Education loan can be denied if parent as co-borrower has poor credit score, says Kerala HC
The Kerala High Court ruled that banks may deny education loans if the co-borrowing parent has a poor credit score. The court emphasized that banks must adhere to their internal lending guidelines and that education loans are not an absolute right.
Why it matters
Clarifies the legal standing of students seeking financial aid and the limitations of government-backed credit guarantee schemes.
The Kerala High Court has ruled that an education loan can be denied to a student if the parent, as a co-borrower, has a poor credit score. However, the application could be considered if there is an eligible co-borrower with a sufficient credit score.
The Single Bench of Justice M.A. Abdul Hakhim was considering a batch of petitions by students challenging the refusal of banks to grant educational loans on the ground that the parent who was the co-borrower in their loan had poor credit scores. The students sought a direction to the respective banks to grant the loans, ignoring the credit scores of their parents.
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