Education loan growth is set to halve this fiscal (FY26) because disbursements for the US decelerate following a raft of policy changes there.
Amid growing uncertainties on visa approvals for students aspiring to study in the United States (US) and the Donald Trump administration's stance on education policies for international students, most non-banking financial companies (NBFCs) giving educational loans are reaching out to universities in countries such as Ireland, Australia, New Zealand, and the United Kingdom (UK) for tieups, said NBFC officials Business Standard spoke to.
The move comes amid a significant slowdown expected in growth in education loans this financial year.
NBFCs, a major player in giving such loans, saw a growth rate of 48 per cent in 2024-25, on the back of 77 per cent growth in 2023-24, according to the data compiled by rating agency Crisil.
In May, the Trump administration told US embassies around the world to stop scheduling appointments for student visas while it prepared to expand social-media vetting of such applicants.
An official memo by the Trump administration said such vetting would be stepped up for student and foreign-exchange visas, which would have "significant implications" for embassies and consulates.
This comes during a wide-ranging crackdown by the Trump administration on some of America's most reputed universities.
Following this, the US embassy in New Delhi advised applicants for visas in the F, M, and J categories to make their social-media accounts public to facilitate the screening process. (The F visa is for academic studies, the M category is for vocational or non-academic programmes, and the J visa is for exchange programmes that include study or research.)
"Students themselves are not opting for US universities because they do not anticipate uncertainties around visa approvals ending soon.
"Further, they are seeing that other nations such as Ireland, Australia, and some other smaller nations have better job prospects after study," said an executive associated with an NBFC focused on education loans.
Another NBFC official said: "Ireland is becoming one of the preferred destinations because its visa rules are simpler, job opportunities are better, and the cost of living and other expenses are way lower than in countries like the US or the UK.
"Considering present scenarios, we are planning to tie up with some of the universities in Ireland not just in Dublin but in other places as well.
"Currently, we have more than 1,500 tieups with foreign universities, mostly in the US, the UK, and Germany."
According to Crisil, for NBFCs, education loans have been the fastest-growing asset class, clocking over 50 per cent growth in assets under management (AUM) over the past few years. Such assets of NBFCs grew 48 per cent to Rs 64,000 crore in FY25.
In FY24, they increased at an even faster pace of 77 per cent.
However, that pace is set to halve this fiscal (FY26) because disbursements for the US decelerate following a raft of policy changes there.
According to the rating agency, these are likely to grow 25 per cent this year to Rs 80,000 crore.
The share of the US in the portfolio came down to 50 per cent as of March 2025 from a peak of 53 per cent as of March 2024, and is expected to go down further over the next few years as lenders concentrate on other geographies, Crisil said in its report, adding that to offset these headwinds, NBFCs had sharpened their focus on other geographies, with disbursements linked to courses in the UK, Germany, Ireland and smaller countries having doubled as students opted for alternative destinations.
"The share of such geographies in total disbursements rose to almost 50 per cent in FY25 from 25 per cent a year ago.
"But this will not fully offset the decline in US-linked disbursements," the report added.
According to an executive with a firm advising students on education loans, "while there is no issue with funding from NBFCs for now, the number of students applying for US-based institutions declined this year.
"Part of the flow has been diverted to the UK and Ireland, which are more affordable than the US."
He added there was no change in norms for US education.
Only getting a loan will be difficult for courses in institutions that are not on the ranking list.
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