How can education loans help in attaining higher education?

financialexpress.com:

By Brajesh Mishra

Education is the gateway to a secure and prosperous life. More so higher education, as it gives many more career options. The government too has identified this as a high priority for the country’s growth and has set a target of increasing the Gross Enrolment Ratio (GER) for higher education from 27% to 50% by 2030.

In general, the cost of higher education keeps increasing every year. If one believes that the investment in a child’s education gives one of the best returns on investment, would it be right to deny admission into a good institute just because the fee was out of range? Does it not make sense to take a student loan and ensure the best possible education? The other scenario would be that the parents might have the money to fund the education but a lump sum payment upfront might not be optimal. Again, a student loan might be a very convenient option.

According to Reserve Bank of India’s Report on Trend and Progress of Banking in India 2022-23, non-banking finance companies (NBFCs) disbursed Rs 25,352 crore in education loans, up 79 percent from Rs 14,162 crore in 2022.

Another report published in February 2023 by rating agency CARE, NBFCs almost doubled their market share in retail education loans to 18.6 percent in September 2022 from 9.9 percent in September 2020 – that’s two years. During this same period, retail education loan assets under management (AUM) of CARE-rated NBFCs increased to Rs 17,877 crore as of September 2022 from Rs 7,738 crore as of September 2020.

While a large chunk of these loans pertained to study abroad programs, these figures do indicate the large appetite for education loans in the country.

Availing an education loan for higher studies is quite common in western