NBFC Foreign Education Loans: Why are they being preferred over Banks in 2026?

As the number of Indian students wishing to go abroad increases over the years, the support systems respond by offering diverse avenues. The most significant changes can be seen in the Indian financial market, as more lenders come up with overseas education loan schemes for students with diverse financial and academic backgrounds. These include Nationalized Banks, Private Banks, Non-Banking Financial Companies (NBFCs), and International Lenders, which offer secured and unsecured education loans for international students.

All these lenders are recognized by the Reserve Bank of India (RBI), but they have different ways of functioning and regulations that affect the student’s loan journeys in different ways. While NBFCs are relatively new to India, they are quickly gaining renown for their student-friendly processes. In this article, we will explore the burgeoning popularity of NBFC foreign education loans and examine the reasons behind it. Without further ado, let’s get into it!

Why are NBFC Foreign Education Loans gaining ground in 2026?

NBFCs are registered lending companies regulated by the RBI. However, they do not have a banking license. Therefore, their processes and products are not restricted by the same expectations as Nationalized Banks and Private Banks. This helps them fill critical gaps in the foreign education loan market, leading to an increase in student preference. In fact, NBFCs may even surpass Banks in certain areas of operation. Keep reading to see how their structure helps with this surge.

• NBFCs can cut through bureaucratic layers, ensuring speedy loan verification, sanction, and disbursement. This is crucial for students who want to avoid delays and further processes.

• NBFCs can tailor financial products and solutions to the student’s financial background, profile, requirement, chosen University, and course. Their specialized knowledge makes this type of customization easier.

• Many NBFCs offer secured and unsecured loans based on flexible norms. The student’s academic potential, University profile, and career prospects are considered alongside traditional aspects like collateral value and credit scores.

• The loan can be sanctioned even before the student gets a confirmed admission from their preferred University. This sanction can be based on academic performance and standardized tests.

• They offer pre-visa disbursements of loans for countries that requires this for visa processes, as well as for I20.

• NBFCs have a mostly young, tech-savvy customer base, which is reflected by their services. They offer digital interfaces, simple application criteria, responsive support services, and transparent processes to match the needs and values of young customers.

• NBFCs are not required to maintain CRR or SLR, and have more leeway with the RBI’s regulations, leading to flexible and creative financial products that benefit more diverse groups of students.

• Students can receive top-up loans in case the cost of tuition and living expenses increases over the course.

NBFCs have brought a transformation to the world of overseas education loans, especially as international students look for more unconventional and flexible options. In the next section, let us understand how this transformation has impacted the Indian financial market.

How are NBFC Foreign Education Loans changing the Study Abroad Loan Trends?

In the past few years, the emergence of India-based NBFCs like Credila, Avanse, and Tata Capital has seen the winds of favor shifting towards the flexible and accessible NBFC foreign education loans. Let us see some factors that have aided this shift below.

• The credit growth of NBFCs has reached nearly 20% in 2025, which is higher than the growth of Nationalized and Private Banks.

• The reputation of NBFCs is growing by the year, with students focused on the 100% funding of overall costs, competitive foreign education loan interest rates, broad University and course coverage, quick sanction rates, and flexible repayment options.

• The RBI eased many norms for NBFCs in 2025, which allows them to expand, improve their cost of funds, and reach more students in 2026.

Additionally, NBFCs combine flexible operations with specialized loan knowledge and the advantage given by changing trends to grab the attention of students. Next, we will see which factors about NBFC foreign education loans students find most attractive.

Why are Study Abroad Aspirants preferring NBFC Foreign Education Loans?

International students looking for their first study abroad loan may not know the technical reasons behind the rising popularity of NBFCs, but instead choose NBFC foreign education loans based on some unique benefits that their preferred lender offers. Read on to know what draws students in

• NBFC foreign education loans offer full coverage of the tuition fees, living costs, travel expenses, laptops & study material, health insurance, etc., with forex rates in mind.

• These lenders understand country-specific risks like currency fluctuations and changes in visa and University regulations, providing tailored solutions and products for international students.

• They lower the financial barrier for students with different financial backgrounds by offering excellent partially secured and unsecured loan options.

• NBFCs match the student’s time-sensitive needs like course enrollment and visa deadlines, sometimes expediting the process for pre-visa disbursements as well.

• They offer interest-only periods, step-up EMI options, post-moratorium payments, and other flexible repayments, allowing students to focus on career growth alongside their loan responsibilities.

• NBFCs provide transparent processes and comprehensive support services to help students navigate the loan application and repayment process without any hassles.

