NBFCs had witnessed a 77 per cent jump in their education loan assets under management (AUM) in FY24, followed by a 48 per cent rise in FY25 to Rs 64,000 crore.
The US, which has traditionally accounted for a majority of NBFC education loans, saw its share drop to 50 per cent as on March 31, 2025, from 53 per cent the previous year. (Source: freepik)
The growth in education loan portfolios of non-banking finance companies (NBFCs) is expected to slow sharply this fiscal, with CRISIL Ratings projecting a moderation in disbursements amid regulatory and visa-related hurdles in the US, a key overseas market.
NBFCs had witnessed a 77 per cent jump in their education loan assets under management (AUM) in FY24, followed by a 48 per cent rise in FY25 to Rs 64,000 crore. However, FY26 growth is expected to halve to around 25%, taking AUM to approximately Rs 80,000 crore.
Also read: General Insurers see robust 9% rise in Q1 premiums; Shriram, SBI Among top Gainers
“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. This has led to a ~30 per cent decline in total disbursements to that geography last fiscal,” said Malvika Bhotika, Director, CRISIL Ratings.
The US, which has traditionally accounted for a majority of NBFC education loans, saw its share drop to 50 per cent as on March 31, 2025, from 53 per cent the previous year. Canada too saw a decline in disbursements due to stricter visa requirements, including enhanced proof-of-funds and caps on permits. As a result, total education loan disbursements grew by just 8 per cent in FY25, compared with nearly 50 per cent in FY24.
In response, NBFCs are widening their lens. Loans to students heading to the UK, Germany, Ireland and other alternative markets doubled last fiscal, pushing the share of such geographies in total disbursements to nearly 50 per cent, up from 25 per cent a year earlier.
NBFCs are also tapping adjacencies, including loans for domestic education, skill development, and coaching. While these segments offer diversification, their lower ticket sizes mean they are unlikely to materially impact the portfolio in the near term.
Also read: Necktie-nomics: SBI’s Colourful Take on RBI Governor's Tie Colour for Policy Clues
However, despite global uncertainties, asset quality remains healthy. “Gross NPAs stood low at 0.1% as on March 31, 2025. And even after adjusting for the moratorium, gross NPAs were well under control at ~0.7%,” said Sonica Gupta, Associate Director, CRISIL Ratings.
However, with around 15 per cent of the portfolio set to exit moratorium this year, asset quality will remain a key monitorable, according to Gupta.
By continuing you agree to our Privacy Policy & Terms & Conditions
