Embarking on an international education journey is a dream for many Indian students. However, securing the necessary funding is a crucial step in this process. While getting an education loan comes up as the most opted solution, many lenders require you to have a co-applicant to secure the loan. At Lorien Finance, we understand the importance of having the right co-applicant for study abroad loans to strengthen your loan application and increase approval chances.
The process of selecting a suitable co-applicant can significantly impact your study abroad financing journey. Whether you’re planning to study in the US, UK, Canada, or Australia, understanding who can be a co-applicant and how they affect your loan eligibility is crucial. A co-applicant for your education loan not only shares the responsibility of repayment but also strengthens the loan application by providing additional financial assurance to lenders. Let’s walk you through everything you need to know about co-applicants for study abroad loans, helping you make informed decisions about your education financing.
What is a Co-Applicant for Study Abroad Loans?
A co-applicant, often referred to as a co-borrower, is an individual who joins you (the primary applicant i.e. the student) in applying for an education loan. They share the responsibility of loan repayment and become legally obligated to repay the loan if the primary borrower fails to do so. For study abroad loans, co-applicants play a crucial role in strengthening the application by adding financial credibility and stability.
Including a co-applicant can enhance the credibility of the loan application, potentially leading to better interest rates and higher loan amounts. Most financial institutions and lenders require a co-applicant for international education loans as a form of security, ensuring the loan will be repaid even if unforeseen circumstances arise.
Who Can Be a Co-Applicant for Study Abroad Loans?
Parents
Parents are the most common and preferred co-applicants for study abroad loans. Most financial institutions and lenders prioritise applications where one or both parents serve as co-applicants. This preference stems from the natural financial responsibility parents typically assume for their children’s education.
Both parents can jointly apply as co-applicants, which can further strengthen the application. If your parents have stable income sources, good credit scores, and sufficient assets, they make ideal co-applicants for your study abroad loan.
Siblings
In cases where parents cannot be co-applicants due to age restrictions or financial constraints, siblings can step in. However, for siblings to qualify as co-applicants, they must:
- Be employed with a stable income source
- Have a good credit history
- Be willing to take financial responsibility for the loan
- Meet the lender’s specific eligibility criteria for co-applicants
Siblings who are well-established professionally can significantly enhance your loan application’s strength.
Spouse
For married students, spouses often serve as co-applicants for study abroad loans. A working spouse with a good credit history and stable income can be an excellent co-applicant. In fact, having a spouse as a co-applicant can be advantageous as it demonstrates shared financial responsibility and potentially higher combined income.
If both you and your spouse are planning to study abroad together, you might want to explore scholarships and financial aid options to complement your education loan.
Other Relatives
Beyond immediate family members, certain lenders may accept other close relatives as co-applicants for study abroad loans. These may include:
- Uncles/Aunts
- Grandparents (age restrictions may apply)
- First cousins (policies vary by lender)
When considering relatives as co-applicants, it’s essential to verify the specific policies of your chosen lender, as not all financial institutions accept extended family members as co-applicants. Understanding different types of education loans available can help you identify which lenders might be more flexible with co-applicant requirements.
Benefits of Having a Co-applicant
Including a co-applicant in your education loan application offers several advantages:
- Increased Loan Approval Chances: A co-applicant with a strong financial background can significantly improve the likelihood of loan approval.
- Higher Loan Amounts: Lenders may be willing to offer larger loan amounts when a co-applicant is involved, especially if their income and credit profile are robust.
- Better Interest Rates: A co-applicant’s good credit score can lead to more favourable interest rates, reducing the overall cost of the loan.
- Tax Benefits: Under Section 80E of the Income Tax Act, the co-applicant can claim deductions on the interest paid towards the education loan, provided they are the ones repaying it.
Eligibility Criteria for Co-Applicants
Age Requirements
Most lenders specify age limits for co-applicants. Typically, the co-applicant should be:
- At least 21 years old
- Not exceeding 65 years of age at the time of loan maturity
These age restrictions ensure that the co-applicant is legally able to enter into a financial contract and is likely to remain employed throughout the loan tenure.
Income and Employment Stability
Co-applicants should demonstrate financial stability through:
- Regular income source (salaried employment, business, or professional practice)
- Employment stability (generally 2+ years in the current job or business)
- Income adequate to service the loan EMIs if needed
Lenders evaluate the co-applicant’s income to assess their ability to repay the loan in case the primary borrower defaults. Higher income stability translates to better chances of loan approval.
Credit History and Score
A co-applicant’s credit history significantly influences the loan application. Lenders prefer co-applicants with:
- Good CIBIL scores (generally 700+)
- Clean repayment history without defaults
- Manageable existing debt obligations
Co-applicants with excellent credit histories can help secure better loan terms, including lower interest rates.
Residential Status and Nationality
For Indian students seeking study abroad loans:
- Co-applicants are typically required to be Indian residents
- NRI co-applicants may be accepted by some lenders with additional documentation
- Foreign nationals as co-applicants are generally not accepted by most Indian lenders
Special Considerations for Who Can Be a Co-Applicant
Single Parent Scenarios
For students from single-parent households, most lenders accept the single parent as the sole co-applicant. In such cases, the financial assessment focuses entirely on the single parent’s credentials. Some lenders might allow another close relative to join as a second co-applicant to strengthen the application.