Since the functioning and services offered by NBFCs are so different from those of Banks, it is natural that the features of NBFC foreign education loans will also vary. Let us understand this difference in the next section.

Banks v/s NBFC Foreign Education Loans: Major Features

As an international student, deciding on a lender and a loan scheme for an overseas education loan is a major factor in the entire process. As such, it is incredibly important to have all the facts upfront and decide after going over all the major features, which are noted in the table below.

We can see that NBFCs come out on top in many regards when it comes to loan schemes and offerings. However, the whole picture may not always be rosy. Students should be aware of some difficulties they may face with NBFC foreign education loans, which we have touched upon in the next section.

Challenges of NBFC Foreign Education Loans

Although NBFC foreign education loans are an excellent option for Indian students, they are far from perfect. Students may face the following challenges during their loan journey:

Since NBFCs borrow from a wide variety of sources, students may face higher interest rates or funding costs. It is important to get a clear idea of those costs before applying.

• Changes in regulation or liquidity can impact NBFCs more than Banks, especially those with a smaller customer base.

• It may be difficult for NBFCs to scale the cost of education abroad alone, so some may reach out to Banks or co-lending models to make this process easier. This can affect the loan amount, interest rate, and processing speed of the loan.

• NBFCs are relatively new to the Indian financial market, and may not enjoy the same trust and deposit protections as Nationalized and Private Banks.

• Not all study destinations accept all NBFC foreign education loans from India, so it is crucial to check the visa regulations regarding proof of funds from student loans for international students.

There is also the overall credit risk of overseas education loans, which requires frequent monitoring. However, the benefits of NBFC foreign education loans certainly trump the challenges. Keep reading to get a glimpse at future trends for NBFCs.

NBFC Foreign Education Loans: Focus of 2026 & Way Ahead

NBFCs are set to expand and grow in popularity even more from 2026 onwards, as regulations and market conditions develop in their favor. This can be attributed to a plethora of factors, which we have detailed below for further understanding.

• There is a marked increase in the collaboration, partnerships, and co-lending agreements between NBFCs and Banks. This provides stable funding sources and credibility for NBFCs and gives Banks access to faster processes and more specialized markets.

• NBFCs are quickly adapting Artificial Intelligence/Machine Learning tools to expedite processes like credit assessment and document verification, as well as develop risk analysis models to help smooth the loan process.

• The RBI’s recent relaxation of norms is predicted to ease operational processes and support innovative products and loan schemes, making NBFC foreign education loans more accessible for a wider population of students.

• NBFCs have the right knowledge and services to quickly and thoroughly meet the rising demand for overseas education loans in India.

Basically, NBFCs are an important and incredibly useful part of the Indian financial market. They represent a modern, student-centric approach to overseas education loans and provide healthy competition for Banks and International Lenders.

Summing it all up, an NBFC foreign education loan is a sound investment for full coverage, competitive interest rates, and easy repayment. As the market moves towards more supportive infrastructure for such innovative products, trusting lenders like Credila or Avanse with the finances for one’s study abroad journey is an excellent option. Élan Overseas Education has partnerships with some of the best NBFCs in India, providing detailed insights about every aspect of the loan application journey. Reach out to our experienced loan counsellors for more information about the next step!

NBFC Foreign Education Loans FAQs

Q1. What are the best NBFCs for international students?

Ans. Some of the best NBFCs offering overseas education loans include Credila, Avanse, Incred, Auxilo, Poonawala Fincorp, and EdGro Finance.

Q2. What is the source of funding for NBFCs?

Ans. NBFCs source funds for overseas education loans from a variety of sources, including other lenders, private equity investors, bonds, term deposits, etc. The flexibility of their funding sources allows them to customize loan amounts for international students.

Q3. What is the interest rate for NBFC foreign education loans?

Ans. The interest rate for NBFC foreign education loans varies across lenders and loan types. Generally, however, the interest rates for secured loans start at 10% per annum, and unsecured loans start at 10.75% per annum.

Q4. What is the repayment tenure for NBFC foreign education loans?

Ans. The repayment tenure for NBFC foreign education loans can be up to 15 years, including the duration of the course. The exact tenure may vary according to the loan amount, the student’s repayment plan, and the lender’s regulations.

Q5. Do I need a co-applicant for NBFC foreign education loans?

Ans. Yes, for most NBFCs. The student must apply alongside a co-applicant, preferably a family member or guardian. The co-applicant should have a steady income source, a strong credit score, and acceptable collateral (for secured education loans).