Key Insights on Government Orders to Fast-track Student Loan Applications

The Finance Ministry has recently ordered the Public Sector Banks(PSBs) to speed up their education loan processing times. The Ministry has asked the banks to process student loan applications within 15 days. 

The government has taken this initiative after receiving several complaints from parents and students about delays in their student loan applications. The government has also set forth several new guidelines for Public Bank education loans to ensure timely approvals and avoid delays. 

This article provides the key insights on the government’s new orders for education loans from Public Sector Banks, along with how they affect students applying for one. We have also provided a few tips to help students speed up their education loan process.

What are the Government’s New Orders for Student Loan Applications?

The government of India has held several meetings with banks to address delays in student loan applications. After a series of meetings, the government, through the Finance Ministry, has given new orders to Public Sector Banks. These new guidelines* from the Ministry aim to speed up the education loan process from public banks. Here are the government’s new guidelines for public banks regarding the processing of student loan applications.
*Read: RBI Education Loan Guidelines

Faster Education Loan Process

Education loans from public banks are known for offering higher loan amounts at low interest rates. This makes public banks the primary choice for many students to take an education loan. 

• The government has ordered the public bank to fast-track the education loan applications within 15 days.
• This means that an education loan from public banks will be sanctioned within 15 days after applying and submitting all the necessary documents.
• The government has taken this initiative as most Public Banks currently take up to a month or more to process student loan applications. As a result, students often miss their university’s deadlines can lead to penalties or cancellation of admission.

As mentioned above, education loans from public banks take a month or more to be processed. However, when you apply via WeMakeScholars, the process can be done much faster in just 7 to 10 days for unsecured loans and 15 to 20 days for secured loans after all the documents are submitted. Get in touch with our team today for a swift education loan process.

Establish Centralised Processing Systems 

• The Ministry has also told the banks to set up Centralised Credit Processing Systems to ensure education loans are approved on time.
• This is to establish clear internal procedures for approving or rejecting student loan applications.
• Subsequently, from now on, before rejecting or returning an education loan application, the decision must be approved by a higher authority. 
• And when the loan is rejected or returned, applicants must be informed of the reasons for it, making the whole education loan process more transparent for them.

Clear Pending Applications and Reduce Delays in Disbursements

The government has instructed the banks to clear all existing backlogs by May and submit a status report on the same. Here, backlogs refer to the pending student loan applications. 

• This involves student loan applications where the loan has been sanctioned, but the disbursement has been put on hold. Education loan disbursement refers to the transfer of the sanctioned funds from the lender to the university’s or the student’s account, according to the loan agreement.
• However, many students face several education loan disbursement issues after the loan is sanctioned, such as delayed disbursements. Issues in the disbursement process are often a result of insufficient or unsatisfactory documentation.
• To expedite the process and reduce delays in disbursements, banks have been instructed to stick only to the documents mentioned under the Indian Banks’ Association’s Model Education Loan Scheme.

We have learned that many students face various issues, including disbursement issues, even after their education loan is sanctioned. This is why at WeMakeScholars, we have a dedicated post-sanction team that helps students resolve such Disbursement issues in no time. Request a callback to contact our team and get a stress-free student loan journey.

How Does it Affect Students Applying for Education Loans?

Let’s look at how these new guidelines affect students applying for education loans from public sector banks.

1. Quick Approvals: These new orders from the government expedite the education loan processing times from public banks. This allows students to access their education loan funds much sooner.
2. Clear Communication: Banks are also instructed to inform students about their education loan application status. This helps students understand their loan application progress and resolve any issues on time. This ultimately makes the whole education loan process more transparent and clear for students.
3. Reduced Delays and Timely Disbursements: The new guidelines reduce the delays in the student loan applications of public banks and ensure clear communication with students by establishing Centralised Processing Systems. Staying informed about their loan progress assists students in identifying and resolving any issues in their disbursement process. This ultimately helps students receive their education loan disbursements on time.

How to Speed Up the Education Loan Process?

Here are a few tips to help you fast-track your education loan process and access the funds sooner.

1. Consider Opting for Unsecured Education Loans: Unlike secured loans, unsecured education loans do not require collateral. Since no collateral is involved, these loans require less documentation compared to secured education loans. Hence, these loans are processed much faster than collateral education loans.
2. Choose the Right Lender: Choosing the right lender with less processing time helps access student loan funds sooner. Compare the education loan processing times from different lenders and choose the lender that satisfies your needs and requirements with the least processing time.
3. Submit Documents on Time: Submit all the required documents* on time to make sure your education loan is approved on time. In case any documents are missing, obtain them as soon as possible and check with your lender if any alternate documents are accepted.
   *Read: Documents Required for Education Loans
   
4. Regularly Monitor the Student Loan Application: Regularly monitoring your student loan application helps speed up your loan process by allowing you to identify and timely resolve any issues on the student loan application. 

Conclusion

The Finance Ministry has recently instructed Public Sector Banks(PSBs) to fast-track their student loan applications. The banks have been directed to process education loans within just 15 days. The Ministry has also set forth new guidelines for PSBs to make their education loan process more transparent and clear for students. These new guidelines involve establishing Central Credit Processing Systems to ensure timely approvals on education loans. The new initiatives aim to reduce delays in student loan applications from public banks.

However, education loans from public banks currently take up to a month or more to be processed. Contact WeMakeScholars to get an education loan from public banks much faster, within just 10 days without collateral and 20 days with collateral. And since WeMakeScholars is funded and supported by the Ministry of IT, all our services are free of cost for students.