NBFCs’ education loan growth to slow down by around 50% due to US headwinds: Crisil

The rating agency Crisil has said that the growth of education loans for Indian non-banking finance companies (NBFCs) is expected to slow down by 50% in FY26, owing to policy uncertainty in the United States. Further, it added that the measures, including reduced visa appointments and the proposed elimination of Optional Practical Training norms, have reduced newer loan originations.

This has led to a around 30% decline in total disbursements to that geography last fiscal. Besides, disbursements linked to Canada, which is the second-largest market, have declined as student visa rules turned stricter, including increased financial requirements via proof of available funds, and a cap on permits. Therefore, the overall education loan disbursements in fiscal 2025 were up by only around 8% as compared to around 50% in fiscal 2024.

In the last fiscal, the education loan AUM of NBFCs grew 48% to ₹64,000 crore, following an even faster 77% growth in fiscal 2024. Meanwhile, Crisil noted that the growth in education loan AUM of NBFCs has been moderating to around 25% to around ₹80,000 crore. It added that the high growth in the past few years and estimated at around 15% of the portfolio coming out of contractual moratorium this fiscal, poses some asset quality risks.

However, offsetting these headwinds, the NBFCs are diversifying into new geographies and product adjacencies. Crisil highlighted that the disbursements linked to courses in the UK, Germany, Ireland and smaller countries have doubled in the past fiscal year as students opted for alternative destinations. Moreover, NBFCs are also looking at domestic student loans and adjacencies such as school funding, loans for skill development, certification and coaching.