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Getting your education loan rejected for your study abroad dreams can feel heartbreaking, especially when you’ve already shortlisted universities, planned your career, and imagined life in a new country. But here’s the truth: most education loan rejections can be fixed!
Whether it’s a low credit score, insufficient collateral, or unclear academic plans, the right fix can help you successfully secure funding later. In this guide, we’ll walk you through practical steps to fix the most common education loan rejection reasons to help you reapply with confidence.
This Blog Includes:
Improve a Low CIBIL Score and Build Credit History
One of the most common reasons for education loan rejection is a low CIBIL score or lack of credit history.
If you’ve faced an education loan rejection due to a low CIBIL score or a lack of credit history, don’t lose hope. Banks consider you a high-risk borrower, but there are real, actionable steps you can take to rebuild trust.
Here’s how to fix an education loan rejection due to a low CIBIL score or insufficient credit history:
- Check for errors
Over 30% of credit reports have mistakes! Get your free CIBIL report [here] and dispute anything that seems wrong. - Become an ‘Authorized User’
Ask a financially responsible family member to add you to their credit card. Their healthy credit habits will start reflecting on your profile, too. - Take a small loan & repay early
Borrow a small personal loan (INR 10,000 is enough) and repay it within 2–3 months to build credibility. - Avoid multiple loan applications
Each loan inquiry can further reduce your CIBIL score. Wait at least 6 months before reapplying.
You can take inspiration from one of the students, Rahul. He faced an education loan rejection due to a 580 CIBIL score and no credit history. Feeling devastated but determined, he:
- Got his free credit report and fixed errors (turns out there were 2 outdated loans listed!)
- Became an authorised user on his father’s credit card
- Took out a small INR 10,000 personal loan and repaid it early
Within 4 months, his CIBIL score jumped to 720, and he proudly secured an INR 15 lakh loan from HDFC Credila. If Rahul could turn it around, so can you!
However, you can still try to get an education loan to study abroad with a low CIBIL score if you follow the tips given in the blog.
Opt for No Cosigner, No Collateral Education Loans
Another major reason for education loan rejection is the lack of collateral or a co-signer with strong financials.
If your education loan was rejected due to collateral issues, or if your co-applicant has a poor credit profile, you still have options to bounce back and reapply for a study abroad education loan.
Here’s how to fix an education loan rejection due to lack of collateral:
- Apply for no cosigner no collateral education loans
Explore international lenders like Prodigy Finance or MPOWER Financing. They look at your potential, not your property. - Use a Fixed Deposit as collateral
Even a modest FD can strengthen your case. SBI and Axis Bank accept FDs as security. - Find a stronger co-signer
If your parents don’t qualify, consider a working sibling or another financially stable family member.
Pro Tip: NBFCs like Avanse accept liquid assets such as insurance policies as collateral.
Also Read: 9 Common Reasons for a Student Visa Rejection
Correct Incomplete Documentation
A surprisingly common reason for education loan rejection is incomplete or incorrect paperwork. If your loan got rejected due to missing documents, you’re not alone. It’s easy to overlook something critical in the rush.
Here’s how to fix loan rejection with incomplete or inaccurate documentation:
- Use this education loan document checklist:
- Admission letter from the university
- Academic transcripts (Class 10 onward)
- Co-applicant’s ITR (last 2–3 years)
- Aadhaar card, passport, and address proof
- Collateral documents, if applicable
- Submit documents early
Aim to submit your application 15–30 days before any deadlines to avoid last-minute issues. - Avoid forged documents at all costs
Submitting fake documents can lead to being blacklisted. If you’ve already done this, wait 6–12 months and rebuild your credibility before reapplying.
Pay Off Outstanding Debts and Clear Existing Loan Defaults
A loan rejection can also occur if your existing EMIs or loans eat up too much of your monthly income. If your debt-to-income ratio is high, you may be labeled as a loan defaulter, even if you’ve never missed a payment.
Here’s how to fix education loan rejection due to a High Debt-to-Income (DTI) Ratio:
- Close small debts first
Pay off credit card bills or small personal loans to reduce your debt burden. - Ask for a longer repayment tenure
This lowers your EMI amount and improves your affordability ratio. - Switch to a co-applicant with low debt
If possible, choose a co-signer with fewer financial obligations.
