Here’s what you must know about a co-applicant before applying for an education loan

Here’s what you must know about a co-applicant before applying for an education loan


Education holds power to truly transform your life. It gives you essential skills, offers opportunities, and lets you pursue your dreams. But what if the cost of education blocks your way to success? That’s where education loans help.

An education loan offers you the much-needed lifeline to finance your studies. You can cover tuition fees, study material costs, cost of living, and other education-related expenses. This helps you concentrate on what truly holds significance- nurturing your dreams and pursuing your passions so that you can become the person you want to be.

But did you know that adding a co-applicant to your application can strengthen your loan application? Here is how.

What is the role of a co-applicant in an education loan?  

In an education loan, a co-applicant shares loan repayment duties with the main borrower, usually the student. This role often involves parents but can include spouses, siblings, blood relatives or others invested in the student’s future.  

The inclusion of a co-applicant increases the likelihood of loan approval by distributing the lender’s risk between two parties. In instances where the primary borrower might default, the lender gets assurance that an additional individual is obligated to fulfil the repayment terms. This reduces the risk for lenders and makes it more likely for the loan to be approved.

Having a co-applicant may also help you avail a higher loan amount and lower interest rates. This is because lenders assess not only the primary borrower’s financial profile but also that of the co-applicant when determining loan eligibility and terms.  

CIBIL score

CIBIL score numerically represents a borrower’s creditworthiness and determines the possibility of timely loan repayment. Calculated from one’s credit history, outstanding debts, and payment history, it plays a critical role in lending decisions. A high score often leads to easier loan approval and more favourable terms like lower interest rates. This is especially true for education loans, where lenders may use an education loan calculator to assess the borrower’s affordability and risk.

Maintaining a healthy savings account can also reflect positively on your overall financial responsibility, although it’s not directly factored into your CIBIL score.

Income Tax Return (ITR) documents

The student loan process considers the ITR document as one of the most crucial requirements, even for a co-applicant. This document plays a significant role in enabling the lender to analyse finance-related information.

Income proof 

Apart from tax returns, banks also need other income proof. When a co-applicant earns a salary, banks generally ask for recent salary slips.  

For self-employed co-applicants, document requirements differ. They must show:

  • GST registration proof
  • Registration certificate
  • Business financial statements from the last 6 months
  • Additional business-related documents as requested by the bank. 

These documents aid lenders in evaluating whether a self-employed or salaried co-applicant can repay the loan.

Income (earnings)

Banks consider the earnings of a co-applicant before approving the education loan application. Each lender sets their own minimum income level for loan approval. But it’s not just the income level, the type of job also counts. Whether a co-applicant works in a government job, a private sector role or owns a business can affect the decision. Job stability and years in the current role can also influence the lender’s judgement, as they indicate reliability.

Co-applicants: Your ticket to smoother education loan approval

A co-applicant isn’t merely a formality. This person’s role goes beyond just signing loan papers. The co-applicant offers reassurance to the lender and shares the journey of shaping the student’s future. So, choosing the right co-applicant becomes important, as it’s not just about securing the loan but also about ensuring responsible repayment. Keep the above-mentioned points in mind as you search for a reliable co-applicant when applying for an education loan.

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