Lenders shell out bigger foreign-education loans as costs rise

As living costs rise and colleges in countries like Germany, Australia, and Canada raise their fees, students are forced to borrow more

- Devina Sengupta & Shayan Ghosh

MUMBAI: Swelling costs of foreign education are beginning to reflect in the size of education loans, with non-bank lenders leading this market reporting an increase of 40-60% in ticket size over the last couple of years.

As living costs rise and colleges in countries like Germany, Australia, and Canada raise their fees, students are forced to borrow more. Rising competition to serve a growing market has also pushed non-banking financial companies (NBFCs) to increase the size of foreign-education loans. Discipline in loan repayments has also encouraged NBFCs to lend to this segment.

“There has been a 50-60% increase in [the size of] overall education loans for studying abroad over the last two years. Before the pandemic, the average loan ticket size was ₹18-20 lakh, and now it has become ₹24-26 lakh," said Amit Gainda, managing director, Avanse Financial Services Ltd, one of the largest NBFCs in the education sector.

Rising inflation, living costs, and a strengthening dollar, have boosted expenses for a Master’s degree by 8-10%, Gainda said.