Applying for an education loan is often important to getting higher education, especially if you are heading abroad or going to a top institution. But what if your father, who would be a co-applicant, is retired? Can you still apply? The answer is yes, but it takes more planning, better documentation, and the proper approach.
In India, many lenders look for co-applicants (typically parents) to have stable income, a credit history, and repayment ability. A parent who is retired may not fit any of those traditional requirements, which can raise red flags with lenders. However, this does not necessarily mean that your loan will be denied. Lenders are thinking about a lot of things, whether they are looking at alternate sources of income or assets already held, academic accomplishments, or even if you were admitted to a top-ranked institution.
In addition, the education loan arena is rapidly changing. By 2025, public sector banks are expected to have education loans approved in 15 working days, and there are also many NBFC’s and private lenders that are in the process of adopting a more flexible policy around co-applicants. In addition, there are options to obtain education loans globally and both MPOWER and Prodigy Finance provide customizable loans devoid of traditional co-applicant standards.
In this blog, we’ll explore practical steps and strategies you can take to apply for an education loan even if your father is retired. We’ll cover alternative co-applicants, documentation tricks, non-collateral loan options, and how to present your case to lenders effectively. By the end, you’ll have a clearer roadmap to navigate this challenge and secure funding for your dream education.
Role of a Co-applicant in Education Loans
When considering an education loan in India, lenders usually do not consider the student’s profile on its own. Since almost all students don’t have a continuous level of income or a credit history, banks and NBFCs typically require a co-applicant (or co-borrower), someone who can share the obligation of repayment.
The co-borrower will usually be a parent or guardian or close family member. The co-borrower’s primary responsibility is to provide the lender some indication that loan proceeds will be repaid after the loan proceeds are disbursed. In nearly all cases, repayment will rest on the co-borrower until the student completes their course and earns an income. Here is why co-borrower is so important:
- Creditworthiness – To determine the repayment capacity, lenders will assess the co-borrower’s creditworthiness (e.g., CIBIL Score), income, and liabilities. The more financially stable the co-borrower is, the greater there is a chance the lender will sanction the loan.
- Legal Responsibility – The co-borrower must repay the loan if the student does not repay it. This means that the co-borrower is just as liable for Nonpayment as the Primary Borrower.
- Loan Eligibility – Typically whether a student can receive funds, and how much they can receive, depends on the income of the co-borrower. Generally, the higher the income, the greater the chances of receiving a larger loan.
- Security to Lenders – Even in non-collateral loans, lenders feel more confident lending money when there’s a financially stable co-applicant backing the student.
- Flexibility for Students – With a co-applicant, students can focus on their studies without immediate repayment pressure, as lenders typically offer a moratorium period (course duration + 6–12 months).
In short, a co-applicant plays a dual role of financial guarantor and legal borrower, ensuring lenders are comfortable sanctioning an education loan. Without one, students may need to explore international lenders like Prodigy Finance or MPOWER, which don’t always require co-applicants.
Eligibility Criteria for No-Parental-Income Educational Loans
For many students, particularly those whose parents are either unemployed, retired, or who have an irregular income, the greatest hurdle is to obtain an education loan without including parental income. Luckily, many Indian NBFCs and international lenders such as Prodigy Finance and MPOWER Financing, provide loans based more on the student profile than the profile of the parents or other income source. Though, the student still has to meet certain eligibility criteria.
1. Academic performance
- Students must have an excellent record of academic performance in school and/or their undergraduate studies. Many lenders would prefer an overall aggregate score of at least 60%-65% overall (or equivalent GPA).
- Continuation of academic performance is an indicator that the student can complete an education with a level of success and there is a continuing expectation to indicate productive contribution after completion of studies.
2. Admission to a Recognized Institution
- Students must have an acceptance letter from an institution recognized internationally.
- Many lenders will only provide capital to students accepted at top-ranked universities /programs known for a high level of placement post-studies that will lead to high returns in income in career potential such as MBA, STEM, Data Science, Finance, etc.
3. Course Eligibility
- In situations where parental income is not eligible, the courses are generally available at a graduate or post-graduate professional course level such as an MBA course, or an MS, STEM, and/or PG Diploma.
- Options are limited for under graduate students, but a few of the NBFCs and some select banks offer options for under-grads.
4. Future Employability
International lenders, such as Prodigy Finance and MPOWER, evaluate a student’s ability to repay the loan based on future income prospects rather than family income. They use predictive models based on the university the user is attending, their course of study, and trends in the job market for the subject to establish their ability to repay.
5. Co-applicant Flexibility
- Some lenders require an alternate co-applicant (e.g. a sibling, relative, or working professional in India) instead of parents.
