Top 5 Things to Consider Before Applying for a Student Loan

Carmina Bayombong

Picture this: it’s your last year in college and your school enrollment’s coming up.

Your family’s a couple of thousand pesos short. They say enrollment is still in the picture, but you’d have to work a part-time job to make money for food and your daily commute.

A part-time job means less time studying and working on your thesis — less time in school means a higher chance of missing out on graduation.

And with your parents working two jobs at a time, delaying graduation for another term is out of the question.

You start to look for ways to come up with the money for your daily stipend. After a lot of Googling and searching through Facebook, you come across an option: Student Loans.

With many loan options available in the Philippines, you think to yourself: how do I apply for one? What do I need to prepare? And how soon can I afford to pay for it?

Getting a student loan is an easy way to bridge the gap between your last year in college and graduation. But just like every other loan, you’ll have to consider a variety of factors to make sure you’re eligible to get one — and if you’ll be able to pay them on time. And typically, applying for one can involve lots of waiting and paperwork.

With that in mind, what are the key things to consider before applying for a student loan in the Philippines?

1. Your Needs: What costs can a student loan cover?

Before applying for a student loan, you need to consider how much you actually need to borrow.

The reason why you should have a figure in mind is that each lender and type of loan has a limit called “maximum financial aid”.

When weighing between options, this should be one of the first factors to consider. Some student loan programs can only offer as low as ₱15,000, while some startups like InvestEd offer as high as P100,000.

2. Application Period: How long will the process take?

Another important factor to consider is the time required to process the loan.

Most loans take several weeks to process, especially when they have to go through manual, handwritten, paper applications.

You can’t typically expect your loan application to be processed within just a couple of days — this could be a problem if you decide to take out a loan days before enrollment fees are due.

Fortunately, some organizations have taken advantage of online applications — InvestEd has an efficient, entirely online set-up that allows applications to be processed as early as three days.

Plan ahead and schedule applications accordingly. You should also keep in mind the processing time it takes for other required documents from your end (e.g. grade records, for example, may take weeks before being released).

3. Repayment: When will I need to pay back the loan?

An important factor to consider while searching where to loan is your repayment schedule. How soon should you start paying for your loan?

Most lenders require borrowers to immediately start repayment over the next couple of months or years. This could be a problem when you or your family is strapped for cash.

Fortunately, some lenders allow students to pay after graduating from college or taking the board exams, just like InvestEd!

4. Interest: How much will I need to pay back?

Circling back to interest rates, these figures differ greatly with every lender, with some private organizations charging as much as 30% per month.

On the other hand, student-friendly lenders like InvestEd only charge interest as low as only 2.25%.

5. Requirements: What do I need to bring?

Student Loan requirements vary significantly with every lender. Some ask for your parents’ income statement, while others ask for just a simple ID.

In any case, the basic ones you need to get a hold of are:
  • The lender’s KYC (Know Your Customer) document such as an Application Form.
This is a must for any application process.
  • Valid IDs.
A government ID such as your passport or Postal ID is sufficient.

Bringing a school ID is a good idea as well since it supports the next requirement on the list.
  • Proof of enrollment.
A government ID such as your passport or Postal ID is sufficient.

Bringing a school ID is a good idea as well since it supports the next requirement on the list.
  • Proof of residency.
Seeing “electricity/water/internet bill” may look like an unusual student loan requirement, but it verifies that the loan applicant is a bonafide resident of the Philippines.
  • Other documents.
Lenders may still ask for additional documents such as proof of their parents’ income, school records, or ID pictures. It’s best to prepare everything you can to make sure your application goes fast and smoothly.

Student Loans in the Philippines

Ultimately, all lenders need to ensure that what they lend out must be returned.

Most traditional lending institutions actually reject applications as soon as a student declares that they or their parents are unemployed, but that isn’t the case for all financial lenders.

The right to a proper college education should not be limited to only a handful of people — students should not give up on their future because of just a couple roadblocks.

Options such as government-financed loans, bank loans, and informal loans from family or friends exist — take the time to consider the pros and cons of each to make an informed decision.

Bonus: Choosing a loan with the best benefits

InvestEd goes out of their way to help provide opportunities for the youth.

Aside from a quick and student-friendly process, they provide a coaching program that trains students to be prepared for employment success.

As a result, Investees find employment as fast as 27 days after graduation, and some even finish paying back their loan early.

College education should be accessible to all — since it’s the best investment anyone can give themselves for a brighter future.

Learn more about InvestEd and student loan applications here.