Growth in the education loan book of non-banking finance companies is expected to halve in the current financial year because of policy uncertainty in key markets like the US and stricter student visa rules in Canada.
CRISIL Ratings estimated education loan assets under management of NBCFs to grow 25% to around Rs80,000 crore in FY26. This compares to a growth of 48% in the previous fiscal and 77% in FY24.
In terms of loan disbursement, FY25 saw a growth of 8% compared to 50% growth a year ago.
“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% decline in total disbursements to that geography last fiscal,” said Malvika Bhotika, Director, Crisil Ratings.
Disbursements linked to even Canada, the second-largest market, fell as student visa rules became stricter, including increased financial requirements via proof of available funds, and cap on permits, she added.
The rating agency said that the share of US in overall education loan portfolio has come down to 50% as on March 31, 2025, from a peak of 53% a year ago.
The share of US is expected to go down further over next few years as lenders gravitate towards other geographies. Meanwhile, education loan disbursements linked to courses in the UK, Germany, Ireland and smaller countries have increased to almost 50% in FY25 from 25% a year ago as students opted for alternative destinations. Still, this will not fully offset the decline in US-linked disbursements, it said.
At the same time, NBFCs are also looking at domestic student loans and adjacencies such as school funding, loans for skill development, certification and coaching, CRISIL said.
Despite the global developments, NBFCs have maintained healthy asset quality so far. 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%, the rating agency added.
CRISIL Ratings estimated education loan assets under management of NBCFs to grow 25% to around Rs80,000 crore in FY26. This compares to a growth of 48% in the previous fiscal and 77% in FY24.
In terms of loan disbursement, FY25 saw a growth of 8% compared to 50% growth a year ago.
“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% decline in total disbursements to that geography last fiscal,” said Malvika Bhotika, Director, Crisil Ratings.
Disbursements linked to even Canada, the second-largest market, fell as student visa rules became stricter, including increased financial requirements via proof of available funds, and cap on permits, she added.
The rating agency said that the share of US in overall education loan portfolio has come down to 50% as on March 31, 2025, from a peak of 53% a year ago.
The share of US is expected to go down further over next few years as lenders gravitate towards other geographies. Meanwhile, education loan disbursements linked to courses in the UK, Germany, Ireland and smaller countries have increased to almost 50% in FY25 from 25% a year ago as students opted for alternative destinations. Still, this will not fully offset the decline in US-linked disbursements, it said.
At the same time, NBFCs are also looking at domestic student loans and adjacencies such as school funding, loans for skill development, certification and coaching, CRISIL said.
Despite the global developments, NBFCs have maintained healthy asset quality so far. 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%, the rating agency added.
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