- International lenders may allow a loan without a co-applicant or collateral, making them a more relaxed option for students without parental support.
6. Credit Score (If Applicable)
- For Indian NBFCs, if a co-applicant (not a parent) is included on the application, their credit CIBIL score will be used.
- International lenders do not typically require credit history on the students, benefiting students with no financial rooms.
7. Nationality and Residency
- For Indian students, both NBFCs and banks want evidence of Indian citizenship along with proof of residence.
- For global lenders, the student must meet the eligibility criteria, which vary based on the lender’s guidelines, for residency and citizenship.
Comparative Table: Education Loan Options Without Parental Income
| Lender Type | Examples | Loan Amount | Co-applicant Requirement | Collateral Requirement | Key Highlights |
|---|---|---|---|---|---|
| Indian Public/Private Banks | SBI, Axis Bank, ICICI Bank, Bank of Baroda | Up to ₹40–75 Lakhs (depending on bank & course) | Usually required (parent/guardian or working relative) | Required for higher amounts (above ₹7.5 Lakhs in most banks) | Lower interest rates (9–12%), but difficult without parental income. |
| Indian NBFCs (Non-Banking Financial Companies) | HDFC Credila, Avanse, Incred, Auxilo, IDFC FIRST Bank | ₹20–75 Lakhs | Co-applicant required (can be sibling/relative with income) | Collateral not mandatory | Faster approval, flexible repayment, higher interest (11–13.5%). |
| International Lenders | Prodigy Finance, MPOWER Financing | Up to USD 100,000 (₹75–85 Lakhs approx.) | Not required | Not required | Loans based on future earning potential; disbursed in USD; higher interest (12–14%). Ideal for students with no parental income. |
Alternative Co-applicant Options for Students
When parents do not qualify as co-applicants because of low or no income, students fear losing approval for their education loan application. There are plenty of private banks and NBFCs that will allow a close blood relative or another family member with adequate income to act as co-applicants.
The only requirement is that the co-applicant has some sort of sustainable, adequate income stream with a minimum monthly income of approximately ₹35,000 – ₹40,000 and no significant financial commitments. This requirement is to ensure that the EMIs the student may incur can reasonably be supported by the co-applicants source of income in repayment.
Eligible Alternate Co-applicants
- Siblings (brother/sister) – Most banks or Federation’s simply accept a sibling as a co-applicant.
- Spouse – in most circumstances will be accepted for married students, especially if the student is seeking an education loan for an MBA or Executive MBA education abroad.
- Uncles (maternal/paternal) – Some Banks/ NBFCs will accept a maternal or paternal uncle as a co-applicant as long as they meet the basic income requirements.
- Legal Guardians or other blood relatives – Generally accepted by NBFCs only under certain conditions.
Steps to Apply for an Education Loan if Father is Retired
1. Start early (apply 4–6 months before course start)
Begin the process of searching and doing paperwork for your educational loan well before the timelines for admission/visa and it gives you more than enough time to approach multiple lenders or time to remedy the problem if the loan application to the first lender is not successful.
2. Check if your retired father still qualifies as co-applicant
Ensure your father has regular pension income that is predictable (not reflecting downward pendulations) in both regular inserts into his bank account (pension credit, annuity, FD interest, etc.) and documented sources of income. If your father’s finances and other income sources support regular pension inflows, many lenders will approve your father as a co-applicant if you can show the continued inflows as part of your additional documentation and if you can produce KYC and pension documents.
3. Gather proof of your father’s retirement income and assets
Collect recent documentation that has your father’s pension income (pension slip, bank statements showing consistent pension credit and deposits, pension sanction order, etc.) and assets (pensioner ID, rental income, Fixed Deposit receipts, property documents, recent ITR (if available)). Presenting assets reduces their overall risk evaluation for a loan offer in their review of your factors for loan approvals whether the borrower is earning an active salary or not.
4. Compare lenders and pick flexible options first
Shortlist banks, NBFCs and international lenders that accept retired parents or offer alternatives (sibling, spouse, legal guardian) or collateral-free/merit-based underwriting. NBFCs and specialized education-loan providers are often more flexible than some public sector banks.
5. Consider alternative co-applicants if father’s profile is weak
If your father’s income/profile is inadequate — find an alternative co-applicant (working sibling, spouse, grandparent with pension + assets source or other close blood relative) who qualifies per lender’s minimum income/CIBIL threshold requirement (general rule of thumb is net monthly income ₹35k – ₹40k without any bulky obligations).
6. Explore non-collateral & international lender routes
If you cannot identify a co-applicant, investigate international lenders and NBFCs (like Prodigy, MPOWER, etc.) etc that lend on the grounds of your acceptance, academic score and future earning potential not requiring co-applicant income or collateral. Please ensure you are aware of their different interest rates as well as currency risk.
