India’s study-abroad lenders are forced to choose their plan B. It's India

**Rachel Varghese** (0:01)
Amit is a 21-year-old computer science student from Mumbai who knew that he wanted to do a master's in cybersecurity. After weighing dozens of options, he picked a university in Canada. But there was a problem. The university needed him to have a four-year undergraduate degree. Amit Dhoom, like most of us, happened to have only a three-year bachelor's in computer applications. Still, he found a workaround. He could take a one-year cybersecurity certificate from a Canadian college with enough credits to close the gap. All he needed was some money to actually pay for it. But that got sorted out pretty quickly as well, because he had a friend who introduced him to their friend at Credila, an NBFC or non-banking financial company that calls itself an education loan specialist. After the introduction, Amit had secured 20 lakh rupees loan within days. Everything was good to go. But then disaster struck, because just before his flight, the Canadian government de-recognized the college he intended to attend. And that was that. Amit's plan had fallen apart and he was left to pick up the pieces. Meanwhile, Credila was left wondering how it would recover its loan from him.
The thing is, the de-recognition of the college was not some one of random event. It was part of a bigger crackdown on institutions that lower foreign students with less rigorous admission norms. The country, in general, is trying to limit the intake of foreign students and is also tightening visa and immigration rules to make sure that that happens. The US and the UK are also setting up similar barriers for entry. Which means, for students like Amit, there are fewer opportunities now to study and eventually work abroad. And for NBFCs focused on lending for education, it means a business model that is starting to crack. The loan books of companies like Credila, Oxalo and Avance, three of the biggest names in education lending are dominated overwhelmingly by students headed to the US, Canada and Britain. Nearly 80% of Credila's loans are held by such students, 86% for Oxalo and 92% for Avance. And for them, this has turned out to be a successful bet. Or well, until recently. Because between FY22 and FY24, education loans were the best performing category within NBFCs. In fact, the profits all companies have made are really impressive. Credila made a net profit of over 900 crore rupees in FY25 on a revenue of almost 5,000 crore rupees. Avance made 500 crore rupees on a revenue of more than 2,000 crore rupees.
But now, those same cushy, comfortable margins are under pressure. Sunit Singh Kochhar, the founder of Fateh Education, told The Ken that study abroad applications are down by 25-30%, with the UK and Ireland especially seeing a decrease of 30-40% by January this year, as compared to 2024
Of course, fewer students going abroad means fewer loans. And it's already showing in the books for these NBFCs. For example, Credila's disbursements grew by almost 80% back in FY24. But it was under 9% in FY25. Avance went from a 100% plus growth in FY23 to again just 9% in FY25.
And this disruption has been serious. Enough that these NBFCs are rethinking their short-term and long-term goals. For example, Avance dropped its IPO plan in December, and Credila, which had filed for its own IPO in June 2025, put it on pause. To survive, the NBFCs are turning to India's domestic market instead. But that pivot has always come with its own risks.
Welcome to Daybreak, a business podcast from The Ken. I'm your host, Rachel Varghese, and every day of the week, my co-host Snigdha Sharma and I will bring you one new story that is worth understanding and worth your time. Today is Monday, the 3rd of August.
So far, overseas education lending has been a really solid business. In fact, Avanza's Gross Stage III NPA or non-performing assets ratio for these loans was just 0.3% as of last September. Stage III, by the way, is reached when a borrower fails to make a payment for over 90 days, which means very few borrowers default on these loans.
If you compare that to nationalized banks, you will see why this is a big deal. Education loans have the highest default rate of any personal loan category for them.
In fact, the latest RBI Financial Stability Report shows that it accounts for close to 4% of total NBAs. That's higher than categories like credit cards, auto loans or even housing loans, which all account for less than 2%.
So why is there such a big gap? Well, it's partly because RBI guidelines limit unsecured education loans at typically about 7.5 lakh rupees. Unless you're a student that's heading for an Ivy League, in which case you could get a loan of up to 50 lakh rupees. But that means for everyone who's not going to a Harvard or Columbia, what's available is only about a quarter of what it costs to stay in the US, Canada or Britain. On top of that, banks are also slow to disburse funds.