Can I Get an Education Loan as a Farmer's Child?

Vaishali Pandey
May 14, 2024

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How to Get an Education Loan as a Farmer’s Child?

In agricultural communities, access to higher education is often hindered by financial constraints. However, education itself is the most powerful tool for breaking this cycle of poverty and driving rural development.

Contrarily, it's not easy to secure an education loan as a farmer’s child. There are a number of limitations due to which lenders have their hand tied for giving loans to farmers’ children. 

However, it's not impossible to get one. Let’s explore the education loans available to the children of farmers and how to get one.

 

Propelld Education Loan for Farmers’ Children

With Propelld, it's now possible to get an education loan for farmers’ children also. Furthering its commitment to fostering inclusive education for all, Propelld aims to bridge the gap in educational financing for the children of farmers, providing them with the financial support they need to pursue higher education.

 

Benefits of Propelld Education Loan for Farmers’ Children

The multiple benefits of Propelld Education loan for farmers’ children include:

1. No Collateral Required

Propelld offers education loans without the need for collateral, thus making it easy for the farmers. 

2. Up to 50 Lacs Loan

Propelld provides education loans up to 50 lacs, without collateral, thus ensuring adequate financial support to aspiring students

3. Faster Process Than Banks

Propelld streamlines the loan application and approval process, offering quicker turnaround times, almost 10 times faster than banks.

4. 10-Year Repayment Term

There is no hurry to repay. Students have support of extended repayment terms of up to 120 months, thus easing financial burden.

5. Moratorium Available

Not just the extended repayment tenure, borrowers also have the option for a moratorium period, providing temporary relief from repayment obligations, allowing them to focus on their studies before beginning loan repayments.

6. Hassle-Free Approval Process

Propelld simplifies the approval process, ensuring a seamless experience for borrowers from application submission to loan disbursal.

7. Lesser Documents

Propelld has minimal documentation requirements, thus reducing paperwork and speeding up the loan processing timeline.

8. Online Process

Propelld offers an entirely online application process that can be managed from the comfort of home, ensuring convenience and accessibility.

 

No Collateral. 7 Days Disbursement. Hassle Free Process. Apply Now!

Why Can't Banks Provide Education Loans to Farmers’ Children?

While NBFCs like Propelld easily extend education loans to farmers’ children, banks face challenges in doing the same due to various factors:

1. No Regular Income

Farmers' income is often seasonal and irregular and bank regulations largely necessitate the presence of a regular income, thus making it difficult for banks to assess repayment capacity accurately and leading to loan rejections.

2. No ITR

Since agricultural income is tax exempt, and also due to lack of awareness, farmers mostly do not file Income Tax Returns (ITR), which is a common requirement for loan approval, further complicating the lending process for banks.

3. Agricultural Land Cannot be Hypothecated

Banks typically require collateral for loans and might provide secure loans in case other documents are not present. However, agricultural land, the primary asset of farmers, often cannot be used as collateral due to legal restrictions.

4. Low Credit Score

Limited access to formal credit and financial services can result in low or no credit scores for farmers, posing a challenge for banks in assessing creditworthiness and increasing the likelihood of loan rejection. 

Know about how to get an education loan without a CIBIL score.

 

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Can I Get an Education Loan Against Agricultural Land?

Precisely, No.

In India, obtaining an education loan specifically against agricultural land can be challenging due to the nature of agricultural assets and the requirements set by financial institutions. While agricultural land holds significant value, it is not typically considered an eligible collateral for education loans.

Primary reason for this being that in most states, the regulatory framework governing agricultural land usage imposes restrictions on land use as a collateral for loan, a few others have defined restrictions against land ownership and conversion.

The main objective of a collateral is the recovery of funds in case a loan is not repaid. In case of agricultural land, due to the regulations, the land cannot be used to recover the funds and hence it cannot be used as collateral.

Hence, most lenders prefer financial assets or immovable properties like residential or commercial real estate for loan security.

