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How to get education loan without parental support

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Mr Nilanjan Chattoraj, Director – InCred Financial Services

John Dewey, Education Reformist, Philosopher, and Psychologist, once famously said, “Education is not preparation for life; education is life itself.” The criticality of education across levels – primary, secondary and higher – is undeniable, not just to enhance one’s cognitive abilities, but also to lay a solid foundation – for one’s success in life itself. Despite its importance and the burgeoning number of aspirants every year, higher education, particularly overseas, is often considered a dream that can be fulfilled by a few, owing to the costs. Or so we thought.

Education loans have brought a huge respite to such aspirants who can now pursue their dream courses and universities in India and abroad, without worrying about depleting all their family’s savings. Unfortunately, traditional lending institutions have at times in the past rejected loan applications owing to non-academic factors such as parent’s low income or savings, their projected inability to repay the loan, lack of hard collateral security such as a house, etc., which defeats the purpose of applying for such loans.

The Student-Centred Approach:

With the advent of specialised and dedicated education loan platforms circa 2007-2008, a new type of assessment of education loan applications quickly emerged. This model relied heavily on the quality of academics and intended program of studies thereby largely removing parental involvement. Further, the need to add collateral to qualify for these loans was done away with. This provided access to hundreds of thousands of students to timely and affordable financing options towards their higher education goals. These platforms are able to spend more resources on researching and understanding the very fragmented higher education sector globally, which in-turn have meant more student-friendly loan options and processes. Eventually, dollar-denominated lenders based overseas opened up their products too for Indian students, albeit for a limited number of universities.

Role of Co-Applicants:

A Co-Applicant or Co-Borrower to a loan is typically a family member or relative who takes the responsibility of repaying the loan in case the student is unable to do so. While most lenders still require such a co-applicant to be on the loan, the weightage given to their financial worthiness is minimal, provided the student has good academic merit.

While traditional institutions may insist on only having a parent as a co-applicant and may shy away from issuing the loan otherwise, the silver lining on the cloud is that new-age fintech lenders like InCred are more understanding of the predicament. This ensures a smooth lending and sanctioning process that is somewhat independent of the co-applicant’s credit-worthiness or even in the absence of parents or parents without a steady source of income.

“Education is expensive, but cost of ignorance even more so”:

Foreign education not only requires a strong academic background, high scores in standardised tests and a zeal to make it big, but also significant financial commitments. With rising costs at universities globally and inflation -even planned savings can fall short when it comes to bearing the expenses. Education loans are the bridge to plug this gap and should be treated as more of an investment in one’s future. More often than not, this turns out to be the most life-changing and profound investment any person can ever make.

Funding one’s higher education externally also eases the burden of repayment to a great extent. It does not put a dent in one’s lifetime savings, and the students can get a breather as the EMIs commence with a leeway period, giving them some time to stabilize financially. It is imperative to remember that the value addition provided by education is unparalleled, and nothing should deter one from achieving their goals. All they need to do is be aware of the best options available, and soar!

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