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How to Get an Education Loan Sanction Letter? [2024]

Despite the growing number of study abroad applicants, hurdles are also rising. To follow their overseas dream, students take study loans. It is one of the best ways to fund their education. However, what ensures the approval of their loan application? An education loan sanction letter. Scholars need this to confirm their loan's approval through the lender. Moreover, there are several other perks of holding a sanction letter. Let us first check out how an education loan can help students study abroad.

How Do Education Loans Help Students?

Scholars who plan to fly abroad for higher studies often face issues with funds. That's when student loans come into the picture. A loan itself means that the borrower has to pay the sum back to the lender. A study loan aims to cover the cost of living, tuition fees, stay, stationary, etc for the student. There are several types of loans. They can be secure, unsecured, private, or federal. So, not only banks but also NBFCs offer study loans to students.
Moreover, most scholars think that taking a loan is a complex process. Besides, many believe that aid is not even guaranteed. However, that is not entirely true. Study abroad experts confirm that the loan procedure can become a piece of cake. Students need to apply for a study loan from a credible lender. The next section will discuss what happens when your loan gets approved.
Suggested read: How to Get Education Loans to Study in Canada?

What is Education Loan Sanction Letter?

When you apply for a student loan, the lender has to consider a lot of things before they can approve your request. Moreover, there are a lot of terms and conditions that you need to agree to. Yet, this education loan letter is a vital proof. It confirms that you got your loan approved and can fund your studies abroad. It is a formal and legal paper that signifies that your monetary aid is ready to release. It means you have enough money to manage your stay, tuition fees, books, and food overseas.
Now, let us take a look at the entire student loan approval process.

Loan Sanction Process

  1. First, you have to submit your application and documents, and the bank will start the process. It takes around 15 days to get the loan approved.
  2. If your request gets approved, the bank will send the education loan sanction letter via post or email.
  3. Lastly, the bank will hand over the amount to you. However, many banks prefer giving to the college directly.

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Now that you know how many days it takes to sanction an education loan, let's learn more about the format of the loan sanction letter.
Read more about how to apply for an education loan to study abroad here!

Education Loan Sanction Letter Format

The components of the sanction letter are:
1. Sum Loan Amount
2. Repayment Rules
3. Interest Rate
4. Payout Process
5. Validity Time
6. Collateral Requirements
These are some key components of a generic format of the education loan sanction letter. The above pointers are in detail below.

Sum Loan Amount

Firstly, the letter officially states the total amount the lender is providing. In addition, this amount can cover tuition fees, stationary, housing, or all. Various banks have different eligibility criteria for deciding the sum amount. The amount can depend on needs, assets, college, merit, etc.

Repayment Rules

Secondly, the sanction letter states when the repayment period starts. This section of the letter also mentions if there is any moratorium period. It means the time when the student studies but does not have to start repaying the loan. You can also find details on loan tenure (the time within which repayment must take place).

Interest Rate

Thirdly, the document mentions the interest rate at which you have to repay your loan. This is one of the most crucial details. In the Indian market, the interest rate on loans from government and private banks ranges from 9% to 15%.

Payout Process

Fourthly, many banks hand over the amount to the student. However, in many cases, they directly pay the college or institute the student enrolled in. Moreover, this is another vital detail on who will get the money. This legal document makes it clear for everybody involved.

Validity Time

Furthermore, the approval can expire if the student forgets to accept this letter. It is a crucial part of the education loan letter format. This letter comes with a validity period, within which the student has to accept it. If they fail to do so, they might have to repeat the entire process all over again. Thus, the sanction letter has important details that can't go unnoticed.

Collateral Requirements

Lastly, if there is any collateral requirement by the lender, the letter mentions it. These can include any tangible assets like a shop, land, house, car, or building. Also, intangible assets like insurance or fixed deposits. These requirements are applicable only if the loan amount exceeds 7.5 lakh.

These are the generic details that a sanction letter for education loan includes. Next, let's understand the process of getting a student loan sanctioned.

How to Get an Education Loan?

This is the process for getting a student loan sanction letter. The process of applying for a Student loan and getting a loan sanction letter is as follows:

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  1. Firstly, decide the college you wish to study in and get over with the admission process. It means you must hold an acceptance or offer letter from that institute to show the lender.
  2. Secondly, if the lender asks you for your academic profile and report cards, submit them. This step usually confirms that you can get a job after your course finishes.
  3. Thirdly, you would also need to give your income statements. The bank might ask for records of all your liabilities and assets.
  4. Fourthly, after the submission of all the documents, you might face an interview. Most lenders prefer this step and call the student for a face-to-face interview.
  5. Fifthly, the bank will give you a promissory note to sign after the process ends. There is an education loan sanction letter validity within which you must sign it. Otherwise, the letter will expire.
  6. Lastly, the repayment clause of the letter must not go unnoticed. You must know when the lender expects you to start repaying the loan amount with interest.