 

If Not Agricultural Land, What Can I Pledge for a Secured Education Loan?

Now that I know that I can’t offer my agricultural land as a collateral and getting an unsecured loan is not an easy choice given my unstable agricultural source of income, what can I pledge to get an easy loan from the bank?

Well, here are the alternatives: 

1. Use Different Property as Collateral

Consider using other types of property as collateral. This could include a house, apartment, plotted land etc. Even if you don’t own the property, it can be used if the owner mortgages it for the student. 

2. Offer Moveable Assets

You can also pledge moveable assets such as life insurance policies, mutual funds, fixed deposits, government bonds, or national savings certificates. 

3. Use Gold Jewellery as Collateral

Another popular option is to mortgage gold jewellery to secure your student loan. The value of the jewellery should be equal to or more than the loan amount you're seeking.

Remember, the value of the collateral you provide must be enough to cover the loan amount. So, you might need to use multiple types of collateral if one alone isn't enough.

Alternatively and smartly, you can also check out NBFCs like Propelld that offer hassle free education loans without insisting on collateral.

Know about your education loan eligibility and application process.

 

How to Get an Education Loan Without Collateral for Farmer’s Children?

While most banks do not provide an education loan in the above case, that’s not the end of the story.

Many private banks and NBFCs have now started providing loans to deserving farmers’ children.

Here a few things that you must know:

1. While many NBFCs like Propelld provide a moratorium period during your study days, most NBFCs demand that you pay a portion of your interest even in the early days of your loan tenure.

2. NBFC’s interest rate is usually higher than that of banks.

3. The credit team analyses a lot of factors like the student profile, academic records, KYC, financial situation etc. to approve the loan.

4. The interest rate is not fixed but floating. Hence it might change with a change in government policies etc.

 

Hassle Free Loans. No Collateral. Upto 100% Fees Financed. Apply Now.

 

How Propelld is Able to Provide Education Loans to Farmers Children?

Propelld, in its endeavour to fuel educational dreams by removing financial barriers through its education loans, goes a step forward to provide education loans to farmers' children.

  1. We look beyond the income documents. 
  2. We look for the promising future that a student holds, based on their academic record and the college they are looking for. 
  3. We check the financial status of the parents, which does not need to be necessarily a regular income.
  4. We dive into the intent of the student and the family, their goals and aspirations behind taking up higher education. 

There are a few more factors that we look at before providing an education loan but rest assured, being a farmer’s child should only be a thing to be proud of and not a worry behind your academic dreams.

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FAQs About Education Loan as a Farmer’s Child

Can education loans cover expenses beyond tuition fees for farmer's children?

Yes, most education loans cover expenses such as hostel fees, examination fees, books, equipment, and even travel expenses for studying abroad.

Can farmer's children apply for multiple education loans simultaneously?

While it's possible to apply for multiple education loans, it is important to check your existing loan liabilities and repayment capacity because lenders analyse that before approving additional loans.

Is there any penalty for prepayment of education loans for farmer's children?

Most lenders do not impose penalties for prepayment of education loans, allowing borrowers to repay the loan ahead of schedule without incurring additional charges.

Can farmer's children avail top-up loans for additional financial assistance during their course of study?

Yes, some lenders offer top-up loans to existing borrowers for additional financial assistance, provided they have a good repayment track record.

Can education loans for farmer's children cover pre-admission expenses like coaching fees for entrance exams?

Yes, most lenders like Propelld offer education loans that cover pre-admission expenses such as coaching fees for entrance exams, subject to certain conditions.

What happens if a farmer's child faces difficulty in repaying the education loan?

In case of financial difficulties, borrowers can request a moratorium or extension of the repayment period, subject to the lender's terms and conditions. Propelld provides a repayment period of upto 10 years.

Can farmer's children pursue education loans for studies abroad?

Yes, most lenders offer education loans for studies abroad, covering tuition fees, living expenses, and other related costs.

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