Top 7 reasons for Education Loan application rejection

Pursuing higher education can be costly. You might apply for an Education Loan to meet your expenses. However, the process of securing a Student Loan isn't easy: you may face the disappointment of application rejection. Understanding the factors that lead to rejection can help you improve your chances of approval.

1. Bad credit score

Lenders ask for good credit scores of both you and your co-applicant. Usually, a score of 700 or higher is considered the benchmark for Education Loans. If your score is below 700, you may face Education Loan rejection. Lenders might find it difficult to determine your creditworthiness if you have little or no credit history.

2. Academic performance

Your Student Loan application may get rejected due to poor academic performance. If you repeatedly fail in subjects, are unable to finish your course on time and score less than the minimum marks (usually 50% or more) set by the lender, your Education Loan might be rejected.

3. Chosen country for studies

A major reason why your Education Loan application might get rejected is because the lender might not approve of the country where you want to study. Lenders or financial institutions have a list of countries for which they approve Education Loans. You must go through this list before applying for a Student Loan with any lender.

4. Course for higher studies

Just like lenders have a list of countries for which they approve Education Loans, they also maintain a list of courses for which they lend funding. If you have applied for a course that is not on the list, your Student Loan application might be rejected.

5. Incomplete application / documentation

If you have submitted an incomplete Student Loan application, it might be rejected. Similarly, if you have not provided all documents requested by the lender, your Education Loan might be denied. Documentation, especially when you are applying to study abroad, plays a crucial role in the lender's decision to grant you the loan.

6. Age limits

Lenders insist on age limits when applying for Student Loans. You must check their eligibility criteria, which will specify the minimum and maximum ages of the applicants. If you do not meet the criteria and have still applied for a loan, it is likely to be rejected.

7. No co-applicant

Since most students who apply for loans are 18 years or so, lenders insist on having a co-applicant or guarantor (usually your parent or guardian). If the credit history of the co-applicant is bad or proof of stable income is not present, there is a high chance your loan might be rejected.

Also Read: Getting lowest-interest Education Loan in India - Complete Guide

Conclusion

Before you apply for a Student Loan, ensure that you understand the eligibility criteria and the terms and conditions set by the lender. Axis Bank offers Education Loans starting at ₹50,000, with up to 100% of the funding. The main criteria include being an Indian citizen, obtaining a minimum of 50% in your HSC and graduation, securing merit-based admissions in India or abroad for career-focused courses, and stable proof of income of the co-applicant.

Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.