Self-Sponsored Students
Mature students or those with work experience might apply as self-sponsored applicants. However, most lenders still require a co-applicant for international education loans regardless of the student’s financial status. The co-applicant requirement may be relaxed only in exceptional cases where the student has substantial assets or an exceptionally strong financial profile.
Government-Backed Loan Schemes
Government-sponsored education loan schemes like the Vidya Lakshmi portal may have different co-applicant requirements. These schemes often have more flexible criteria and might accept a wider range of co-applicants or have different eligibility parameters altogether.
Comparing Co-Applicant Requirements Across Lenders
Different lenders have varying policies regarding who can be a co-applicant for study abroad loans. During our Loan Fest, you’ll get an opportunity to directly compare these requirements across multiple lenders. Here’s a general overview:
Traditional Banks
- Prefer parents as co-applicants
- Strict age and income requirements
- Typically require co-applicants to be Indian residents
- Detailed documentation and verification process
NBFCs and Specialised Education Loan Providers
- Often more flexible with co-applicant requirements
- May accept siblings and extended family more readily
- Sometimes accept NRI co-applicants with fewer restrictions
- Focus more on the co-applicant’s credit score and repayment capacity
International Financial Institutions
- May not require Indian co-applicants if the student plans to work abroad
- Often focus on future earning potential of the student
- May accept international co-signers in certain cases
- Typically require co-applicants with ties to the country of study
Study Abroad Loan Fest
Why chase lenders individually when they can all come to you? That’s the idea behind Lorien Finance’s Loan Fest – India’s biggest abroad education loan event where you can compare multiple public and private lenders for your study abroad loan.
At our Loan Fest, you can secure your loan for your abroad studies at interest rates starting at 3.39%* from 17+ Indian and International lenders. There’s more! You can even enjoy exclusive benefits, including assured gifts worth ₹2,000 on successful loan disbursement and rewards like MacBook, iPhones and study abroad travel kits worth Rs. 20,000.
Preparing Your Co-Applicant for the Loan Application Process
Essential Documents for Co-Applicants
Co-applicants should prepare the following documents:
- Identity proof (Passport, Aadhaar, PAN card)
- Address proof (Utility bills, Passport)
- Income proof (Salary slips, ITR for the past 2-3 years)
- Bank statements (usually for the past 6-12 months)
- Property documents (if providing collateral)
- CIBIL score report
- Employment verification documents
Discussing Financial Responsibility
Before finalising a co-applicant, have an open discussion about:
- The extent of financial responsibility they’re undertaking
- Repayment expectations and timelines
- Their rights and obligations as a co-applicant
- Contingency plans in case of repayment difficulties
This transparency ensures that both parties understand the commitment involved in a study abroad loan arrangement.
Selecting the right co-applicant is a crucial step in securing funding for your international education journey. While parents remain the preferred choice for most lenders, understanding alternative options and specific requirements can help you navigate the process more effectively.
At Lorien Finance, we’re committed to helping Indian students realise their study abroad dreams by connecting them with the most suitable financing options. Our platform simplifies the comparison process and provides expert guidance on strengthening your application with the right co-applicant. Whether you’re exploring options for different co-applicants or preparing for our upcoming Loan Fest to compare multiple lenders, we’re here to support your education financing journey every step of the way.
FAQs
Can I apply for a study abroad loan without a co-applicant?
While some lenders might offer loans without co-applicants for domestic education, most study abroad loans require a co-applicant due to the higher loan amounts involved. Self-sponsored options are extremely limited and often come with stricter eligibility criteria and higher interest rates.
Can NRIs be co-applicants for Indian students’ education loans?
Yes, some lenders accept NRI co-applicants, especially if they are parents or close relatives of the student. However, additional documentation and verification procedures apply. NRI co-applicants may need to provide proof of income, tax returns in their country of residence, and sometimes a local guarantor.
What happens if my co-applicant’s financial situation changes during my loan tenure?
Most lenders do not regularly reassess the co-applicant’s financial situation once the loan is approved. However, if you wish to change your co-applicant due to unforeseen circumstances, you would typically need to apply for a loan restructuring, which is subject to the lender’s approval and policies.
Can I have multiple co-applicants for my study abroad loan?
Some lenders allow multiple co-applicants (e.g., both parents), which can strengthen your application, especially if one co-applicant has a stronger financial profile than the other. This arrangement can potentially help you secure a higher loan amount or better interest rates.
Does my co-applicant need to provide collateral for my study abroad loan?
For most study abroad loans, collateral requirements depend on the loan amount rather than the co-applicant’s profile. However, having a financially strong co-applicant might reduce the collateral value required or, in some cases, help secure a partially unsecured loan, depending on the lender’s policies.
How does my co-applicant’s age affect my loan eligibility?
Most lenders have age restrictions for co-applicants, typically requiring them to be at least 21 years old and not exceeding 65 years at loan maturity. If your primary choice for a co-applicant doesn’t meet these age criteria, you might need to consider alternative co-applicants or look for lenders with more flexible age policies.
Will having a co-applicant impact my own credit score?
Having a co-applicant doesn’t directly impact your credit score. However, if either you or your co-applicant defaults on the loan, both credit histories will be negatively affected. Conversely, timely repayments will help build positive credit histories for both parties.
