Get an Education Loan without Parental Income for Abroad

Studying abroad can be financially challenging, with substantial cost which includes tuition fees and other related costs. One can expect around INR 30 Lakhs of expense in top countries such as USA, UK and Canada. To afford this big amount students can consider education loan as a financial aid. Still, before going for the education loan for abroad studies, one should know the nitty gritties of it. Education loans has an eligibility criteria among which co-applicant or parental income play an important role in the loan approval. But what if you cannot demonstrate parental income or your co-applicant has a low income? Does this mean you have to give up on your dream of studying abroad?

Tha answer is “no”. So, can I get a student loan on my own? Yes, explore the loan options and prominent solutions to low parental income in the blog below. 

Importance of Co-Applicant/Parental Income While Taking Education Loan

Before we start exploring the alternative options of getting an abroad education loan with low or no parental income at all, let’s first understand the importance of co-applicant/parental income. Parental income plays a significant role in obtaining an education loan for studying abroad for several reasons:

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  Financial security: Lenders view parental income as a measure of financial stability and the ability to repay the loan. Parents' income provides a guarantee to the lender that the borrower has a reliable source of repayment.

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  Creditworthiness: Parents' income and credit history contribute to the overall creditworthiness of the loan application. Lenders assess the parents' financial standing to determine the applicant's ability to manage and repay the loan.

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  Financial responsibility: Demonstrating parental income signifies a sense of financial responsibility on the part of the borrower. It reflects the ability to handle financial commitments and assures the lender.

Alternative Options for Education Loans With No Parental Income

Having a financially capable co-applicant, such as parents, is generally advantageous when applying for an abroad education loan. Thus, most lenders say “no” when you ask, “Can I get education loan if my parents are unemployed?”. Yet, your parents are ineligibility won’t limit your abroad studies. Instead of dropping, take help of alternative factors. These options will enable you to secure an abroad education loan without relying on their financial strength.

Secured Education Loan:

The first alternative option is an education loan with collateral, where you pledge an asset as security against the loan amount. This eliminates the need for parental income as the collateral serves as a guarantee for repayment. The majority of the time a normal co-applicant is required but a financial co-applicant is not required. Lenders like SBI and UBI offer secured abroad education loans, providing up to 80% of the collateral's valuation as the loan amount. This allows you to access the funds needed for studying abroad without relying on parental financial support. 

Co-Applicant: Blood Relative:

If your parents are ineligible as a co-applicant, the next viable option for you is to change the co-applicant. Private banks and Non-Banking Financial Companies (NBFCs) offer unsecured education loans, if close blood relative, such as a brother, is the co-applicant. The minimum reuqirement is that monthly income should be around INR 35,000 - 40,000 without any obligations. Consider the table below for different lenders and eligible co-applicants in the case where the parental income is low or not at all present. 

Co-Applicant: Self:

One common question that comes to mind is - Can I get student loan on my own? The answer is that certain lenders offer abroad education loans that consider your professional experience as a basis for loan approval, eliminating the need for a traditional co-applicant, thus not requiring any income, i.e., it will not matter if your parents have a low income or no income at all. 

ICICI Bank is one such lender that provides education loans for studying abroad based on your professional experience. 

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  They process loan application based on your qualifications and work history rather than parental income.

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  Minimum of 3 years or more years of professional experience required.
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  Do not need a co-applicant for this loan product, thus avoiding the need for parental income. 
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  Minimum salary of INR 35,000, but this may differ as per the loan amount required. 
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  There is a restriction for universities/colleges to avail of this service.
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  Full moratorium period, although you need to make an FD as a security. The main benefit of this is that you will get regular interest on the same, and you will get the locked amount in FD after the repayment period.

Loan From International Lenders

Not everyone has the collateral to pledge thus, we need to include one more alternative to our list. Loans from the international lenders fulfils that and makes it a great abroad education loan with low or no parental income option. International lenders such as MPOWER Financing and Prodigy Finance providing loans without collateral or co-applicants.

These lenders can offer loans of USD 100,000but, students should carefully consider and adhere to any additional requirements or conditions set forth by these lenders when applying for an education loan.

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  Loan currency: These lenders provide loans in USD or CAD, not in Indian currency.

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  Interest rate: The interest rate for these loans generally ranges between 12% and 14%.

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  Processing fees/ Origination fees: The processing fees, also known as the origination fee, may be on the higher end; they are usually adjusted within the loan amount itself. 

Eligibility Criteria for No-Parental-Income Loans

If you are willing to apply for non-parental-income loans, then you must meet the following eligibility criteria, since lenders also want security against advancing the education loans.

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  Strong academic record is required.
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  Should have secured admission to a recognized university or institution abroad since lenders look for the possibility of repayment from the student.
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  Some lenders require proof of previous work experience before advancing you the education loan.

Institution Providing Loans For Students With No Income

Can I get education loan without parents? Yes, there are some financial institutions that provide abroad education loans without parental income. The names are listed below but, they might one or other term to the loan application incase, they are not considering the parental income. 

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  Public Banks: SBI, UBI, and more. 
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  Private Bank: ICICI Bank
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  International Lender: MPOWER Financing and Prodigy Finance
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  NBFC: HDFC Credila, InCred, and more

Common Challenges and How to Overcome Them

Students with low or zero parental income often face various challenges, since the role of co-applicants in securing education loans is crucial, as they provide security to the lender. 

Low Parental Income:

Students often face the risk of rejection of loans due to low parental income. As for unsecured loans, private lenders look for the co-applicant's income and CIBL score. However, if your parental income is low, then the feasible option is to get secured loans from public banks.

Weak Academic Profile:

Students with weak academic profiles often face the risk of rejection; hence, it is advisable to maintain a good academic record if you are planning to study abroad with the help of an education loan.

Loan Limitations Based on University, Country, or Course:

Lenders may limit loans to certain universities, countries, or courses. Lenders generally offer high loan amounts to students flying for top study-abroad destinations and universities with good QS rankings. Thus, you should consider securing admission to a recognized university as it increases loan approval chances.

High Interest Rates:

If you do not have collateral to offer, then you might have to pay high interest rates as international lenders charge high interest rates against lending you without co-applicant and collateral. Hence, providing collateral or applying with a co-applicant can help secure lower interest rates and better loan terms.

Loan Repayment Options and Flexibility

Even iof you are applying for the international education loans with low parental income that doesn’t mean you can’t enjoy the full moratorium period. Many lenders offers different option of repayment during the course duration with additional 6 to 12 months, allowing students to focus on their studies without the stress of repayment. By understanding these repayment options, you can choose for the best bank for education loans that aligns with your needs.

Tips to Increase the Loan Approval

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  A strong academic background helps lender evaluate the future earning potential, thus, provides security of the loan repayment in the future.
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  Admission to a recognized institution, shows the placement chances and evaluate the possibility of repayment.
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  A co-applicant with a stable financial background also increases the chances of loan approval significantly. This provides the lender security and helps in mitigating the risk of default.

Now you are aware of the alternative options available to get an abroad education loan with low or parental income. Based on the above information you can carefully consider and shortlist suitable loan providers and alternative approaches mentioned. By exploring these possibilities, you can successfully obtain a loan for your abroad education. Well, if you are still missing out on something and need guidance, take help of GyanDhan. Check your Loan Eligibility , and receive valuable advice for your abroad education loan.

Read more:

• 
  Education loan for Canada
• 
  Education loan for MS in US
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  Education loan for Australia
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  Education Loan for NRI Applicants
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  Study Abroad Scholarships for Indian Students
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  Education loan vs. self-funding
• 
  Education loan EMI calculator

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