covenants (conditions) during the time of disbursal of the loan. The same generally is mentioned during the provisional or the sanction letter of the bank. The same could be related to property papers, guarantor employment verification etc. Please read the disbursal conditions very carefully to ascertain the availability of all the documents requested.
8. Additional Charges -
   There are many charges that skip the eye during finalization of the loan. Please be very careful to understand the type of required mortgage - equitable or complete, insurance policy requested etc. We would request you to add the entire cost of incidental to the interest and then, compare both the loan options.

Once you have received the provisional offer, you have a positive affirmation with respect to your loan application. In general cases, the financial institution would request you to pay the processing fees (if applicable) and start with the validation of documents submitted for the loan. The validation could be the following -

1. Property Valuation and Legal Verification: In case the student is looking for a loan with collateral, he would be provided names of the empanelled valuators and lawyers. The applicant needs to coordinate with the respective valuators and lawyers to get his property valuated as well as get it legally cleared.
2. Guarantor credentials verification: The financial institution would check for CIBIL, ascertain last 3 years IT returns, conduct physical visits for self employed, request for salary slips etc.
3. Student Verification: Student verification could include details such as proof of admission, proof of stay, proof of balance amount, proof of past academic records etc.

Usually the provisional offer is the final amount that is sanctioned to the student. In case you are looking to increase the loan amount, you would require to contact your financial institution directly before proceeding for final sanction.

The academic profile of the student, the course, the university, the country is an important parameter used by various financial service providers to determine the loan. In case you have chosen any of the above differently, you may have to reapply to ascertain final terms and conditions offered by the financial institution.

In a majority of the cases (NBFC, International Funds), you can use the provisional offer as the proof of funds for the visa purpose. In case of nationalized banks, we would prefer the sanction letter.

The financial institutions usually have their own requirement to ascertain mortgage of the property. We would request you to ascertain in advance the following parameters that would help you to get your loan sanctioned faster

1. Free unencumbered property - The property provided to the bank should be free from any lien. The property should not be mortgaged to another bank. In case the property is mortgaged, then it is advisable to approach the same bank for the loan. In case the properties have been previously mortgaged, it is also important for you to have a NOC/No dues certificate from the bank.
2. Property papers to be legally registered – The property papers need to be registered from the first document onwards. All financial institutions would insist on the property papers being registered. In case the same is not there on an older property sale, we would request you to immediately approach the registration center. Generally, you are required to pay additional stamp duty charges and get the property registered
3. Property should not be jointed or part of other property – In case you have two adjoining flats where in you have broken the wall in the middle, the bank would insist on getting both mortgaged even if one has the value to cover for your education. So in case one is already mortgaged and you are looking at the second adjoining one, the same could create issues during the processing of your loan.
4. Property should have an Occupation Certificate - Occupation certificate (OC) is a document issued by the municipal corporation of the area signifying the completion of the proposed building as per the initial approval provided by the municipal authority. It signifies that the building construction is legal. This is an issue with many old buildings where the property was constructed and the builder failed to obtain an OC due to illegal or exceeding sanctioned construction.
5. Property should be in the name of the immediate parents- In case the property is in the name of extended family such as grand parents or uncles, the same need to be put on the loan papers as guarantors. You would also be required to address the issue of lineage and property claim. Generally, the bank insists to get a no objection undertaking from other stake holders during the loan in order to provide the loan on the same property.
6. Property should not have any claim or inheritance issues – There should not be any dispute on the property going on in the court. In case we have a scenario like in a 3 floor building, the ground floor is under dispute or has no OC. There are high chances that the financial institution would have issue in processing the loan for a property on the second or third floor due to uncertainty of the decision on floor one.
7. NOC from Society - You would be required to have a NO Objection Certificate from your Society as well, as any prior loan would have required to have a lien marked on the share certificate issued by the society. The society would also be intimated after the property has been mortgaged to inform them that the property is in custody of the Bank.
8. Registered Mortgage and Stamp Duty - All financial institutions would insist that the property would be registered mortgage. There is an expense of Stamp duty, which gets associated by a registered mortgage. The Stamp duty is generally in the range of 0.2% to 0.3% of the loan value.

