London : The demand for education loans for overseas studies is witnessing a sharp rise, driven by escalating tuition fees, increasing living expenses, and evolving visa policies in major study destinations. According to industry estimates, education loan assets under management (AUM) of Indian Non-Banking Financial Companies (NBFCs) are expected to grow by around 20% during the current fiscal, highlighting the growing reliance of students on financial assistance to pursue higher education abroad.
The trend comes at a time when the cost of pursuing professional courses in India has risen significantly, prompting many students and their families to compare domestic education expenses with the potential long-term returns offered by international degrees.
Over 1.25 Million Indian Students Studying Abroad
According to the Ministry of External Affairs (MEA), approximately 1.25 million Indian students were pursuing higher education overseas as of January 2025. The growing number reflects India’s increasing appetite for international education, supported by expanding financing options and greater access to global universities.
With tuition fees, accommodation costs, and foreign exchange fluctuations pushing up the overall cost of studying abroad, education financing has become a critical factor in enabling students to achieve their academic aspirations.
Rising Domestic Education Costs Narrow the Gap
One of the major drivers behind the surge in overseas education loans is the increasing cost of professional education within India.
Courses in engineering, healthcare, pharmaceutical sciences, and other professional disciplines at leading private institutions now often cost amounts comparable to international degree programmes.
As a result, many families are evaluating overseas education as a more attractive investment, considering the potential for higher salaries, global career opportunities, and international exposure.
Industry experts note that if substantial borrowing is required regardless of the destination, many students prefer investing in qualifications that could provide stronger long-term career prospects.
Changing Lending Landscape
The education finance market has evolved significantly over the past decade.
Traditional banks and private lenders generally offer education loans of up to ₹3 crore for overseas studies. However, these loans typically require:
- A co-applicant
- Collateral such as residential property
- Fixed deposits or other financial security
Government-supported education loan schemes also generally require a co-applicant once the loan amount exceeds ₹75 lakh.
Meanwhile, specialised international education finance providers are increasingly offering alternative lending models based on a student’s academic profile, future earning potential, and career prospects, reducing dependence on collateral-based lending.
For example, Prodigy Finance offers loans of up to USD 220,000 for eligible international students without requiring collateral or a co-signer, instead assessing repayment capacity based on future income potential.
Growing Competition Among Education Consultants
The rapid expansion of international education has also encouraged the growth of education consultants, advisory firms, and digital application platforms.
These organisations assist students with:
- University admissions
- Visa documentation
- Scholarship guidance
- Loan applications
- Financial planning
While the growing ecosystem provides students with more choices and support, experts caution that increased competition has also created challenges.
Students are advised to carefully evaluate consultants before making financial commitments, as some agencies may charge substantial fees without offering comprehensive guidance.
Visa Uncertainty Influencing Student Decisions
Recent changes in visa policies across major study destinations have introduced additional uncertainty into the international admissions process.
According to Sonal Kapoor, Global Chief Business Officer at Prodigy Finance, the current admission cycle has become more challenging because many students are still awaiting visa approvals despite completing their university admission process.
She noted that the company has received thousands of requests from applicants seeking additional time while their visa applications remain under process.
According to Kapoor:
“This time of year always creates pressure. Despite students preparing well in advance, many are still waiting for their visa confirmation. We are receiving thousands of emails asking us to hold their application in place because their process is still ongoing. We understand that, and we are working with them.”
Students Diversifying Beyond the United States
Industry trends suggest that students are increasingly considering destinations beyond the traditional preference for the United States.
According to CRISIL Ratings, countries such as:
- United Kingdom
- Germany
- Ireland
are steadily gaining popularity as students diversify their study destinations amid evolving immigration and visa regulations.
Kapoor also pointed out that students unable to secure admission or visas for destinations such as the US or Australia still have opportunities to apply for universities in countries where admissions remain open.
She emphasised that many institutions in the United Kingdom and several other countries continue accepting applications for the Fall intake, allowing students to explore alternative options without waiting another academic year.
Affordability Challenges Continue to Grow
While access to education loans has improved, affordability remains a significant concern for many families.
Education loans today must cover:
- Higher tuition fees
- Inflation in living expenses
- Currency depreciation
- Travel and insurance costs
- Academic materials and accommodation
As a result, the average size of international education loans has increased considerably compared to previous years.
Experts caution students against excessive borrowing without carefully evaluating future employment prospects and repayment capacity.
Responsible Borrowing is Essential
Sonal Kapoor advised students and parents to carefully assess:
- The course they intend to pursue.
- The country and university they choose.
- The loan amount they require.
- The terms and conditions of the lender.
She particularly cautioned families from modest economic backgrounds against unnecessarily pledging valuable assets, noting that poorly planned borrowing decisions could create long-term financial challenges.
According to industry observers, selecting the right financing partner and making informed educational choices have become more important than ever as global education costs continue to rise.
Education Loans Becoming a Fast-Growing Lending Segment
The international education finance market is increasingly being viewed as one of the fastest-growing segments of consumer lending, supported by growing demand for overseas education and rising financing requirements.
As more students seek global career opportunities, lenders are expanding their products to provide flexible financing solutions that balance accessibility with responsible lending practices.
The continued growth of this sector is expected to play a vital role in enabling Indian students to access higher education opportunities around the world despite economic and regulatory challenges.
Key Highlights
- Education loan demand for overseas studies is projected to grow by around 20% during the current fiscal, according to CRISIL Ratings.
- The Ministry of External Affairs estimates that approximately 1.25 million Indian students were studying abroad as of January 2025.
- Rising costs of professional education in India are encouraging students to compare domestic degrees with international education opportunities.
- Traditional lenders generally provide loans of up to ₹3 crore, often requiring collateral and a co-applicant, while some specialised lenders offer collateral-free financing based on future earning potential.
- Growing visa uncertainties have prompted many students to reconsider study destinations, with the United Kingdom, Germany, and Ireland emerging as popular alternatives.
- Prodigy Finance reports receiving thousands of requests from students awaiting visa approvals before finalising their education loan applications.
- Experts advise students to borrow responsibly, carefully evaluate universities and courses, and avoid risking family assets without a clear repayment strategy.
Source: Industry insights shared by Prodigy Finance, data from the Ministry of External Affairs (MEA) and CRISIL Ratings, released in July 2026.
