How H-1B visa fee hike impacts India's education loan market
What's the story
The recent hike in H-1B visa application fees by the United States government has sent shockwaves through India's overseas education loan market. Industry insiders told Moneycontrol that demand for such loans has plummeted for the Fall 2025 academic season compared to Fall 2024. Bankers have blamed the decline on the US's policy environment under President Donald Trump, a staunch critic of the H-1B program, a major pathway for international students to enter the American job market.
Market shift
No significant shift to other countries
Despite the decline, there has been no significant shift in demand to other countries. The US continues to be India's largest market for overseas education loans. However, uncertainty around post-study work opportunities is making families rethink their plans. This comes after a period of rapid growth where the education loan business had seen double-digit growth since 2018, driven by India's aspirational middle class and English-speaking student population.
Market slowdown
Regional disparities in education loan outstanding
The slowdown in demand is especially evident in India's western and northern regions. According to Reserve Bank of India (RBI) data, education loan outstanding in these regions grew at a slower pace between 2016 and 2024. The southern region remains the largest contributor to outstanding education loans, with Tamil Nadu leading the way. Despite this, growth has already slowed down for lenders like Credila Financial Services and Avanse Financial Services.
Worry
Slowdown in demand
The slowdown in demand is especially evident in India's western and northern regions. According to Reserve Bank of India (RBI) data, education loan outstanding in these regions grew at a slower pace between 2016 and 2024. The southern region remains the largest contributor to outstanding education loans, with Tamil Nadu leading the way. Despite this, growth has already slowed down for the education loan market, affecting lenders like Credila Financial Services and Avanse Financial Services.
NBFC challenges
Education loans as a growth driver for NBFCs
For education-focused non-banking financial companies (NBFCs) like Credila and Avanse, the risks are sharper. Both have built their businesses on financing overseas studies, particularly the master's programs in STEM and management. Credila disbursed over ₹15,000 crore in FY25 to more than six lakh students, while Avanse has expanded aggressively in Tier 2 and Tier 3 cities to tap aspirational demand. Together, these NBFCs increased their share of the education loan market from 11% in 2016 to nearly 45% by 2024.