Most financial institutions require you to have a valid co-signor who is ready to sponsor your education. They usually check the following parameters in the co-signor/guarantor

• CIBIL Score - CIBIL is part of Transunion, an American conglomerate and one of the 4 approved rating agencies by the RBI. It is an indicative figure between 300 to 900. The score of generally 750+ is required to process any application. In case the current score is below the required value by the financial institution you are requested to pay all pending dues as well as keep track of the deadline for the dues.
• Past and Current Loans with repayment history – Financial institutions would insist on complete track record of the past loan. They would 100% ask for closure letter of the past loan. Post the closed loans the financial institution will generally ask for a good conduct and bank statement certifying the payment outflow ever month. . The free income generated generally called Fixed obligation to income ratio (FOIR).
• For the self-employed, they visit location of work - Financial institutions would check location of work for the guarantors who are self employed.
• For the salaried, they ask for salary slip - For salaried employees they ask for pay slips generally for last 3 to 6 months.
• Additional co-signor details - In case the primary guardian does not have sufficient income, other co signors are required. The total family income is considered and a percentage of free income is ascertained.
• Legal separation of parents (In case scenario) – In case the parent are separated, the financial service providers would insist on the legal document for separation.
• IT return of the owner of the collateral – Incase the collateral provided is not from the guarantor the financial institution insists that the owner of the property should be added in the agreement. The owner of the property in most cases the grand parents is required to act as a guarantor.
• Proof of retirement age of the guarantor – The financial institutions check the retirement age of the parents to ascertain the feasibility of interest payment. This becomes one of the important criteria especially for an unsecured loan as the banks look at the tenure of the loan matching with the ability of the parent to repay the loan.
• Ascertaining a Politically exposed person" (PEP) - This is a term describing someone who has been entrusted with a prominent public function. A PEP profile generally presents a higher risk for potential involvement in bribery and corruption by virtue of their position and the influence that they may hold. Hence, for unsecured loans, generally financial institutions shy away from giving a loan to an individual whose guarantors are PEP.

For an education loan, the student is the most important criteria for the loan eligibility. Most financial providers look for the following parameters to provide the loan

1. Academic Background - The 10th Standard marks, 12th Standard marks, and graduation marks (semester wise) are generally asked by the financial institution.
2. Competitive Exam Score - This is a must as your GRE score,TOEFL/IELTS score determines your acceptance at an institute of rank.
3. The course of study - The course of study is important in the criteria determining interest rate and eligibility for unsecured loans. Generally STEM courses students enjoy better terms and conditions than business students.
4. The university of study - University stature and its employment statistics are very important in ascertaining the eligibility of the loan. Usually each financial institution has its own rating system for the university.
5. The country of study - The stay back option, countries growth index and the past record of the student getting suitably placed is an important parameter for the financial institutions. There could be scenario that similar students with similar courses and university rankings would get differential pricing and loan amount criteria based on the country rules and regulations regarding stay.
6. The KYC of the student - The financial institutions require basic KYC like the passport copy, Aadhar card as well as the PAN card for the processing of the loan.
7. CIBIL Score of the student - The student is expected to have good or no CIBIL score.
8. Work Experience of the student - In case the student has work experience the past record of the student is taken into consideration to ascertain future earning potential.

KYC means “Know Your Customer”. It is a process by which banks obtain information about the identity and address of the customers. This process helps to ensure that banks' services are not misused. The KYC procedure is to be completed by the banks while opening accounts and also periodically update the same. The list of documents for the same include Driving Licence, Voters' Identity Card, PAN Card, Aadhaar Card issued by UIDAI and NREGA Card (As per govt dictum dated Aug 29, 2017.

