IGI Logo

Crisil Ratings in its latest report has said that education loans, primarily those to fund courses overseas, will continue to be among the fastest-growing segments for non-banking financial companies (NBFCs) because of rising demand for higher education. Their assets under management (AUM) is expected to grow at a healthy clip of 40-45 per cent to cross Rs 60,000 crore this fiscal.

It stated after robust growth of over 80 per cent and 70 per cent in fiscals 2023 and 2024, respectively, NBFCs’ education loan assets under management (AUM) rose to Rs 43,000 crore as on March 31, 2024. On the asset quality front, it said metrics should remain stable despite country-specific concerns.

Ajit Velonie, Senior Director, CRISIL Ratings, said ‘The number of Indian students studying abroad is estimated to have doubled in the past five years to around 13.4 lakh as of last fiscal. Only a tenth are being funded by these NBFCs, and even including education loans by banks, the financed quantum is not much higher. What that indicates is that a large portion of overseas education is being funded through alternative means - informal financing, self-funding, or perhaps other forms of loans’.

He added ‘That shows education loan companies have significant headroom for growth. Rising ticket sizes because of ascending tuition fees, inflation and living expenses are also tailwinds. Strong micro-market intelligence and fast turnaround times have allowed NBFCs to carve out a niche in the education loans space. Their specialised business model–backed by strong understanding of relevant geographies, courses, universities, tenures and profiles of students and their families–affords customisation of products, enabling better assessment of employability and risk-adjusted pricing.’