Your CIBIL Score Isn't the Only Reason Your Education Loan Gets Rejected
Most students believe that an education loan is approved or rejected based only on their CIBIL score.
After working with borrowers and financial institutions for years, I've seen that's rarely the full story.
Many students have decent academic records and supportive families but still struggle to get an education loan approved. The reason is usually a combination of factors rather than a single issue.
If you're planning to study in India or abroad, understanding these factors before applying can save weeks of frustration.
What Banks Actually Look At
An education loan is different from a personal loan.
Since most students don't have an income, the lender evaluates the overall risk instead of only the applicant.
Some of the important factors include:
The reputation and accreditation of the college.
The course and its future employability.
Whether the student has a co-applicant with stable income.
Existing loans or repayment obligations of the family.
The total loan amount compared to the expected future earning potential.
The student's academic performance.
Even if your CIBIL score is good, weakness in one or more of these areas can affect the lender's decision.
A Simple Rule of Thumb
Before applying, ask yourself these four questions:
✔ Is my college recognised by the relevant authorities?
✔ Does my co-applicant have stable and documented income?
✔ Can my family comfortably manage repayments if required during the moratorium period?
✔ Am I borrowing only what I genuinely need?
If you answer "No" to multiple questions, it's better to improve your application first instead of applying to several banks at once.
One Common Mistake Students Make
Many applicants submit loan applications to multiple banks within a few days.
Every lender may perform a credit enquiry. Too many enquiries in a short period can make future lenders more cautious.
Instead, shortlist lenders that actually finance your type of course and profile before applying.
Don't Ignore Future EMI
An education loan helps you invest in your career, but it also becomes your financial responsibility after the course ends.
Before signing the loan agreement, estimate:
Expected starting salary after graduation.
Monthly EMI after the moratorium.
Living expenses if you relocate for work.
Emergency savings you'll need.
A loan should help build your future—not create unnecessary financial stress.
Learn Before You Borrow
Education loans involve interest rates, moratorium periods, collateral rules, co-applicant requirements, and repayment options. Understanding these concepts beforehand can significantly improve your chances of choosing the right lender.
I explained these topics in greater detail on FinSikho's guide to education loans, where I've broken down the complete process in simple language for first-time borrowers.
Making informed borrowing decisions today can save you from costly mistakes tomorrow.