Indian Students Turn Away From US Education Loans as UK, Europe Gain

Indian students in American universities.

Indian students are increasingly reconsidering the United States as the default destination for overseas education, with a sharp fall in U.S.-linked education loans providing fresh evidence that visa uncertainty, post-study work concerns and employment risks are reshaping where young Indians choose to study.

Education-loan disbursements by Indian non-banking finance companies for students headed to the United States plunged 57% in fiscal 2025-26, according to Crisil Ratings. In contrast, disbursements linked to the United Kingdom rose 24%, while Germany, Ireland and other destinations continued to gain ground.

The shift is striking because the United States has traditionally generated some of the largest education loans in India, reflecting high tuition fees and living costs at American universities.

By March 31, 2026, the U.S. accounted for about 43% of NBFC education-loan assets, down from 54% a year earlier. The UK’s share climbed to about 29%, while the combined share of other destinations also increased. The geographical breakdown in the chart on page 2 of Crisil’s report illustrates how quickly lenders’ overseas portfolios are becoming less U.S.-dependent.

The numbers do not mean Indians have stopped borrowing for education. In fact, NBFC education-loan assets grew 21% to about ₹78,000 crore by March 2026 and are projected by Crisil to reach roughly ₹94,000 crore by March 2027, an increase of around 20%.

Instead, the data points to a relocation of demand: students who might once have automatically considered an American degree are increasingly evaluating alternatives.

Crisil said U.S. policy and regulatory uncertainty, including concerns surrounding student visas, Optional Practical Training and post-study employment opportunities, has weighed on student sentiment and new loan originations. Lenders themselves have also become more selective about financing U.S.-bound students because their ability to repay large education loans often depends heavily on securing employment after graduation.

There are signs beyond the lending industry that the shift is affecting the student pipeline.

Indian first-year undergraduate applicants using the Common Application declined about 15% in the 2025-26 admissions cycle, to 14,424, according to its latest end-of-season data. Common App covers more than 1,100 institutions, although the figures represent only one portion of the U.S. higher-education market and should not be treated as a count of all Indian applicants.

The decline comes after years in which India emerged as the biggest source of international students in the United States. The Institute of International Education counted 363,019 students from India at U.S. institutions in 2024-25, up 10% from the previous academic year. That figure reflects students already enrolled, however, and therefore does not contradict more recent evidence of weakening new applications and loan originations.

 Europe gains as students diversify

The UK remains one of the biggest beneficiaries of the changing preferences. British government figures show Indian nationals received 90,425 sponsored study visas as main applicants in the year ending March 2026, making India the largest nationality group on the student route during that period.

Germany is also emerging as a major alternative. The German Academic Exchange Service, or DAAD, reported 59,419 Indian students at German higher-education institutions in the 2024-25 winter semester, making India the country's largest international student source. The number was about 20% higher than a year earlier.

For students and families, the changing geography of education loans suggests that the calculation surrounding overseas study is becoming broader than university rankings alone. Visa predictability, tuition costs, the ability to work after graduation and the likelihood of earning enough to repay a large loan are increasingly important considerations.

That shift is particularly relevant for Indian and Telugu-American families weighing whether an expensive U.S. graduate degree still offers the same risk-reward equation it did several years ago.

The United States remains a major destination and continues to host hundreds of thousands of Indian students. But the education-loan numbers indicate that its dominance is no longer assured: Indian students are not abandoning overseas education so much as looking beyond America for it.