This section discussed the generic process for applying for a student loan. Now, let us talk about the pre-approval sanction letter.

What is the Pre-Approval Sanction Letter?

A pre-approved sanction letter is also called a provisional sanction letter. Often, scholars need a sanction letter before applying to a university abroad. It is a vital document asked by many colleges before confirming admission. Thus, the borrower gets a pre-approved sanction letter before getting admission. However, the purpose of the letter is the same. It proves that the student has a definite source of aid to fund their studies abroad.

Moreover, not all lenders or banks offer this service. Those who do expect you to pass your standardized tests before you get the visa.

What are the Documents Required for Loan Sanction?

There is a list of generic documents that a student needs to submit to get an education loan sanction letter. Moreover, the table below mentions the documents required by co-applicants.

Correctly filled loan application. ID Proofs
Government ID Proofs: PAN card, Adhaar Card, Passport, etc. Residential Proofs.
Residential Proofs: A copy of water/electricity bill, for instance. Bank A/C Statement
(from last 6 months)
Previous Academic Records
(10th, 12th results are mandatory)
IT Returns From Last 2 Years.
Standardized Test Score Proofs
Last 3 Months Salary Slips.
Proof of Admission
(if it is not for pre-approved sanction letter)
Qualification Certificate
Statement for Entire Cost of Studying Abroad. TDS Certificate
(If self-employed)
Passport-sized Photographs. Form 16 Copy from the Last 2 Years.
(If Salaried)
Previous Loan Statements
Business Address Proof
(If self-employed)

These are the various paperwork asked from borrowers and their co-applicants. Furthermore, this blog will discuss the several advantages of the loan sanction letter.

What Are the Advantages of Loan Sanction Letter?

Now that you know what loan sanction meaning, let's move forward. These are the benefits of holding a student loan sanction letter:
1. Funding Proof
2. Ease in Visa Process
3. Smooth Admission Process
4. Secure Financial Position
5. Transparent Transactions
The above pointers are in detail below:

Funding Proof

Firstly, this is a formal letter and legal proof that you can fund your studies abroad. Moreover, it is also a confirmation that your collaterals (if any) are with the bank. Furthermore, it states that they have approved your request for education loan letter. Also, they cannot demand any repayment before the start of the repayment period.
Suggested read: Financial Aid to Study in Canada

Ease in Visa Process

Secondly, their visa process also smoothens as they can fund their studies. The visa officials verify whether the student can afford the tuition fees and stay there or not. This sanction letter ensures that certain expenses are covered. These expenses include books, stationery, the cost of living, etc.
Suggested Read: Why Are Indian Students Facing Visa Rejections?

Smooth Admission Process

Thirdly, the most vital benefit of having a sanction letter is that scholars have solid proof. This letter proves that the student can manage to afford the expenses of the country they are going to. If the scholars carry the pre-approval sanction letter, their admission becomes easier.

Secure Financial Position

Fourthly, before a student takes off for their college, they can't rely on their future income. This means that they cannot count on their potential salary for part-time jobs. Thus, they need to have a fixed source of financial aid. A student loan education loan letter does exactly that. Hence, the sanction letter is the document that students can use to claim the loan amount.

Transparent Transactions

Lastly, this letter has all the terms and conditions. Thus, they give you to sign before it expires. This means that the lender and the borrower agree to these conditions. Moreover, it also means that both parties will see all the transactions.

In addition, as it is a legal document, the lender and the borrower are bound to abide by it. Thus, none of them can breach the terms or take an independent decision with regard to this matter. Check out the sample of the sanction letter in the section below.

Sample Education Loan Sanction Letter

Take a look at the sample of a student loan sanction letter. Notice all the details mentioned in the sample below to get an idea of what a sanction letter describes.

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This is a sample sanction letter for a student loan. You can refer to it and understand the details you have to keep in notice before signing the letter.
To conclude, there are a lot of perks for those with an education loan sanction letter. There are various other ways to get monetary aid for studying abroad as well. Yet, student loan services are the most popular among all. Besides, mentors at Gradding.com can further ease the process for you. They can inform you about the best available options and help you select the one with a low-interest rate. Moreover, their ultimate goal is to help you in every step of your study abroad journey.

So, if you are wondering how you are going to manage or handle your standardized tests and visa queues, talk to an expert now! This blog discusses how you can get a study loan sanction letter, a legal document a student might need in their visa process. However, to talk to a mentor directly, you can book a free session with one of the best consultants in India at Gradding.com.

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View all comments
Siya Ahuja

I'll definitely be sharing this with my friends who are planning to study abroad!

Utkarsh Mehra

Are there any specific terms and conditions that should be clearly outlined in the sanction letter?


Yes, the education loan sanction letter should clearly outline terms and conditions related to interest rates, repayment schedules, grace periods, collateral requirements (if any), and any applicable fees or charges.

Vedhai Kapoor

I'll definitely be sharing this with my friends who are planning to study abroad!