MC EXCLUSIVE Hit by US visa policies, education-loan NBFCs see growth slowdown, deferred IPOs

Education Loan

• Education loan NBFCs see slower growth due to US visa policies
• Avanse and Credila halt IPO plans due to overseas education slump
• Students explore new study destinations beyond US, UK, Canada

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India’s education loan-focused non-banking finance companies (NBFCs) are seeing a sharp moderation in growth after a blistering run in recent years, as restrictive US visa policies under the Trump administration weigh on demand for overseas education and force lenders to reassess expansion and listing plans.

Avanse Financial Services and Credila Financial Services, the two largest independent players in the segment, have both reported a slowdown in topline growth in the first nine months of FY26, reflecting growing headwinds from the US, which is the biggest overseas education market for Indian students and the most profitable corridor for education lenders.

The slowdown has also impacted capital market plans of these lenders. Avanse has already shelved its initial public offering (IPO), while Credila’s listing plans have been on pause amid uncertainty over growth visibility.

Growth moderation sets in

Avanse, which focuses on education loans for overseas studies, allowed its Securities and Exchange Board of India (SEBI) approval for an IPO to lapse in October. Instead, it raised Rs 1,200 crore from existing shareholders through a rights issue, signalling a more cautious stance amid shifting market conditions.

Financials underline the moderation. Avanse’s interest income for the April–December period of FY26 grew 27.5 percent year-on-year to Rs 1,846 crore, compared with a much faster 39.7 percent growth in the same period of FY25, according to the company’s disclosures. Profit growth slowed even more sharply, rising just 17.28 percent to Rs 434 crore in FY26 against a 47.18 percent jump a year earlier.

Avanse is owned by private equity firms Warburg Pincus, Kedaara Capital and UAE’s Mubadala.

Credila, the largest education loan NBFC by assets, has also seen growth cool after an exceptional FY25. Private Equity firms EQT and Chryscapital acquired Credila from HDFC Bank in 2023.

A source familiar with the matter said the company has kept its IPO plans on hold, with no clarity yet on whether it will revive the process. SEBI’s approval for Credila’s IPO remains valid until May.

Credila’s numbers tell a similar story. Interest income growth moderated to 31.3 percent in the first nine months of FY26, compared with a blistering 78.2 percent growth in the same period last year. Profit growth, while still strong at 59.8 percent, was sharply lower than the 77.7 percent growth recorded in FY25.

This cooling of growth rates reflects signs of stress in the overseas education pipeline, particularly for students targeting the US.

In a recent report on Credila, credit rating agency ICRA said as the loans are primarily extended for overseas education, the portfolio remains exposed to geopolitical risks and immigration-related issues.

“Additionally, geographical concentration is high, with the US, UK, and Canada accounting for 47%, 23%, and 10% of the AUM, respectively, as on September 30, 2025. Consequently, the portfolio is vulnerable to economic conditions in these regions, which could affect students’ employment prospects,” the report said.

The slowdown in overseas education is also seen in the Liberalised Remittance Scheme (LRS) numbers from the Reserve Bank of India. Money sent abroad by Indians for studies in foreign countries through the LRS route saw a sharp 22 percent contraction in the calendar year 2025 to $2.45 billion from $3.1 billion in 2024.

US visa uncertainty hits demand

The moderation comes against the backdrop of tightening US visa policies under President Donald Trump, which are beginning to reshape student and lender expectations.

A recent analysis by the National Foundation for American Policy (NFAP), a US-based public policy research organisation, warned that proposed changes to the H-1B visa regime could significantly weaken job prospects for international graduates, especially Indian students.

While H-1B denial rates are currently low, about 2.8 percent in FY25 (US fiscal year ending September 30), the report highlighted how denial rates had spiked to as high as 24 percent during Trump’s earlier term before being overturned by courts.

Recent visa policy changes by the US include a steep $100,000 fee for new H-1B visa applicants from outside the US, higher minimum wage thresholds, narrower definitions of “specialty occupations”, and changes to the H-1B lottery system that would prioritise senior professionals over recent graduates.

These changes carry disproportionate consequences for Indian students, who dominate US STEM programmes.

International students account for more than 70 percent of graduate enrolments in computer science and engineering fields in the US, and for most Indian graduates, the H-1B route is the only viable pathway to long-term employment after studies.

NFAP cautioned that growing uncertainty around post-study work options could deter Indian students from choosing US universities, while also encouraging American employers to move jobs offshore rather than sponsor visas.

For education loan NBFCs, the US corridor is critical because loans for US education tend to be larger, longer-tenure, and more profitable.

Pivoting beyond the US

To offset the slowdown, lenders are now increasingly betting on other international markets, while also exploring newer destinations to sustain growth momentum.

"The recent geopolitical realignments, macroeconomic conditions and market dynamics have impacted the overall study abroad landscape. We are witnessing a clear transition from destination loyalty to career-goal loyalty. Whether it is engineering in Germany, business analytics in Ireland, or management in France, students are choosing programmes that best align with their skill development and future employability," Avanse Financial Services said in a response to a Moneycontrol query.

The NBFC added students are looking beyond the traditional "Big 5" study abroad destinations of the US, the UK, Canada, Australia and Germany and are exploring alternate destinations such as Ireland, France, New Zealand, UAE, South Korea, Japan, Singapore, Finland, Norway and Denmark.

Students are laying greater emphasis on career outcomes, calling it a clear transition from destination loyalty to career-goal loyalty. "Social acceptability has become a decisive factor for international students," Avanse said. 

Emails sent to Credila had not elicited a response at the time of publishing. The copy will be updated when the response comes in.