Quality education is essential to build a promising professional career. However, studying at well-ranked universities could be expensive due to the rising cost of education. Did you know that in 2022 the education inflation in India is ~5.68%, which was ~3.34% in 2021? Overseas educational costs keep rising too. Despite this, students continue to pursue their academic quests thanks to unsecured (non-collateral) and secured (with collateral) education loans. So, let’s understand everything about non-collateral education loans.

• What are the types of education loans?
• Unsecured loan
• Secured education loan
• What is collateral?
• Documents required for non-collateral education loan
• Eligibility criteria for non-collateral education loans
• How to apply for non-collateral education loans?
• Some parameters that your financial lender will evaluate
• FAQs

What are the types of education loans?
Unsecured loan: Non-collateral education loan in India
If you do not have any security to offer to your lender against your education loan, you can opt for the non-collateral loan. Security is an asset you provide to your financial institution when applying for an education loan.

Secured education loan: With collateral
When you opt for secured loans, you have to offer an asset as a security against the education loan. Depending on your financial requirements, you can easily opt for a secured or unsecured education loan in India.

What is collateral?
If you have a property, such as a home, you can pledge it to get a student loan. This acts as a guarantee against the loan that you take from a financial institution. Collateral can be tangible such as a piece of land, or intangible such as a fixed deposit.
Here are some common types of collateral

• Residential property (apartment/house)
• Fixed deposit by any registered deposit-taking organisation
• Non-agricultural open land with clearly defined boundary

Documents required for non-collateral education loan

General documents

• Student KYC
• Details regarding the course and fees
• 2 colour passport-sized photos
• Photo ID
• Academic documents
• University acceptance letter
• Fee Structure

For co-applicant (salaried)

• Income proof
• 8-month bank statement
• Relationship Proof

For co-applicant (self-employed)

• GST registration proof
• Partnership deed or Memorandum of Association (MOA) and Articles of Association (AOA)
• Certificate of Incorporation or Registration Certificate
• Financial statements of the business for the last six months

Eligibility criteria for non-collateral education loans

For students

• Indian citizens who are 18 or older can apply for student loans
• Should produce a university admission letter before the final disbursal of the loan
• Should have a co-borrower who earns in India

For co-applicant

• Any Indian citizen who is a parent, legal guardian, sibling or other blood relatives of the student is eligible to be a co-signer.
• Should have an active bank account in India that allows them to sign cheques
• Must be the primary debtor

How to apply for non-collateral education loans?
Nowadays, many financial institutions, including Avanse Financial Services, have moved the application process online. If you want to get some insights before applying for an education loan, you can also visit the lender’s branch office.
Here is a 4-step application process to get an Avanse education loan:

• Step 1: Fill out the online education loan application form
• Step 2: Speak to our student loan experts
• Step 3: Send us the requisite documents
• Step 4: Receive the loan amount if you meet our preset criteria

Some parameters your financial lender will evaluate
Financial institutions will examine your student profile to determine your employability potential. Hence, they will analyse the following factors:

• Academic scores

Your consistent academic scores will assure the lender that you will easily find suitable employment opportunities post-completion of your course.

• Entrance exam

Similar to academic scores, entrance exam performance plays an important role in the education loan journey.

• Pedigree of university

Pursuing higher education from well-ranked and reputed universities will earn you some brownie points

FAQs

Which is the best non-collateral education loan in India?
The education loan that comes with bundle of benefits such as 100% finance, quick sanction and flexible repayment options are some of features of the best education loan. In addition, your loan should also cover the holistic cost of education, such as tuition fees, accommodation costs, living expenses, learning devices, equipment costs and other education-related expenses.

How do I get a non-collateral education loan without a co-borrower?
One must remember that student loans are often the first debt in a student’s life; hence, most financial institutions will require a co-applicant. So, to apply for a non-collateral education loan, it is essential to have a co-borrower who can co-sign the student loan documents.
So, now that you know everything about the non-collateral education loan, you can plan your higher education. At Avanse Financial Services, we offer a hyper-personalised loan for education. If you have any queries, please feel free to connect with us. We will be glad to partner with you on your academic journey.