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Student Loan : What is the Average Student Loan Debt?

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March 24, 2023


What’s Inside

If you’re a student looking into getting a loan to fund your studies, knowing the ins and outs of India’s financial system is important. You might have some burning questions like ‘What’s the usual amount students borrow?’ or ‘How much of these loans are Non-Performing Assets?’

An Overview of Student Loans In India

In India, student loans are typically offered as conventional mortgage loans (CMLs). In these loans, the repayment schedule, interest rate, and repayment tenure are fixed. These parameters remain unchanged, no matter what you may earn after you have completed the educational program.

Most of these loans follow the Indian Banks’ Association (IBA) model of education loans, where the collateral requirements typically depend on the amount borrowed, as follows:

  • No collateral required for student loans up to ₹4 lakhs
  • Third-party guarantee required for student loans over ₹4 lakhs but up to ₹7.5 lakhs
  • Tangible collateral required for student loans over ₹7.5 lakhs

Other education loans in India include loans sanctioned to students admitted into universities via the management quota, loans offered to needy students pursuing vocational education, and loans for students enrolled in premier educational institutions in India or abroad.

Pre-COVID: A Deep Dive Into the Indian Student Loan Landscape

Before the pandemic broke out, the average student loan debt was on an upward trajectory. Here are some numbers to substantiate this.

  • The average size of student loans grew from ₹7,08,000 in September 2018 to ₹8,95,000 in March 2019.
  • The volume of loans in the ₹20+ lakh category grew six times in the 5-year period from 2013 TO 2018.

Much of this could be traced to the rising preference among Indian students to study abroad. Furthermore, the fees in India’s premier institutions have also been rising, increasing the average student loan debt size.

However, despite a marked rise in the average student loan debt, the number of education loans disbursed was shrinking. In the 4-year period ending in 2019, the number of student loans lent in India decreased by 25%. High levels of non-performing assets (NPAs) contributed to this development.

Post-COVID: What India’s Student Loan Landscape Looks Like Today

In the years following the pandemic, the level of bad debts in the student loan segment has only risen in India. Loans disbursed to nursing, and engineering students have been among the top borrowings in this category, with nearly 10% of NPAs being traced back to these loans by December 2020.

To counter this growing risk, banks have begun to curb student lending. The average student loan debt segment has shrunk by nearly 6% in the 2-year period ending in January 2022. Data from the Reserve Bank of India has revealed that lending banks' overall student loan portfolio dropped by 3.7% in 2020-21 and 2.4% in 2021-22.


If you have already availed a student loan, planning your repayments smartly is crucial, so you can pay off the loan without accumulating penalties and interest costs. Plan your borrowings well to minimise the burden of debt. Fi Money’s AI-powered Analyser can help you here. With this money management platform, you can analyse and track your expenses, determine how to save more and then use those extra funds to repay your student loans on time.

Frequently Asked Questions

1. Is it OK to have a lot of student loan debt?

Having large amounts of any debt is never a good idea. In the case of student loans, a lot of debt can mean that you will spend most of the initial years of your career repaying the loan. This, in turn, could impede your investment journey significantly. It is best to only borrow the amount you need for your educational course.

2. What is the average student loan debt after 4 years?

The average student loan debt in the US is $34,100 for a 4-year bachelor’s degree overall. In public colleges, the average 4-year debt is $31,900, whereas, in private colleges, the number stands at $58,600.


Fi Money is not a bank; it offers banking services through licensed partners and investment services through epiFi Wealth Pvt. Ltd. and its partners. This post is for information only and is not professional financial advice.
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