7. Use government schemes and guarantees where applicable
Investigate if eligible for any Government schemes (for example credit-guarantee, interest-subsidy schemes, State of Padho Pardesh schemes) that can allow for a collateral-free loan or some better form of terms for meritorious or disadvantaged type students.
8. Prepare a strong loan application packet
Assemble a complete, tidy documentation pack to boost approval odds:
- Student: passport, photos, offer/admission letter, fee schedule, course start date, academic transcripts, test scores (IELTS/TOEFL/GMAT/GRE if applicable).
- Father (co-applicant) or alternative co-applicant: KYC (PAN/Aadhaar/passport), latest bank statements (6–12 months), pension slips/bank credit proof, Form 16/ITRs (if any), property/FD/mutual fund documents (if offering as security).
Any scholarship/assistantship letters, gap certificate, resume (if relevant).
Banks value a clean, complete file—missing paperwork is a common cause of rejection.
9. Submit applications to multiple lenders in parallel
Apply to 2–4 lenders at the same time (mix of public bank, private bank/NBFC, and an international lender if suitable). This widens options and reduces time lost if one application is turned down.
10. If the co-applicant is rejected, act fast
Ask the lender for the precise rejection reason, then either: provide missing documents, propose an alternative co-applicant, offer partial collateral (FD lien, property), or switch to an NBFC/international lender. Reapply quickly—many approvals are won on the second submission.
11. Negotiate and clarify pre-visa disbursement rules
For study-abroad students you’ll need proof of funds for visa (bank balance/blocked account or loan sanction letter). Confirm with the lender whether they will provide a loan sanction letter acceptable for visa and whether they can transfer funds to a blocked account or university before visa or immediately after visa issuance.
12. Review the sanction letter carefully before signing
Check interest rate type (fixed vs floating), moratorium period, prepayment/foreclosure charges, processing fees, disbursement schedule, and security/margin rules. If your father is retired and you offered alternative security, confirm exactly what is liened and for how long.
13. Plan EMIs and exchange-rate exposure (for abroad loans)
If you borrow in INR but your tuition is in foreign currency, clarify how disbursement will happen (INR→foreign conversion fees, SWIFT charges). If you borrow in foreign currency from an international lender, plan how you will make repayments from India and factor forex risk into your budget.
14. Seek professional help if needed
An education-loan advisor or certified counselor can save time, point to the best lenders for retired-parent cases, and prepare a strong application. Use advisors selectively and verify their credibility.
FAQs: How to Apply for Education Loan If Your Father is Retired
Q. Can I still get an education loan if my father is retired?
A. Many banks and NBFCs will allow retired parents to be co-applicants if they receive a pension, or if there is an additional source of income such as rents, or fixed deposits or investment income. If your father has no income to show, you can have someone else as a co-applicant who is a working sibling or spouse or another blood relative.
Q. What documents do I need to show if my father is retired?
A. You will be asked to show your father’s proof of pension, such as a pension sanction letter, or pensioner ID, any recent bank statements reflecting pension income, Form 16 (if applicable) and any documentation you need to show for assets, like fixed deposits or ownership of property. All of these documents provide evidence of repayment ability, even if salary income is not available.
Q. What if my retired father has no regular income?
A. If your father has no current income, you can apply if you have a co-applicant that has the financial wherewithal, but does have regular income, such as a brother, sister, or a spouse, or uncle. Some lenders, primarily NBFCs and international loan sources do provide loans without co-applicants or collateral, pending that your overall academic profile and qualities are attractive.
Q. Will a pension be enough to get an education loan?
A. A pension can be acceptable if it is stable and within the lender’s minimum acceptable income. However, pension may result in a maximum amount of loan available, and even lower pensions may require additional guarantees and/or assets submitted to the lender.
Q. Do retired parents’ CIBIL scores matter in education loan approval?
A. The CIBIL score of the co-applicant does still matter. Even if the father is retired, the lenders will still check the co-applicant’s credit history. If the co-applicant’s score is low, adding a second financially powerful co-applicant can help.
Q. Can government schemes help students whose parents are retired?
A. Certain government schemes such as the Credit Guarantee Fund Scheme for Education Loans (CGFSEL) and interest subsidy schemes will assist students even when the parent is retired. These schemes address collateral and enhance access to loans.
Q. What should I do to improve my chances of getting a loan with a retired parent as co-applicant?
A. Apply early, have all documentation available, indicate your father’s pension/asset proof, add another working co-applicant, and apply to multiple lenders at once. A clean application package and strong academic admission letter will help increase loan approval time.