How to secure an educational loan with no parental income?

How to secure an educational loan with no parental income?

If you are dreaming to study abroad for your higher education and come from a modest financial background, then the small repayment capacity of your parent will not be a hurdle. The number of funding options has been rising with the number of students going for higher education overseas. However, not all the students can avail themselves of this loan and they are conditional.

The cost of studying abroad at an Ivy League college can go into the crores and despite the grants, scholarships and other financial assistance, the net cost remains out of reach for many of the deserving students from India. They have only the option of availing of an education loan.

A relatively small student base can only avail of grants and scholarships from overseas universities and as the aspirational student population keeps increasing steadily, this number may spread thin, thus making higher education a difficult dream for a significant proportion of the population.

An educational loan, however, considerably increases a student’s chances of getting into their preferred universities. Education loans are often secured or unsecured. Based on a good parental income and sound repayment capacity, a few students easily get an unsecured education loan. A higher loan amount can also be availed by students whose parents have sufficient assets after offering their assets as collateral.

However, for students who do not have a sound financial background, avail of the desired loan amount has not been easy. If the child or parent cannot repay the loan, the parent\’s assets play a significant role as they are offered as collateral. The academic records of the students are of little importance under this category as the financial institution has assurance.

Students who do not possess strong financial background often give up on their dreams. Some of these students can gain a small unsecured loan which is comparatively much lower than the secured education loan.

Currently, Many new funding options have emerged especially for students who do not have any assets to offer as collateral. New lenders have emerged in the market who provide loans without collateral but by checking the student’s past academic performance and future earning potential.

Funding may not be a big hurdle if you have the merit and secured admission to some of the most prestigious institutions. An alternative is the merit-based collateral and co-signed free loans where students need not rely on traditional alternatives that create a burden on them and their families, ensuring that the only thing a student needs to be worried about is their studies.

Many of the new lenders are ready to offer a higher amount of collateral-free loans to deserving students which is a calculated risk based on the child’s prospects and ability to pay back the proposed loan. The candidates can receive up to INR 40 Lakhs depending on the course and chosen college. The loan amount is extended to Rs 75 lakhs depending on the merits of an application.

The lenders often assess several factors before taking the risk of offering a loan. The student\’s profile is assessed in detail and there are around 50-60 criteria that are evaluated to derive the Employability Potential Score of a student such as past academic performance, entrance test scores, the pedigree of the university/institute, continuity in education, course selection in line with the existing skills and more.

Moreover, the record placement and remuneration offered to previous students who pursued the same course in the same institution plays a vital role in deciding if you will get the desired unsecured loan or not. Students can, thus, fund their studies without putting any financial burden on their parents.

If you are still falling short of funding despite all the efforts, you may address such issues after you start your studies abroad. Financial institutions offer loans in foreign currency without the need for any collateral or a cosigner.

Moreover, the repayment can be made without any prepayment penalties in any currency. Only interest payments are required during the course of this loan and the principal amount and accumulated interest can be paid after completing the course.

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