New Delhi
Non-banking finance companies (NBFCs) have seen strong growth in education loans, with assets under management (AUM) rising by over 50% in recent years. However, according to Crisil Ratings, this growth is expected to slow down significantly in the current fiscal year due to changing U.S. policies that are discouraging Indian students from studying there.
In FY24, NBFC education loan AUM surged by 77%, followed by a 48% increase in FY25 to ₹64,000 crore. But in FY26, growth is projected to moderate to around 25%, with AUM likely reaching ₹80,000 crore. The slowdown is largely due to a 30% drop in loans to the U.S. last year. This decline is attributed to reduced visa appointments and proposed restrictions on Optional Practical Training (OPT) programs. Canada, the second-largest destination, also saw a dip in disbursements due to stricter visa rules and financial requirements.
In response, NBFCs are shifting their focus to new regions like the UK, Germany, and Ireland. Disbursements to these alternative destinations doubled in FY25, and their share in total loans rose to nearly 50%, up from 25% the previous year. Still, this shift isn’t expected to fully offset the drop in U.S.-linked loans.
Crisil noted that NBFCs are also exploring domestic education loans and adjacent sectors such as school financing, skill development, and coaching. While these loans have lower ticket sizes and may not contribute significantly to the total portfolio, they could offer stability during uncertain global conditions. Crisil also cautioned that asset quality should be closely monitored, as 85% of education loans are still under moratorium and global risks remain.