Non-Banking Finance Companies (NBFCs) are flipping through their education loan playbooks, AND GUESS WHAT, it’s not all A+ grades anymore. Once the top scorer in their lending portfolio, education loans are now hitting the brakes after a dream run. Did you know NBFCs saw their education loan assets under management (AUM) leap by a staggering 77% in FY24 and then climb another 48% to ₹64,000 crore in FY25? But here’s the catch: Crisil Ratings now pegs the growth for this fiscal at just 25%, with AUM expected to reach ₹80,000 crore. Wondering what’s cooling off this hot streak? A mix of policy speed bumps, fewer visa slots, and tighter norms in major education destinations like the US and Canada are making things tough. As Malvika Bhotika, Director, Crisil Ratings, puts it, “Policy uncertainties in the US, combined with measures including reduced visa appointments and the proposed elimination of Optional Practical Training norms, have culled newer loan originations.” Thinking of studying abroad or lending in that space? Time to take notes.
Education Loan Growth Takes A U-Turn
NBFCs are watching their once red-hot education loan portfolios cool off. While education loans remained the fastest-growing asset class for NBFCs, fiscal 2025 has painted a more sobering picture. Disbursements grew just 8%, a sharp slide from the 50% growth seen the previous year. US-bound students bore the brunt of this reversal. According to Crisil, disbursements to the US dropped by 30% last fiscal. Canada didn’t fare much better. “Disbursements linked to even Canada, the second-largest market, fell as student visa rules turned stricter, including increased financial requirements via proof of available funds, and cap on permits,” added Bhotika.
NBFCs Diversify Loan Play Into New Geographies
Faced with student visa crackdowns in their two largest markets, NBFCs switched gears. Crisil noted that disbursements for education in the UK, Germany, Ireland, and other smaller countries doubled over the past fiscal. Students eager to pursue international education found refuge in these destinations. As a result, the share of these countries in total education loan disbursements climbed from 25% in fiscal 2024 to nearly 50% in fiscal 2025. However, Crisil clarified this shift won’t fully offset the decline in US-linked disbursements. The US, which once made up 53% of NBFC education loan portfolios, now holds a reduced share of 50%.
NBFCs Explore Domestic Education Loan Avenues
To keep the education loan engine humming, NBFCs are now targeting domestic student lending and adjacent categories. These include loans for school education, upskilling programs, certifications, and coaching classes. While these products carry lower ticket sizes, they offer new growth pockets. Crisil remarked, “Given the lower ticket sizes of such loans, their share in the overall portfolio is unlikely to be material, but they may lend some stability in times of global uncertainties.” NBFCs continue to maintain stable non-performing assets (NPAs), but Crisil flagged asset quality as “monitorable,” especially as 85% of AUM remains under contractual principal moratorium.
(With Inputs From ANI)
Also Read: FATF Reveals Decentralized Terror Networks, State-Sponsored Terrorism Trends
Aishwarya is a journalism graduate with over three years of experience thriving in the buzzing corporate media world. She’s got a knack for decoding business news, tracking the twists and turns of the stock market, covering the masala of the entertainment world, and sometimes her stories come with just the right sprinkle of political commentary. She has worked with several organizations, interned at ZEE and gained professional skills at TV9 and News24, And now is learning and writing at NewsX, she’s no stranger to the newsroom hustle. Her storytelling style is fast-paced, creative, and perfectly tailored to connect with both the platform and its audience. Moto: Approaching every story from the reader’s point of view, backing up her insights with solid facts.
Always bold with her opinions, she also never misses the chance to weave in expert voices, keeping things balanced and insightful. In short, Aishwarya brings a fresh, sharp, and fact-driven voice to every story she touches.