Financial institutions would require you to show margin money during the sanction process. The same should be equivalent to your cost of study less the amount being sanctioned. Generally, most financial institutions insist the margin to be in the form of liquid assets - savings account or semi liquid – fixed deposit, shares, gold valuation, LIC, etc. If you have already made payments to the school, you may include the confirmation of such payments as part of your proof of savings. This will include transfer receipts or a paid invoice from the school with the accompanying bank statement showing the outgoing payment from your account.

Generally, this process would take approximately 10 to 15 working days, depending on the financial partner and the student. We recommend that the student should keep the entire set ready and submit the same in a single go rather than multiple times.

Usually, the sanction letter has a 1-month to 6-month validity in which time the student has to complete the disbursal documentation and disburse some part of the loan. Incase the same is not done the student might need to reapply for the loan and do the entire process again.

Property Mortgage - All property documents starting from the first sale have to be submitted to the financial institution. The same also needs to be mortgaged. There are two types of mortgage that the financial institutions can insist – equitable and registered mortgage.

• Equitable Mortgage - Equitable mortgage is when the borrower submits his original title deed to the registrar. No formal or legal document is registered with the registrar. The stamp duty involved is low and the paperwork is less.
• Registered Mortgage - Registered mortgage is when the lender creates a charge on the security by registering the same with the sub registrar. The stamp duty involved is high with more paperwork.

The sanction letter would have distinct mention of the amount of loan sanctioned. The same would be in INR. In case in the future the rupee depreciates the amount would be limited to the amount sanctioned. In case the rupee appreciates the same would be the total amount required in dollars to study for your loan. The same would also have the concept of margin money where in financial institutions would ask you to remit the margin money alongside the loan being sanctioned. Its important to have the money to remit and incase you do not have the balance amount it would be difficult for you to remit the initial amount.

In case during the process of getting the loan there is delay due to the procedure of the loan the financial institution generally does not hold any accountability on the delay. The best they might do is that they can send intimation to the university for the payment.

Another point of concern is that banks and financial institutions insist to remit the money directly into the university. Some universities have instituted FLYWIRE, a leading global payments gateway for the remittance. However, there might be an issue as the bank would insist remitting directly to the university and the university may want you to remit through FLYWIRE. In most cases, to resolve the above predicament, a letter of undertaking from the university may be required to initiate the payment.

The interest will get charged to the loan amount drawn. The same shall have to be paid partially or fully, during the time of study. Incase the same is paid partially, the same would get adjusted against the principle outstanding of the student.

In case during the course of study, you are unable to pay the interest amount committed you could request your service provider to reschedule the interest amount. However the same would be at the discretion of the service provider.

The co signor can claim 80E tax benefit on the amount of interest paid during the year. This becomes very advantageous to the guarantor of the borrower as he is able to claim tax benefits.

The monthly due on the loan depends on the total availed loan. The EMI is calculated based on the total loan used during the course of study. There is no compulsion of using the entire sanctioned amount.

The EMI represents the minimum value to be paid every month to successfully settle your loan at the end of the repayment term. The EMI can change subject to increase or decrease of the base rate that the financial institution is using to determine the amount payable.

Yes. And, there is no penalty for those willing to repay in a shorter period. In case the same is applicable it would be on a case-to-case basis.

In case the borrower is not able to repay the loan as per the given schedule he can request the financial institution to increase the tenure of the loan. While increasing the tenure of the loan the EMI reduces which can help the borrower repay the loan. The same however is at the discretion of the lending institution.

The student needs to figure out the complete bank details along with the swift code of the financial institution for financial transfer. Certain financial institutions have a customer login where automatic remittances can be generated. The other financial institutions may require you to remit manually every time with an identification code.

The financial institution would report your non-repayment or delay initially to the credit agencies. After 90 days you would be labeled as a defaulter and the banks can initiate legal action. The legal action can claim enforcing the personal guarantee of your guarantor or the security held as collateral. We would never want the situation to arise and would request you to look at the repayment plan very carefully before taking the loan.