Fewer students are borrowing a lot more for education

Over the last 10 years, the number of students availing educational loans has shrunk while the money borrowed has sharply risen, an analysis of quarterly data published by the Reserve Bank of India on outstanding credit of scheduled commercial banks showed.

The number of student loan accounts declined by 15.2% from 25.76 lakh in June 2016 to 21.84 lakh in June 2026. However, in the same period, the average amount of loan outstanding per education loan account increased by 178.2% from ₹2.6 lakh to ₹7.25 lakh, an indication of rising costs of education, as observed by the 372nd report of the Parliamentary Standing Committee on Education, Women, Children, Youth and Sports.

Although there is marginal improvement in the total number of accounts in the last three years, the increase has come from students going for bigger-sized loans over ₹2 lakh. While such loan accounts have increased by 31.6% from 14.31 lakh in the 10-year period, the number of accounts in the smaller loans category of up to ₹2 lakh have drastically declined from 11.44 lakh to just three lakh, which is roughly one-fourth of their previous size between June 2016 and June 2026.

For smaller loan accounts, the size has remained fairly the same. Driven by the increased size of loans in the above ₹2 lakh category, from ₹3.82 lakh to ₹8.25 lakh, the overall average of amount outstanding per student loan account has increased from ₹2.6 lakh to ₹7.25 lakh — an increase of 178.2% as mentioned earlier.

An analysis of education loans in different slabs shows how loans of bigger sizes have increased noticeably in the last 10 years. Loan accounts in the range of ₹25,000 to ₹2 lakh accounted for 41.2% in June 2016. This share dropped to just 13.6% in June 2026.

The data also showed that the share of education loans in the total amount of credit given by scheduled commercial banks have come down over the years. As per the RBI’s data, education loans accounted for 0.93% of the total share in June 2016.

This came down to 0.74% in June 2026. This is despite the total outstanding amount under the education loans increasing from ₹67,175 crore in June 2016 to ₹1,58,468 crore. While inflation would have contributed, by a small extent, to the loan amount increasing in size, the declining share of education loans along with the declining number of loan accounts indicate that fewer students are borrowing a lot more for education than they did in 2016.

Education becoming affordable or more students joining government-run institutions that offered free education or at subsidised costs are unlikely to be the factors behind the notable decline in the number of student loan accounts.

This is inferred from the All India Survey of Higher Education’s (AISHE) annual reports showing that the number of students entering government-run colleges has remained fairly the same over the years, with 2023-24, the latest year for which the report is available, in fact showing a decline.

Moreover, the estimated budget of the Department of Education has also come down from being 1.46% of India’s budget in 2016-17 to 0.99% in 2025-26.