NBFCs' education loan AUM growth to halve amid US headwinds

For non-banking finance companies (NBFCs), education loans have emerged as the fastest-growing asset class, with assets under management (AUM) expanding by over 50% in recent years. However, that growth rate is expected to halve this fiscal, as disbursements for educational courses in the US slow following a raft of policy changes, according to a latest analysis by rating agency Crisil Ratings.

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The US has introduced sweeping visa and policy reforms, including the suspension and subsequent resumption of visa processing under tighter social-media scrutiny—especially targeting certain countries and academic fields. The reforms also propose fixed-term student visas, enforce visa revocations linked to political activism, and have triggered legal challenges and institutional pushback.

These developments have heightened enrollment anxiety and financial risks for universities. For students from India and other countries, this has translated into longer waiting periods, additional documentation requirements, potential term limits, and greater uncertainty-particularly for those involved in activism or pursuing sensitive academic disciplines.

To mitigate the potential decline in business, NBFCs are diversifying into new geographies and adjacent product segments. While nonperforming assets (NPAs) in the NBFC sector have remained stable so far, asset quality remains a monitorable factor given global uncertainties and the significant portion of AUM still under contractual principal moratorium.