CHENNAI: As colleges and universities reopen globally and governments ease travel restrictions, students are resuming plans for overseas study, resulting in a demand surge for education loans.
Education loan institutions are seeing a jump in outbound student enquiries. But banks are not seeing any such spike in their education loan book. According to HDFC Credila MD & CEO Arijit Sanyal, there is a 209% growth in overseas education loan applications in Q1FY22 over the first quarter of the previous year. "The growth is across geographies — the US, Canada, the UK and other European countries," he said.
Last month, the US embassy said that over 55,000 Indian students and exchange visitors are travelling to study in the US this year and it is "an all-time record". In the UK, a record number of 3,200 students from India have been accepted into university and higher education courses through the country's centralised application system in 2021, an increase of 19% over the previous year.
A fall in lending rates has helped. Rates are down by 50 basis points (100bps = 1 percentage point) during FY21, and now start at 9.5% for applications to premier schools overseas. A senior SBI executive described the growth as emergence of pent-up demand. Also, the ticket size for an average overseas education loan has increased to Rs 35 lakh in FY21 as compared to Rs 30 lakh in previous year.
Mayank Batheja, co-founder of fintech company Credenc, which has a book size of Rs 150 crore, said, "Demand has more than doubled in recent months. We see more traction from students who want to pursue higher education in the UK, Ireland, the EU and Singapore, as compared to the US. We also see a growing interest in Russia and the Czech Republic for the first time."
However, Germany, Australia and New Zealand have not officially communicated visa and travel guidelines for overseas students. Batheja said, "We are not very clear on how Germany will accept overseas students currently."
International education loan provider Prodigy Finance, which has a $1.5-billion education loan book, sees India as its fastest-growing market with a 60% increase in loans as of August this year. China, Brazil, Pakistan, Mexico and Peru are its other key markets. "There is a 10-15% increase in the average ticket size of loans from Rs 30 lakh, driven by a marginal increase in the tuition fee," said Mayank Sharma, India head for Prodigy Finance.
Source : The Times Of India