Step-By-Step Guide To Secured Education Loan Application Process

Written by Shreya Berry

Shreya has expertise in writing engaging content for the readers and has a deep interest in unique applications of technology in various domains. She has worked closely on projects with Neil Patel Digital, Hindustan Times, News 18 and Shiksha.

April 20, 2021

Education is the only scale on which human intelligence can be measured, and there is no other substitute for that. 

Our parents have always told us how education completes life in every direction by demonstrating how to behave in a mature and balanced manner. There was a time when getting into top schools and universities was not for everybody. However, times have changed, and if you have potential, you should be able to reach great heights in your life. However, that is better stated than achieved. The rising cost of education, especially higher education, is a source of concern for both parents and students. And if an applicant passes a difficult entrance exam for admission to a particular institution, the tuition fees are so exorbitant that students find themselves in a difficult situation. 

Due to the high expense of tuition, parents are compelled to pursue alternate plans while also facing a financial shortfall when it comes to paying college fees. In such a case, an education loan proves beneficial in saving a person’s life. With the dramatic increase in the fees for MBA and other vocational schools, banks have begun to provide education loans to students so that they can pursue their education without any obstacles. Under this financial assistance, meritorious students with outstanding educational credentials are given wings to fly and pursue their dreams. Furthermore, the paperwork mechanism is held to a minimum in order for students to receive the loan amount in a timely and simple manner. 

So, before moving onto the step-by-step guide to the secured education loan application process, here is a quick overview of what is the meaning of a secured education loan.

Secured Education Loan: Meaning

A secured student loan is granted with the use of collateral. In India, the standard procedure for obtaining a collateral-based higher education loan entails the pledging of collateral support. All of India’s major government banks make these loans affordable. A student who has been accepted into an accredited college is entitled to request an education loan. Furthermore, parents, siblings, or spouses can also apply on behalf of the student as co-applicants

The loan is specifically designed for students who wish to pursue higher education in India or abroad. The number and interest rate on domestic and foreign education loans vary from bank to bank. The moratorium period, which is like a loan holiday given to all applicants until the repayment period starts, is one of the most significant advantages of secured education loans lent from government banks. This moratorium duration allows other students to pursue work and continue repaying their college loans for overseas studies.

Secured Education Loan Application Process | Step 1: Filling the Application Form

The first move, as with every other loan, is to complete an application form. The application form is easy, and you must include your personal contact information as well as your academic information. In this form, make sure to include true and genuine facts.

Step 2: Personal Interview

The interview round is the next phase in the education loan process. After reviewing your submission, your bank will usually contact you for a personal conversation or interview. It should be noted that the loan is given to the student with the co-obligation of parents/guardians, and the student is deemed the primary loan borrower. You will be asked questions about your academic performance, the institution you want to join, the course you choose, the potential scope of your chosen course, and so on. You must be truthful and willing to persuade the bank that you are selecting a stream that has the ability to produce a high income, allowing you to repay the loan.

Secured Education Loan Application Process | Step 3: Documentation

For that loan to be approved, you must show the bank that your desired institution has offered an acceptance offer. This is the main document that all banks need, long before the loan application process starts. The bank will contact the university to confirm your enrollment. In most cases, if the education loan crosses a particular amount, you would be expected to have collateral in the form of a third-party guarantee if the loan value is up to an amount prescribed by the bank, and collateral protection equal to 100 per cent of the loan amount along with assignment of the student’s potential profits for payment of instalments if the loan amount exceeds the prescribed limit. 

Step 4: Loan Approval

According to the education loan repayment process, banks provide the loan to the student borrower, and since the student cannot repay the loan before the course is finished, the bank deems parents/guardians to be co-applicants. Before sanctioning the loan, the bank always verifies the credit background of the co-borrower/guarantor. The bank has a moratorium period that is equal to the course period plus one year, and it is optional for borrowers to pay the interest on education loan during this period. The borrowers will obtain a “sanction letter” from the bank after the loan has been authorised. If the borrowers have accepted the terms and conditions of the sanction, the bank will contact them to execute loan documentation and hand over collateral protection papers in original to the bank, as necessary by the terms of the sanction.

Secured Education Loan Application Process | Step 5: Loan Disbursement

Loan disbursement is the final phase in the education loan process. Banks usually direct disburse the loan to your desired university through a banker’s cheque, demand draft, or SWIFT message based on the position of the chosen university/institution, as well as the margin if stipulated in Sanction.


Even though obtaining an education loan with collateral is easier than obtaining an education loan without collateral, the secured education loan application process is nevertheless lengthy and fraught with obstacles. Banks can often deny or postpone loan approval due to a lack of certain documentation. Since this is a person’s first loan, taking an education loan lets you develop a positive credit score. If you repay the loan on time and without any defaults, it would be simpler for you to get a home loan, car loan, and so on in the future.

I hope you like our blog “secured student loan application process”, for more insightful blogs related to education loans for studying abroad, head to our Education Loan Archives.

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