The increasing education cost around the globe has forced students to get loans from lenders.
According to Statista, higher education costs have risen more than the average wage in countries like the United States despite the fact that these countries have more graduates every year.
This is one of the reasons making Non-Banking Financial Institutions, as well as private and public banks, a darling to many students.
If you cannot afford the fees required to see you through university, you can turn to these institutions for an education loan.
However, this does not mean that your loan application will be approved. You might get your loan application rejected even though you thought you did everything right.
Here are some reasons why your application might get rejected:
1. Submitting Force Information
Would you help someone financially if they were not truthful to you in the first place?
Similarly, what do you think a lender would do if they found out that you are lying to them?
You will be asked for information like your name, nationality, address, educational qualification, and many others.
You might also be asked about your guarantors’ information.
In case your lender finds that you are not truthful with the information you provide, your student loan application will be rejected. You should also make sure that the documents you provide are valid.
2. Incomplete Documentation
When applying for a student loan, you will be asked to provide certified copies of certain documents.
These might include things such as educational certificates, proof of identity, birth certificates, and passports, among others.
The best way for you to handle this is to first do some research to find out the documents that might be required.
If, for instance, you are seeking a SoFi education loan, the lender will reject your application if you cannot provide all the documents that they want.
3. Tax Status and Nationality of Your Co-Applicant
Did you know that you must be a resident of the country for you to qualify for either a secured or unsecured student loan?
Did you also know the same rule applies even to guarantors?
Well, if you get a guarantor who happens to be a foreigner, you can be assured that your student loan application will be rejected.
In addition to this, you are all supposed to abide by income tax laws.
However, if your guarantor has taxable income, you should not have any issues with lenders.
4. Your Creditworthiness
The truth is that even though you might qualify for a loan to finance your education, your financial strength and creditworthiness will play a role in convincing lenders to consider you for the loan.
You can check your own credit score before you even start applying for a student loan.
You can also check the debts you have, repayment history, and sources of income and evaluate yourself to see your chances.
The lender might just look at these things and reject your student loan application if they feel that you do not meet their requirements.
5. Collateral Requirements
If the student loan you are applying for is secured, your lender will ask you to provide documentation showing the assets that you own or those owned by your guarantor.
These might include fixed assets like land or properties and will be held as mortgages.
In a situation where you cannot pay or default on the student loan in the future, the lender will have to repossess the assets you provided.
However, before you get approved, your lender might want to verify these documents.
What do you think will happen if they are fake? Of course, your loan will be rejected.
6. Location of Your Institution
You might not believe it, but some lenders will check the country of your institution before approving your student loan application.
The truth is that some countries have a better quality of education than others.
Imagine competing with a student going to study at The Harvard Business School when you are going to some poor university that has never been heard of in another country!
Do you think your loan application will be approved? Most definitely not.
It is, therefore, important for you to ensure that you have chosen a country with high-quality education, especially if you are going to study abroad.
7. School Not Recognized
If you are applying for an unsecured student loan, you need to be careful with the choice of your institution.
This is because most lenders check the credentials of your school before approving your student loan.
What does this mean for you?
Well, before seeking to secure a student loan, make sure that you have secured admission to a highly accredited or top-ranked university or college.
In addition, you can check the list that your lender has approved to ensure that your student loan is approved.
8. Language Requirements
Yes, your student loan application can be rejected if you do not meet certain language requirements.
Since English is the most common official language and is spoken in North America and Commonwealth countries, you might need to be proficient in English.
You might be required to take some tests to show how good you are in English, or any other language for that matter.
If you do not get the required grades, then it would mean that you cannot study in those countries.
Consequently, your lender would also reject your loan application.
Get Your Student Loan Approved
As you can see above, many reasons might lead to the rejection of your student loan application.
If you want to avoid this, you should be very keen and provide everything required for your loan to be approved.
