Education Loan Growth For NBFCs At 20 Per Cent Despite Decline In US Demand, Says Crisil Report

The assets under management (AUM) of education loans of non-banking financial companies (NBFCs) are expected to grow by around 20 per cent this fiscal, according to a Crisil Ratings report released on July 14, 2026. The report said that a broader mix of study destinations is helping lenders maintain growth, even as demand for education loans for study in the US has weakened.

Diversification Helps Sustain Growth

The report said that asset quality has remained strong so far and is expected to stay stable. This has come despite a growing share of education loans moving from the moratorium phase into the repayment stage.

The moratorium period for the NBFC education loan is typically equal to the tenure of the course duration. Generally, borrowers start their equated monthly instalments (EMIs) once they have finished their education and obtained a job. The report said that since a large share of borrowers still remain under the moratorium period, the portfolio’s performance across a full repayment cycle has not yet been completely tested.

Crisil Ratings said that a large part of the overall education loan portfolio is still under the contractual moratorium period. As a result, the long-term repayment performance of these loans will become clearer only after more borrowers enter the repayment cycle.

US Policy Uncertainty Affects Loan Demand

The report said that policy and regulatory uncertainties in the US have impacted student interest over the past two years. Concerns over visa rules and work opportunities after study under the Optional Practical Training (OPT) programme have led many students to consider other countries for higher education. It added that lenders have also adopted a more cautious approach towards financing students planning to study in the US.

Lenders have also adopted a more selective approach while financing students planning to study in the US because of the evolving policy and employment environment.

This shift was reflected in loan disbursement trends during the last financial year. Education loan disbursements linked to the US fell 57 per cent, while disbursements for students heading to the UK increased 24 per cent.

According to the report, countries, such as the UK, Germany and Ireland have attracted greater interest from both students and lenders due to relatively stable visa policies, favourable post-study work opportunities and growing acceptance among Indian students.

Shift In Portfolio Mix

The shift in student preferences has also changed the composition of NBFC education loan portfolios. As on March 31, 2026, the US accounted for 43 per cent of the overall education loan assets under management (AUM), down from 54 per cent a year earlier.

UK has accounted for 29 per cent of the portfolio, making it the second-largest study destination financed by NBFCs. Germany, Ireland and other countries also increased their share during the year. The report said that the broader mix of destinations reflected greater diversification in education loan portfolios.