EDUCATION LOAN PROCESS

The education loan process may vary from bank to bank but there are some fundamental steps.

Step: 1 Fill in the loan application form

     Like in case of every loan, the applicant has to fill in an application form which may ask for details such as contact details, details relating to academics etc.  it is important to fill in accurate information.

Step: 2 personal Discussion

     Once the applicant, that is the student fills in the form, there is a round of personal discussion wherein he/she may be asked various question relating to the academic performance, the course one has selected, probably the institute etc.  At this stage, it is very important to be lucid and clear about one’s selection of course and its future potential of generating income.

Step: 3 provide validated supporting documents

     In case of education loans, documents relating to admissions are mandatory even before the bank considers the loan application.  The bank will verify the enrollment of the student from the concerned institute.  One may also require collateral security such papers relating to property to be mortgaged if the loan amount is above Rs.4 lakhs.

Step: 4 stage of loan approval or denial

     For an education loan, a guarantor is mandatory.  The guarantor could be an applicant’s parents or guardians.  The bank will run a thorough check of the guarantor and his/her credit history before sanctioning the loan.  After completion of the process, the loan may be sanctioned or denied.

Step: 5 Borrower’s signature on a promissory Note

     While the parents/guardians are guarantors, the student is the actual borrower of the loan.  Once the loan is sanctioned, the student has to sing a promissory note to the bank.

Step: 6 Disbursal of the loan

     Once the formalities are completed (additional documents and signed post-dated cheques may be required), the bank will disburse the loan.  The bank may disburse the college/institute fee directly to the concerned institute.