FAQs about Role of Co-signers in Study Abroad Loans
Is a co-signer's age a deciding factor for loan approval?
Lenders prefer a co-signer who has a longer working life ahead of them. If your co-signer is retired or nearing retirement, the bank may ask for a secondary co-signer or require a stronger financial profile to offset the shorter repayment window.
Does a co-signer have to be a salaried person?
Not necessarily. A co-signer can be a salaried employee, a self-employed professional, or a business owner. The key is a stable and verifiable source of income that can support the loan repayment.
Can the co-signer’s responsibilities be transferred to the student after they start earning?
Some lenders offer a "co-signer release" option, but it's not guaranteed. To qualify, the student must typically demonstrate a consistent and stable income for a certain period (e.g., 1-2 years after graduation) and maintain a perfect repayment history before the co-signer can be legally released from their obligations.
What happens if the student fails to repay the loan?
If the student defaults on the loan, the lender can legally demand that the co-signer repay the outstanding amount. Failure to do so would negatively affect both the student’s and co-signer’s credit scores.
Can I get a loan from an international lender without a co-signer?
Yes, some international lenders (e.g., Prodigy Finance, MPOWER) offer loans to students without a co-signer or collateral. These loans are typically based on the student’s academic profile and the future earning potential of their course.
Can a retired parent be a co-signer?
Yes, a retired parent can be a co-signer if they have a consistent income from a pension, rental income, or other investments, and they meet the bank’s eligibility criteria.
Is a co-signer the same as a guarantor?
While the terms are sometimes used interchangeably, a co-signer has primary liability for the loan's repayment, whereas a guarantor’s responsibility is typically secondary, coming into effect only after the lender has exhausted all attempts to recover the debt from the primary borrower.
Can I secure a collateral-free loan with a co-signer for a very high loan amount?
Yes. While most collateral-free loans are capped at ₹7.5 lakhs, some private lenders and NBFCs will approve a higher amount (up to ₹50 lakhs or more) based on the student's admission to a premier institution and the co-signer's exceptional financial profile.
What documents does a co-signer need to provide?
A co-signer is typically required to provide KYC documents (PAN, Aadhaar), income proof (ITR, salary slips, bank statements), and proof of any assets or property.
Can I be a co-signer for my sibling?
Yes, many banks and NBFCs allow a sibling to be a co-signer for a study abroad loan, provided they have a strong financial profile and meet all the eligibility criteria.
Does the co-signer’s loan limit get affected?
Yes, the co-signed loan is considered part of the co-signer’s financial obligation. This can affect their eligibility for any future loans they may wish to take out.
Can I get a loan without a co-signer if I have collateral?
In many cases, yes. If you can pledge a valuable asset (e.g., a residential property), the collateral can serve as the primary security for the loan, potentially making a co-signer unnecessary for certain lenders.
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