Kerala leads in overseas education loans but faces high default rates

Kerala has emerged as the leading state in India for the number of overseas education loans approved by public sector banks. According to data presented by Union Minister of State for Finance, Pankaj Chaudhary, in the Lok Sabha, the state accounted for the highest number of foreign education loans disbursed between 1 April 2019 and 31 March 2024.

As per information provided by the Indian Banks’ Association (IBA), a total of ₹7,619.64 crore was disbursed across 66,159 accounts in Kerala over this five-year period. This represents approximately 17% of the total overseas education loans disbursed nationwide.

Following Kerala, Maharashtra ranked second with loans amounting to ₹6,158.22 crore, while Andhra Pradesh stood third with ₹5,168.34 crore. Other major states on the list include Telangana with ₹5,103.77 crore, Karnataka with ₹4,027.82 crore, and Tamil Nadu with ₹3,530.41 crore.

However, Kerala also leads in education loan defaults. As of 31 December 2024, a total of 2,99,168 education loan accounts—covering both domestic and international studies—had been opened in the state. Out of these, ₹16,293 crore remains outstanding. Notably, 30,491 accounts, amounting to ₹909 crore, have become non-performing assets (NPAs), according to the State-Level Bankers’ Committee (SLBC).

The primary reason behind the high rate of defaults is the lack of employment opportunities abroad after post-graduation. Many students return to India after completing their studies, as they are unable to secure jobs within the validity of their two-year post-study visa period.

According to S. Raj, Managing Director of Fair Future, an overseas education consultancy, many families and students believe that simply arriving in a foreign country will lead to job opportunities. "There is a lack of awareness about which courses actually lead to employment abroad. Many choose programmes without understanding their job prospects," he said.