A complete guide to getting an education loan without income proof

Pursuing higher education can be a life-changing opportunity for many students. However, not every parent has a formal salary structure. In such cases, the struggle to secure a loan without proof of income can put your dream career at an impasse.

While proof of income is a standard document required for an education loan, you can explore other options, like a secured education loan or getting a financial co-applicant to finance your higher education. Continue reading this guide to get a better understanding of these options.

No proof of income? Here are some loan alternatives without it
 

Here are some alternatives you can explore if you cannot present proof of income for your education loan.

1. Secured education loan
 

This is one of the most popular loan alternatives available for students without a stable source of income. Instead of proof of income, you must pledge an asset as collateral against the loan amount. You can pledge fixed deposits, government bonds, gold, commercial or residential properties, etc., with valid documents to secure the education loan.

While you may still need a co-applicant, they don’t need proof of a stable or strong source of income.

2. Unsecured education loan
 

These education loans do not require an asset as collateral but an immediate family member to sign as your financial co-applicant. Your parents, siblings, spouse, parents-in-law, grandparents, or even maternal/paternal uncles or aunts can sign as your co-applicants.

However, your financial co-applicant must meet the lender’s minimum income criteria to make you eligible for an education loan. You must submit the co-applicant's bank statements or income records as proof of income.

3. Loan from international lenders
 

You can also apply for a loan without proof of income from an international lender if you cannot offer collateral or arrange a financial co-applicant. These lenders offer unsecured loans without demanding any proof of income for loan approval.

However, these lenders charge a higher interest rate on education loans and offer loans in US dollars. This can significantly increase your repayment amount with an increase in the value of USD.

4. Government-sponsored education schemes
 

The Indian government has launched several schemes to help students from weaker financial backgrounds obtain education loans at affordable interest rates. The schemes offer interest subsidies or low interest on education loans. Some examples include the Dr. Ambedkar Scheme for Interest Subsidy on Education Loans and the NSFDC Education Loan Scheme.

However, these schemes are for meritorious students from economic/other backward classes and scheduled castes and tribes with a low family income. Hence, they may only be available to a limited number of students.

How to choose the right loan without proof of income
 

While several lenders offer education loans for studies abroad or in India, it is essential to understand if it meets your requirements. Here are some factors you can consider before applying for one.

1. Loan amount – Check whether a particular bank or lender has the institution of your choice listed. They may be willing to sanction a higher loan amount if you meet their eligibility criteria for a listed institution.
   
   
2. Interest rate – Most lenders charge interest on education loans between 8% and 15% of the loan amount. To avoid higher repayments, look for more affordable interest rates.
   
   
3. Repayment terms – Longer loan durations lower monthly payments but increase the total interest, while shorter terms clear debt faster. Additionally, flexibility in payment terms can help you adjust your loan schedules based on your financial conditions to avoid default.
   
   
4. Expenses covered – Check in advance if your lender covers expenses related to travel, study material, health, and overseas insurance, etc., in addition to the cost of education.
   
   
5. Country eligibility – Look for lenders that approve your choice of country for higher education. Otherwise, they may only be willing to sanction a small education loan or even decline your application.
   
   
6. Collateral requirement – Most lenders demand collateral if you apply for a higher loan amount. You risk losing your assets if you fail to repay the loan, so you should always be careful when pledging your assets for an education loan.

Improve your chances of approval when applying for an education loan
 

Most lenders follow strict criteria while evaluating your loan application. Here are some points you can work on to improve your chances of approval for an education loan.

● Good credit score – Try to maintain a credit score above 700 as it reflects your creditworthiness. If you do not have any credit history, the lenders will consider your co-applicant’s credit history.

● Clear your existing debts – Pre-existing debts can indicate difficulty in managing your finances and affect your chances of approval. Try to reduce the amount of debt that you or your co-applicant has before applying for a new education loan.

●  Apply for a reasonable loan amount – Get a realistic estimate of your anticipated expenses in addition to your cost of education. An unreasonable loan request can portray you as a risky borrower and affect your chances of approval.

●  Get a financial co-applicant – This is helpful for students with no stable prenatal income. As mentioned above, you can get an immediate family member as a financial co-applicant with a high income to sign with you.

Explore IDFC FIRST Bank Education Loan for your higher studies
 

IDFC FIRST Bank offers student education loans to study in India or abroad at competitive interest rates. With a seamless loan application process and fast sanction, here are some significant features that make it a better choice –

1. You can get a loan of up to ₹1.5 crore with collateral
2. You can get funds of up to ₹75 lakhs collateral-free
3. Depending on your eligibility, you can get 100% financing for your education
4. You can get a flexible loan tenure of up to fifteen years with flexible repayment options
5. The bank also funds additional expenses for travel, equipment, books, uniforms, insurance, etc.
6. The loan is eligible for income tax benefits under section 80E

Steps to apply for an education loan at IDFC FIRST Bank
 

IDFC FIRST Bank offers education loans of up to ₹1.5 crore with collateral, along with funds of up to ₹75 lakhs without any collateral, at competitive interest rates. Even if you do not have proof of traditional income, you can still qualify for the loan by applying with an eligible co-applicant or collateral.

Here are the eligibility criteria –

• You must be an Indian National (includes NRI)
• Your age should be above 18 years
• You must have secured admission to the course/institution of your choice
• You can opt for pre-admission sanction if you do not have a secured admission

If you meet the above criteria, you can apply for a loan without income proof at IDFC FIRST Bank by following these steps –

1. Visit the IDFC FIRST Bank Education Loan webpage and click on “Apply Now” to initiate the application process.
2. Fill out the application form with your name, contact details, and course information, then click “Submit.”
3. Submit the necessary documents for you and your co-applicant as applicable.
4. Wait for the bank to process and verify your application.
5. Once your loan is verified, make sure to carefully review the final loan terms before signing the agreement.

Alternatively, you can also apply for an education loan with IDFC FIRST Bank by –

● Downloading the FIRST UNI Mobile App – https://firstuni.onelink.me/RfBJ/homepagev1

● Visiting the FIRST UNI Website – https://www.firstuni.in/finance/loan/Availsimplestep.

● Calling the Customer Care at 1800 10 888

● Visiting your nearest branch by using the IDFC FIRST Bank Branch Locator – https://www.idfcfirstbank.com/support/branches.

Dream bigger with flexible education loans
 

Securing an education loan without proof of income is possible with the right approach. By leveraging alternative documentation, guarantors, and collateral-based options, you can overcome all your financial barriers and pursue your career without worrying about a traditional income source.

The IDFC FIRST Bank Education Loan funds 35k+ courses across 4500+ universities with its flexible eligibility criteria, competitive interest rates and tailored solutions. Apply now and get one step closer to your dream university.