Second Education Loan: How to Get Another Educational Loan if You Already Have One?

What if a student who has already taken an education loan to finance their undergraduate education wants to take another education loan to pursue their post-graduation? Is it possible to take a second loan in this case? This question often comes up in the mind of students who wish to pursue further education, in India or abroad, but are not sure if they will get one. 

What is a Second Education Loan?

A second education loan is borrowing money to finance higher education expenses. In other words, if a person has already secured an education loan for their first degree or course and then decides to pursue further education, they might need additional funding to cover the costs of the new course.

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Eligibility Criteria for a Second Education Loan

To be eligible for a Second Education Loan, the student must fulfill the following eligibility criteria. 

1. 
   Any student who has secured admission to a recognized university/college.
2. 
   These loans are offered to postgraduate students.
3. 
   The student should have maintained a good academic record during the tenure of their previous education loan.
4. 
   The collateral value should be more than the loan amount.
5. 
   The co-applicant must have a steady income and CIBIL score.

Borrowing a Second Education Loan from the Same Bank: Secured Education Loans

A student may visit the same bank from where they had taken their first education loan and explain the additional requirements for a second education loan. A student who has taken a secured education loan needs to ensure that the value of the collateral they had pledged for the first loan is enough to cover both loans. This will enable them to get their second loan sanctioned easily. In case the collateral value is not sufficient, they need to check whether the bank allows them to pledge new collateral (of a family member or even a non-family member) for the second education loan.
 

A student applying for a second education loan will fall under either of the following two categories - 

1. 
   Repayment has not started - This situation is applicable to students who have just finished their undergraduate studies and are about to start their post-graduate program in a month or so. Students can immediately apply for a second loan during the moratorium period. Once the second loan gets sanctioned, the moratorium period of the second education loan will start. This way, the student will be able to get a loan holiday, for both loans.
    
2. 
   Repayment has begun - In this situation, the borrower will have to continue to repay the EMI for the first education loan as agreed. As a thumb rule, the second loan amount that a student can take will be the maximum limit minus the outstanding amount of the first loan. 

For example, a student who was eligible to take an education loan of INR 30 Lakh took 20 lakhs for his first education loan and has repaid INR 15 Lakh. This means that his outstanding loan amount for the first education loan is INR 5 Lakh. So, he would now be eligible to take a second education loan of INR 25 Lakh (INR 30 Lakh - INR 5 Lakh). This can however vary from bank to bank.
 

It is evident from the above discussion, that it is wiser to plan and apply for a second education loan before repayment for the first education loan starts. 

Borrowing a Second Education Loan from a Different Bank: Secured Education Loans

What if the bank from where you had taken your first education loan is unwilling to sanction a second education loan? Well, don’t worry and approach another bank. For such a scenario, there are two options - 

1. 
   Take a fresh loan from a different bank.
2. 
   Students can also transfer their first education loan to the new bank and then apply for an additional second education loan from the new bank. The student will incur some loan transfer charges, but that would be a minuscule amount.

Borrowing a Second Education Loan: Unsecured Education Loans

Students who went for an unsecured education loan for their first education loan will need to look beyond government banks for a second education loan and apply to private banks or NBFCs for the same. These lenders do not require collateral rather they need a financially sound co-applicant. So, if you have a co-applicant with a good financial record, getting a second education loan from private banks or NBFCs should be relatively easier. 

Second education loans can be invaluable tools for those seeking to further their education and career prospects. They enable individuals to embrace new opportunities, adapt to evolving industries, and stay ahead in the professional game. However, careful consideration of eligibility, loan terms, and financial implications is essential. If you are also looking for a second education loan but are unsure of how to start then consider GyanDhan, India’s first financial marketplace. We connect students with suitable lenders and customize education loans according to one’s specific needs. With our commitment to transparency, and personalized assistance, we will be your guiding light through the complexities of second education loans. To start your education loan journey with us, check your loan eligibility.

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