More Indian students are defaulting on their overseas education bank loans: Report
- The number of bad loans in education reportedly increased to 9% in March 2018 from 7.3% as of March 2016.
- As of 2016, over five million international students were studying abroad out of which 300,000 were Indians.
- As per data by Reserve Bank of India, spending on tuition and accommodation have increased by 44% during 2013 and 2018.
According to a LiveMint report, which cited data by the Indian Banks’ Association, Indian banks have seen a rise in education loan defaults. The number of bad loans in education increased to 9% in March 2018 from 7.3% as of March 2016, said the report.
There were about 2.79 million active education loans as of March 2018.
While securing an education loan may have become easier than before but repaying them has seemingly become difficult primarily because of a shrinking job market, say experts.
Additionally, tighter visa rules for working overseas in the West has forced many Indian students to return home after finishing studies, with huge debts and find work in a market where the wages often aren’t as high. The US, for instance, has a cap on the H1B visas for people including students who have studied there.
Increasing costs of higher education, particularly overseas, has partly driven more students to avail education loans. According to CRIF High Mark, a credit bureau, there has also been an increase in the average size of new loans given each year, said the LiveMint report.
The average size of new education loans varied -- from ₹895,000 in September 2018 to ₹708,000 at the end of FY18. In comparison, the average loan size for new loans was ₹503,000 in 2015, according to the media reports.
Spending by Indian students has also spiked in recent years. As per data by Reserve Bank of India, spending on tuition and accommodation have increased by 44% during 2013 and 2018.
India also has high interest rates on student loans that range from 8.50% to 10.30% per annum.
Indian students make up the second largest pool of international students globally after China, said CNBC. As of 2016, over five million international students were studying abroad out of which 300,000 were Indians, according to UNESCO data. The number of Indian students studying overseas increased to 553,000 in 2017.
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