Data released earlier this year by international student loan company Prodigy Finance shows that the number of Indian students applying for education loans through its platform grew by 98% in the first quarter of 2022, compared to the same period last year.
India country head at Prodigy Finance Mayank Sharma told The PIE News that the trend has continued into the second quarter of 2022, now reaching a 100% growth in loan applications from India this year compared to last year.
In comparison, by this point in 2021 there had been a 78% growth in applications from 2020.
Speaking to Indian newspaper The Economic Times, Sharma attributed the increase to the re-opening of international travel and the easing of other Covid restrictions, which have helped the international education sector to recover from the impact of the pandemic.
India’s towns and cities are classified as tier one, two or three according to their population size and level of development, where tier one is the most developed. Significantly, tier two and tier three cities and towns contributed to 176% of the growth recorded by Prodigy Finance.
“Students who come from lower-income backgrounds do not have the ability to provide collaterals or co-signers”
“We are very excited to see that a lot of students from tier two and three cities are now able to make their study abroad dreams come true,” Sharma told The PIE.
“These students who come from lower-income backgrounds do not have the ability to provide collaterals or co-signers, which has thus far restricted their access to student loans, especially for higher studies abroad.”
Sharma believes that students are becoming more aware and trusting of fintech platforms like Prodigy Finance for funding overseas study.
“More and more aspiring students are considering Prodigy as their lender of choice, which is, in turn, driving this growth for us,” Sharma said.
Writing in The PIE earlier this year, Ashish Fernando, CEO of edtech platform iSchoolConnect, said that online study agencies were also reaching more students in India’s rural communities, driving up outbound student numbers from these regions.
University Living, a student accommodation marketplace that partners with education loan providers, said it had seen four times the number of Indian students enquiring about loans through its website.
Its data also shows increased enrollment rates among Indian students from tier two and three cities.
“Students from rural India are now more aware about the options available to them,” said Saurabh Arora, founder and CEO of University Living, adding that Indian students increasingly “see an education loan as more of an investment into their futures”.
Similarly, Leverage Finance, the fintech branch of study abroad platform Leverage Edu, said it has seen a 500% increase in education loan applications from Indian students since it launched in January 2022.
But Akshay Chaturvedi, founder and CEO of Leverage Edu, said that, in the company’s experience, “it is students and parents from the large towns that still make up the majority of education loan disbursals”.
“A large majority of students coming in from tier 2 and 3 towns in India prefer to not take education loans,” Chaturvedi said.
“They could be either opting for other traditional financing options, or using up savings for the first few semesters and then looking for a part-time job there.”
A report by Redseer strategy consultants published in October 2021 found that spending on post-k12 education by Indian households had risen steeply as the country saw a 30% growth in per capita income over the past six years.
However, Chaturvedi urged caution when linking loan applications to wider trends. “I wouldn’t necessarily correlate growth in education loans to study abroad trends. That is here anyway, and not every student opts for a loan.”
In its report, Redseer found that 43% of Indian students planned to self-finance their study abroad, while 28% hoped for scholarships. 9% said their first choice would be an education loan.