Education Loan Rejection Reasons

The first thing to do when faced with student loan rejection by banks is to find out why the student loan application got rejected in the first place. There could be several reasons, let’s explore each possibility in detail.

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Can Bank Reject Education Loan

Education loan rejected because of incomplete Information

When applying for an educational loan, several documents are required and each document will be verified one by one by the bank. Therefore, it’s important to ensure that all documents are properly submitted along with the application for an education loan to the bank. Documents once submitted cannot be changed. Also, if the bank discovers that the documents have been forged, the education loan will be immediately rejected. Due diligence can help with quicker student loan approvals from the bank.

Study loan rejected on account of poor academic performance

When considering an application for a study loan, banks or NBFCs will take into account academic success. A student who continuously performs well and is admitted to a prestigious institution has a better chance of getting the best education loan in India. On the other hand, a student with ordinary or below average grades may have a lower probability of getting their student loan in India approved. It’s because the chances of finding employment are greatly diminished on account of their poor academic records, ergo raising questions about timely EMI payments.

Student loan rejected on account of institute ranking

It’s not unusual for banks and NBFCs to reject education loan applicants who seek admission in an unrecognised educational institute, especially if the institute has no placement history. It’s important to cover all bases when it comes to student loan applications, and that includes ensuring the university or college in question is recognised and features under bank-listed institutes.

‍Student education loan rejected on account of course potential

Student loan applications are accepted by banks and NBFCs if the course in question offers high earning potential such as many science, engineering, medicine, and management courses do. Based on the course or elective, banks can assume a student's future income and provides the educational loan amount. It’s important to remember that banks defer from offering education loans for part-time courses.

‍Loan for students rejected on account of Low Credit score

Education loans are co-borrowed by students wherein the parent or legal guardian is a co-applicant. Also, when a student loan is under the scanner, the creditworthiness of co-applicants is taken into account. So if the parent’s or guardian’s credit score is below the expected 750, the student loan may most likely be denied. It’s important for co-applicants to check their credit score before applying for student loans, for a low CIBIL score will most definitely result in loan rejection. In this scenario, the right guarantor with the perfect CIBIL score matters for students looking to get their education loans approved quickly. 

It can be deeply saddening when students don't get the student loans they are seeking and compromise on the institution. 

All is not lost. There are alternatives that can help.

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Propelld - An Alternative to traditional bank-based study loans 

Other than banks and NBFCs, there are alternatives like Propelld that have their own underwriting process. Unlike traditional bank-based loans, where credit history holds more merit, Propelld’s process takes into account the student’s academic merit too.

While banks demand tangible collateral security and financial documentation, a loan approval from Propelled requires proof of academic performance along with details of the course they are applying to and at which institute. Once the loan is approved, students can complete their loan application. This includes further verifications and advanced EMI payments if needed.

Benefits of Choosing Collateral-Free Loans with Propelld

There are many advantages to choosing Propelld to apply for an education loan without collateral:

• Customised Loan Products: Propelld customises its loans based on the applicant’s profile.
• A chance to apply for more expensive courses by opting to take a loan from Propelld.
• EMI payments, rather than one-shot payments.
• Propelld has a fully digitised process, which includes the application, approval, disbursal, and collection. 
• Loans are sanctioned quickly and there are no-cost EMIs.
• No mortgage is required by Propelld.

A rejection from the bank can be a disappointing experience, especially since it invariably affects the future pursuits of meritorious students. But with alternatives like Propelld that remove the barrier to financial access through private study loans, the real impact of not getting a traditional education loan, is getting a collateral-free loan with competitive student loan interest rates. Apply now.

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Learn More about Credit Score and Loans from Propelld

1. Does my credit score get affected when the bank rejects my education loan application? 

Yes but also no. Credit and loan applications in the last 30 days typically affect your credit score, but there is no direct correlation between loan rejections and your credit score.

2. Am I eligible for a private loan from Propelld?

Loan approval from Propelld depends on a satisfactory KYC and verification process. Eligibility is based on:

1. Valid Indian citizenship,
2. No default on past loans, and
3. Submission of required documents.
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3. Does Propelld offer flexible repayment plans?

Propelld does offer flexible repayment plans. However, flexibility is subject to the applicant’s credibility and the partner institution they are applying to. Propelld loans are close-ended loans. That means, the payment goes directly to the institution and not the borrower.

‍4. What is the paperwork required to apply for a loan?

The documents needed when applying for a loan are:

• ID proof (Aadhaar, PAN, Driving Licence, Voter ID, Passport)
• PAN
• Bank Statement
• ITR
• Salary Slip
• Marksheet

‍5. How do I prevent my Propelld loan from getting rejected?

Ensure you submit all the necessary documents along with proof of academic performance (marksheets and certificates of excellence). For more assistance, contact the support team at +91-7375911702 or drop an email at support@propelld.com.