Non-Banking Finance Companies (NBFCs) broaden their scope as disbursements of student loans in the United States and Canada face a setback.
In recent times, Non-Banking Finance Companies (NBFCs) in Canada and the United States have experienced a significant shift in their education loan disbursements, primarily due to stricter student visa policies in these countries.
Measures such as reduced visa appointments, the elimination of Optional Practical Training (OPT) norms in the U.S., and stringent visa conditions in Canada, including higher proof of funds and permit caps, have led to a sharp decline in education loan disbursements. The U.S. has seen a ~30% drop, while Canada has experienced a similar fall.
This decline has significantly slowed the growth of NBFC education loan assets. Growth rates dropped from about 77% in fiscal 2024 to 48% in fiscal 2025 and are expected to moderate further to around 25% in the current fiscal year.
Due to these challenges in North America, NBFCs have started diversifying and shifting their focus to other geographic markets such as the UK, Germany, Ireland, and smaller European countries. These regions have emerged as the key alternative destinations for students, and their share in total education loan disbursements has almost doubled—from about 25% in the previous year to nearly 50% in fiscal 2025.
This geographic diversification partly offsets the decline in U.S. and Canadian loan disbursements, but it is unlikely to completely compensate for the downturn, as the U.S. still accounts for around 50% of education loan assets under management (AUM) for NBFCs as of March 2025, down slightly from 53% a year prior.
In summary, the U.S. education loans have seen a ~30% decline in disbursements due to visa/OPT changes, slowing loan growth. Canada's education loans have declined due to increased financial requirements and permit caps. The NBFC education loan growth has slowed from ~77% (FY24) to ~48% (FY25), projected to be ~25% (FY26). There has been a significant pivot to the UK, Germany, Ireland, and smaller European countries, with these regions accounting for nearly 50% of total disbursements. However, the U.S. still dominates the market, making up around 50% of education loan AUM.
NBFCs are also exploring more options such as domestic student loans, school funding, skill development, certification programs, and coaching classes. These types of loans are usually smaller in size and won't make up a big chunk of the overall portfolio. They could help add some steady, reliable income while the global outlook gets uncertain.
Some NBFCs disburse funds directly in foreign currency, simplifying the payment process for students studying abroad. The momentum for education loans is slowing down due to rule changes in the U.S. and Canada, but NBFCs are adapting by targeting emerging educational hubs globally, aligning their lending strategies with evolving student migration patterns.
Finance and business strategies are being revised by Non-Banking Finance Companies (NBFCs) in the light of the declining education loan disbursements in the U.S. and Canada. To counteract this trend, they are expanding their focus towards education-and-self-development opportunities in areas such as domestic student loans, school funding, skill development, certification programs, and coaching classes.
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