Mumbai :With concerns around post-study work opportunities under the Optional Practical Training (OPT) programme and visa-related challenges in the US, lenders are diversifying by financing students pursuing higher education in other geographies such as UK, Ireland and Germany.
According to a study by Crisil Ltd, education loan portfolio composition has evolved meaningfully over the last fiscal. The US share of overall education-loan assets under management fell to 43 per cent as of March 31, 2026, from around 54 per cent a year earlier. The UK accounted for approximately 29 per cent of the portfolio consolidating its position as the second-largest destination, while Germany, Ireland and other countries continued to increase their contribution.
These geographies benefited from relatively stable visa regimes, favourable post-study work opportunities and growing acceptance among Indian students. They also attracted greater lender interest as portfolios became more diversified.
The US-linked loan disbursements declined a sharp 57 per cent in 2025-2026, while those to the UK rose 24 per cent, with Germany, Ireland, and other destinations also continuing to gain traction.
For non-banking finance companies that largely cater to the education loan market, growth in education-loan assets under management (AUM) is projected to stay steady at around 20 per cent to Rs 94000 crore this fiscal with increasing diversification across study destinations offsetting the impact on demand for US-focused education from policy uncertainties said Crisil Ltd.
Asset quality has remained robust so far and is expected to stay stable, even as the share of the portfolio transitioning from moratorium to repayment has increased.
NBFCs typically structure education loans with a moratorium period aligned to course tenure. Repayment obligations, in the form of equated monthly instalments (EMIs), are calibrated to borrowers’ earning potential and which typically commence when the course is completed and the student gets employed. Nevertheless, with a substantial portion of the book still under contractual moratorium, the portfolio’s performance over a broader repayment cycle remains to be fully tested said the rating agency.
Reported asset quality indicators continue to be strong, with overall 90+ days past due (dpd) at ~0.2 per cent as of March 31, 2026. Although loans under contractual moratorium continue to account for a significant share of the portfolio, their proportion has declined to around 73 per cent from 85 per cent a year earlier. In addition, strong prepayments have supported portfolio resilience despite the long contractual tenor of these loans.
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