Education loans are an excellent way to fund students' education abroad and help them fulfill their academic dreams. When applying for an education loan, lenders not only review the current admission details but also verify the student's academic continuity.

If there exists a gap of one year or more in the journey of their education, it significantly affects the chances of getting an Education Loan. However, if students can demonstrate strong and valid reasons for the education gap, they can avoid the negative impacts on securing an Education Loan. This can be done by presenting a Gap Certificate.

What is a Gap Certificate?

A gap certificate is a document that explains the break in a student's education or employment. It is a legal declaration stating the valid reason for the gap. This certificate is often required while continuing studies after a gap. Lenders ask for a gap certificate for Education Loans if a student has an educational gap of one year or more than one year.

What is Considered a Gap While Applying for an Education Loan?

If a student has a gap of one year or more in their academic journey, such as

  • From the 10th standard to the Intermediate.
  • In between your 2 years of Intermediate education.
  • From Intermediate to Degree.
  • From a Degree to a PG. 
  • After your last completed course.

It is considered an education gap and is checked during the loan process while evaluating the eligibility of the student.

What could be the Reasons for the Gap in students' Academic journey?

Generally, students have various reasons for the gap, such as

  • Personal or family emergencies or responsibilities.
  • Health issues.
  • Taking a break after school or college.
  • Preparing for exams (NEET, GRE, GMAT, JEE, etc.)
  • Employment.

Why Do Lenders Check the Gap Years for Education Loans?

Lenders consider this parameter while processing an education loan to check the intent, seriousness, and the ability of the student to complete the course. Because the education gap raises a lot of questions about the student, including their repayment capacity and the risk related to it.

To ensure that the student is dedicated and certain about future commitments, lenders check this parameter.

How a Study Gap Can Impact Your Education Loan Approval

The education gap can significantly affect the chances of getting an education loan. Below is the breakdown of the effects of the education gap on an education loan.

  • Eligibility Risk: Some lenders have specific criteria related to academic performance and continuity of education. If a student cannot meet these criteria, it may affect the loan eligibility. They check the loan application and student profile closely when there is a gap in education or any backlogs, which may potentially lead to loan rejection.
  • Impact on Loan Terms: Lenders may offer a lesser loan amount than the required amount. An education gap may raise doubts about the commitment and repayment capacity of the student. They even offer the loan at a higher interest rate if the student does not have a strong academic record or a gap.
  • Repayment Concerns: A lack of consistency in academic performance and backlogs can raise concerns about the future earning potential of the student. Which is again a risk-concerned factor for the lender, eventually affecting the loan eligibility of the student.
  • Collateral Requirement: Considering the above factors, lenders can even ask for collateral to reduce the risk associated with the loan repayment. They can impose strict rules like the involvement of collateral, citing the academic record, or the educational gap.

How to get a Gap Certificate?

  • To get a gap certificate, students have to prepare an affidavit on non-judicial stamp paper, clearly explaining the reason and the duration of the gap or break.
  • Students have to sign in the presence of a licensed notary, who will then notarize the document, to make it legally valid.

Documents required to get a Gap Certificate for an Education Loan

Below are the documents required to get a gap certificate

  • Identity proof- Aadhaar card, PAN card, etc.
  • Admit card from the university.
  • Last academic mark sheet or certificate
  • Most importantly, a supporting document explaining the gap. E.g., Work experience letter, Medical reports, etc.

Conclusion

In this blog, we have learnt how an education gap can impact your chances of getting an education loan. In detail, we have also discussed the reasons for the gap, how a gap certificate can enhance the eligibility of the applicant. We have also uncovered how to get a gap certificate and the documents required to get the same.

However, to check your eligibility, connect with us today to get the best advice in the education loan ecosystem and enhance the chances of your loan approval. At WeMakeScholars, we have a dedicated and experienced financial officer who analyzes your profile and suggests the best fit.