India’s education loan market, especially loans tied to U.S. universities, is facing a rough patch. With 50–75% of education loan disbursements directed toward students pursuing higher studies in the U.S., lenders are now dealing with the collateral damage of America’s tightening immigration policies under the Trump administration.
Loan Approvals Get Tougher for US-bound Students
Lenders have begun applying stricter evaluation criteria for students seeking loans to study in the U.S. Priority is now being given to applicants with strong academic credentials and those admitted to top-ranked universities. This cautious approach stems from growing fears about students’ ability to secure employment and repay loans, especially with the possibility of recession and hiring slowdowns in the U.S.
Major Players Brace for the Downturn
Companies like InCred Finance report a 50% decline in inquiries and applications for U.S.-focused education loans. “If programs like OPT and STEM OPT are curtailed, we expect demand to fall drastically,” said Nilanjan Chattoraj of InCred. Other major lenders like Credila and Avanse Financial Services are also witnessing similar trends.
Regulatory Flexibility & Risk Mitigation
To navigate the uncertainty, lenders are turning to regulatory frameworks that allow restructuring of existing loans. The Reserve Bank of India (RBI) permits limited flexibility in such cases. While currently, only 1–2% of accounts need restructuring, this number is expected to rise to 5% as more students face study or job disruptions.
Shift in Student Preferences
While loans for U.S. education are still being sanctioned, the overall interest is waning. “Students are looking for transfer options and backup plans,” said Akshay Chaturvedi of Leverage. Countries like the UK, Australia, and Canada are seeing increased interest, potentially cushioning the blow to Indian lenders.
Conclusion: A Market in Transition
With U.S. visa rejections on the rise and student enrollments dropping—India saw a 28% decline from March 2024 to 2025—lenders must adapt quickly. The focus is now on managing risk, exploring new geographies, and providing support to existing borrowers amid a shifting global education landscape.
