The combination of a weakening Indian rupee and escalating tuition fees is forcing Indian students to rethink their plans for studying abroad. As costs for overseas education continue to climb, the focus has shifted from choosing the ideal destination to finding ways to fund their education while ensuring a strong return on investment (ROI).

Loan providers and education consultants have observed a significant uptick in student inquiries and applications, reflecting a growing financial awareness among students and their families.

“Education spending has grown across the entire student lifecycle, but overseas education has been one of the most prominent growth areas in recent years,” said Amit Gainda, CEO of Avanse Financial Services (AFS).

Data from AFS reveals a threefold increase in student loan disbursements for international education, surging from ₹1,551.25 crore in FY22 to ₹4,712.80 crore in FY24. Additionally, the average loan amount per student has risen, with the sanctioned ticket size increasing from ₹28.8 lakh in FY22 to ₹33.1 lakh in FY24.

“This increase in average loan sizes is primarily driven by higher course fees, living expenses, and inflation, compounded by the depreciation of the Indian rupee,” added Gainda.

Financial Challenges and a Shift in Priorities

With annual tuition fees ranging from $30,000 to $80,000 in popular destinations, affordability remains a significant concern. As families face the daunting financial burden, they are scrutinizing education expenses more closely than ever.

Adarsh Khandelwal, cofounder of Collegify, highlighted the growing dependency of Indian students on education loans, particularly in the United States.

“Approximately 70-80% of Indian students in the US fund their education through loans,” Khandelwal said. “The typical loan amount ranges from $50,000 to $100,000, with repayment terms often stretching over 7-10 years.”

Khandelwal emphasized the importance of avoiding the “prestige trap” — where students choose non-essential programs at prestigious universities without considering their ROI.

“Students need to carefully evaluate factors like employment rates, average salaries, and industry demand for their field of study to make informed decisions,” he advised. Degrees in fields like political science, history, and liberal arts often fail to provide direct employment opportunities or justify the high cost of education.

“Graduates from these fields frequently struggle to secure jobs in the US, making loan repayments challenging,” he noted.

Mitigating Risks and Ensuring Sustainability

Despite the surge in education loans, non-banking financial companies like Prodigy Finance have managed to maintain low default rates by supporting students in high-demand fields and partnering with reputable institutions.

“Our focus is on minimizing borrower risk by selecting programs and universities with strong employment outcomes,” said Sonal Kapoor, Chief Commercial Officer at Prodigy Finance.

Similarly, AFS employs advanced technology, including AI and machine learning models, to predict defaults and streamline loan collection. Gainda highlighted that structured repayment terms and adequate risk classification for institutions have helped AFS maintain a gross NPA ratio of just 0.43% in FY24.

A New Approach to University Selection

Nikhil Jain, founder of ForeignAdmits, noted a perceptible shift in how students choose universities.

“Students today are far more financially savvy. They want transparency regarding their education investment—whether it’s related to job roles, salaries, or the reputation of the university,” he said.

Many students now prioritize employability and affordability over institutional prestige. Instead of simply relying on rankings, they are choosing universities with prime locations, lower tuition fees, and better employment outcomes.

“Students are increasingly using feedback from lenders, preferred university lists, and alumni insights to make informed decisions,” Jain added.

This evolving approach reflects a broader trend among Indian students who are reshaping their study-abroad aspirations to align with financial realities and career goals.