Strengthen your Academic Profile
Sometimes, an education loan is rejected due to a weak academic profile or if your chosen course is seen as having low job potential.
But don’t worry- your passion still matters. You just have to improve your academic performance profile and show the bank how your course fits into a viable career path.
Here’s how to fix an education loan rejection if your academic record does not meet the criteria set by the lender:
- Write a Strong SOP (Statement of Purpose)
Explain how your course leads to stable, in-demand careers. Example: “MA in Psychology can lead to roles in HR or counseling.” - Show University Rankings
Mention if your university is in the QS Top 200 or if it has strong placement records. - Switch to a Related, Job-Oriented Course
If you’ve been rejected twice, consider shifting to a course with broader career options like Digital Marketing or Business Analytics.
Here’s an example through Priya’s success story and how she turned a history degree into loan approval.
When Bank of Baroda first rejected Priya’s loan application for her MA in History, their concern was clear: “How will this degree lead to stable income?”
Rather than give up, Priya:
• Researched museum and cultural heritage job growth (projected 18% increase in India)
• Rewrote her SOP to highlight specific career paths like “Museum Curator at National Archives”
• Added her internship at a local heritage site as proof of practical experience
The result? Not only did her reapplication get approved for INR 12 lakhs, but the loan officer remarked it was “one of the most convincing humanities applications” they’d seen.
Also Read: 15 Hidden Visa Rejection Reasons Under Section 214b
Target Approved Universities for Education Loans
Another reason for education loan rejection is applying to non-approved or low-ranked universities. Banks want to ensure your degree leads to employment. Choosing the right university is crucial.
Here’s how to fix it if your education loan rejection is due to unapproved educational institutions:
- Apply to Approved Universities for Education Loans
Refer to bank-specific lists like SBI’s or HDFC Credila’s approved institutions. - Highlight Placement Statistics
Show data like “95% placement for MBA grads within 6 months”—it makes a strong case. - Consider a Backup Option
Have a Plan B. If your dream university isn’t bank-approved, apply to a more recognized program as a backup.
To sum up, an education loan rejection isn’t the end, it’s a redirection. It’s a sign to tweak your application, strengthen your profile, and try again with better clarity and strategy.
Every problem listed above has a solution. You’re not alone, and with the right approach, your dream of studying abroad can still come true.
If you need help and want to bounce back with a better solution, you can apply for fast, convenient and accessible education loans with Leverage Edu’s Fly Finance Loans expert.
Check out the FAQs below for more information.
FAQs
First, ask your bank for the specific rejection reason (in writing if possible). Common issues like low CIBIL scores, missing documents, or weak academic profiles can often be fixed within 3–6 months.
Yes! Most rejections are fixable. For example:
– Low CIBIL? Improve your score in 4–6 months.
– No collateral? Apply to lenders like Prodigy Finance.
– Weak academics? Strengthen your SOP with career-focused arguments.
It depends on the reason:
– Document errors: Reapply immediately after correcting them.
– Low credit score: Wait 4–6 months after improving your CIBIL.
– Academic profile: Next intake cycle (6–12 months).
Try NBFCs or international lenders with flexible criteria:
– Avanse: Accepts liquid collateral (e.g., insurance policies).
– MPOWER Financing: No cosigner/collateral required.
– HDFC Credila: Fast approvals for top-ranked universities.
Only if you don’t address the root cause. Multiple rejections for the same reason (e.g., low CIBIL) can raise red flags. Fix the issue before reapplying.
Yes, but you’ll need to:
– Dispute credit report errors.
– Add a strong co-applicant.
– Apply to NBFCs (they approve scores as low as 600).
Explore alternatives:
– Scholarships: Use platforms like Leverage Edu’s Scholarship Finder.
– Part-time work: Study in countries like Canada/Germany that allow student work.
– Crowdfunding: Platforms like Ketto are for education funding.
Evaluate all study abroad options with Leverage Edu. Stay tuned with Leverage Live classes and realise your dream of studying in your dream country.
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