The role of co-applicant or co-borrower in an education loan

Longer Loan Tenures

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 19, 2021

Taking an education loan is a huge responsibility. You have to take into account many considerations involved in an education loan, and it is not often easy to do this on your own. Factors like eligibility, income, loan size, and duration may be a little complicated to manage single-handedly. We know you wish to study at your dream university abroad and you might not have many problems in securing a loan if you have good test scores and a stable paycheck. In certain situations, the borrower can opt to take out a loan with the help of a co-applicant. In other terms, two parties can apply for a single loan as co-applicants and jointly share the responsibilities that come along with it. Co-applicant for education loan and co-signers play a crucial role in the education loan. This is particularly relevant in the case of a co-applicant for an education loan. One of the big factors that many loan borrowers struggle to get an education loan from a reputable lender is a co-applicant who does not fulfill the relevant eligibility requirements. The person who is the co-applicant is a very important factor in education loans.  Before moving into the details about the role of a co-applicant/co-borrower in education loans, here is a short glimpse of the co-applicant meaning and relevance in education loans.

Role of a Co-applicant/co-borrower in Education Loans: Who is a Co-applicant?

A co applicant in education loan is a person with a secure financial profile who co-signs the education loan agreement with the loan applicant when borrowing one. A co-applicant means in education loan that he/she is the only party to whom banks will switch if the loan applicant (student) fails to repay the education loan on time. Co-applicants are referred to differently by various lenders.

Who can be co applicant for education loan is another applicant who participates in the loan underwriting and processing process on a particular loan. A co-applicant might be deemed an alternative to the main applicant in certain circumstances.A co-applicant varies from a co-signer or guarantor in terms of their loan privileges. A person who is the co-applicant can be used to support a primary borrower to get better loan offers. They are not, though, usually allowed access to the funds and are not linked with the collateral concerned. As a result, a co-signer is just a secondary means of payment in favour of the borrower. Meanwhile, a co-applicant himself shares the burden of the loan. This is the essence of the co-applicant meaning.

Role of a Co-applicant/co-borrower in Education Loans: Responsibility 

The main role of a education loan co applicant in a joint loan is to provide a financial guarantee; it is his duty to repay the entire loan amount if the primary borrower fails to pay the amount within the stipulated time period. Even the sum lent is based on the income of the borrower and the co-applicant. If you fail to repay the loan, it is the duty of the co-applicant to do so. As a result, it is important to consider the consequences of becoming a co-applicant, and understand what a co-applicant means in education loan and just how important he or she is.Most lenders of education loan policies in India state that only a parent or a close relative may be listed as an education loan co-applicant. Although, a few of them also mention providing an education loan without a co-applicant. This is because as lenders issue large amounts of education loans, it is critical to their values to guarantee that the applicant may be counted on to make periodic repayments. When lenders advise students to appoint a family member as an education loan co-applicant, they guarantee that this condition is fulfilled and that in the case of a mishap, the burden of repaying the whole education loan debt falls to this co-applicant for education loan.

Role of a co-borrower in Education Loans: Eligibility Criteria 

Here we try to specify the role of a co-applicant in education loan. Since secured education loans need collateral in the form of various types of properties, government banks’ co-applicant eligibility requirements for such education loans are slightly versatile. In such conditions, government banks permit students to designate two types of education loan co-applicants. Discover student loan cosigner requirements below.

  • Primary Co-applicant: Students who wish to opt for secured education loans from government banks can include their parents as co-applicants, regardless of their financial situation. In simpler words, students may select retired workers, workers, and others without a steady income as primary co-applicants for education loans in government banks.
  • Financial Co-applicant: In the secured education loan system, a financial co-applicant is needed only if students are unable to appoint persons with a permanent income as their primary co-applicants. Anyone who is linked to the loan borrowers by blood can be a financial co-applicant. For financial co-applicants, first cousins, own family, paternal uncle or aunt, and maternal uncle or aunt are some of the chosen options. These people must have a steady stream of income and must have all of the required documents in place to justify the same. Students can often appoint a third person as their financial co-applicant in education loan if they do not have any family. This clause also applies to students whose parents are no longer around.

Is the Loan Process Affected By Co-Applicant’s Low CIBIL Score?

When applying for a joint education loan, both parties are collectively responsible, which also means their CIBIL scores are taken into consideration as well. In certain cases, the bank reviews the borrower with a lower CIBIL score before sanctioning the loan amount in a personal loan. Where it comes to credit ratings, a co-applicant cannot assist you in improving your ranking. Furthermore, if you can not repay the loan on time, you would have a detrimental effect on the co-applicant’s credit score. One area where the co-applicant will assist you is with their debt-to-income ratio (DTI). A co-applicant with a low DTI increases the likelihood of loan acceptance when their loans and revenue are factored in with yours. This may also be seen as a criterion for obtaining a lower interest rate or a larger credit cap.

Also read: How to Get an Education Loan With a Low CIBIL Score

Concluding Thoughts

Studying abroad could entail a significant financial outlay for many. Many times, students depend on loans to realise their dream of securing an education based in a foreign land. However, opting for an education loan will surely provide a reprieve in this situation. However, it is not wise to have a co-applicant on the loan application if their debt-to-income level is equal to or lower than yours. This is because if an individual qualifies for a loan with a strong credit score and he decides to add a co-applicant with a worse credit score or a higher debt to income ratio, it might happen that the primary applicant will lose the loan acceptance, even if he was worthy.


1. Can there be 2 co-applicants for an education loan?

The eligibility conditions for co-applicants for secured education loans from government banks are quite flexible because these loans require collateral in the form of different kinds of properties. Government banks allow students to choose from two categories of co-applicants for student loans in such circumstances.

2. Is co-borrower compulsory for education loans?

Unsecured education loans are those that do not require a co-applicant or collateral. It is a sort of loan where the borrower is only required to submit their name as a guarantee and not to attach any collateral security to the loan amount. This form of education loan is only available from foreign lenders only.

3. What is the responsibility of a co-applicant in an education loan?

If the loan applicant is unable to repay the education loan owing to any unforeseen circumstances, the financial institutions will only resort to a co-applicant. Co-borrowers and co-signers are terms frequently used to describe co-applicants.

4. What is a co-borrower on a student loan?

The co-borrower should be an Indian citizen who is willing to co-sign and execute the loan agreement and other documentation; who is capable of paying the interest during the moratorium period, which includes the study period and grace period; and who promises to do so in the event that the student is unable to repay the loan.

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