Young Indians are increasingly pursuing additional learning-related loans, as education has evolved into a continuous process. For many, a college degree now serves merely as the starting point for career development. The need for upskilling through certifications, training, and new qualifications has become an essential aspect of maintaining professional relevance.

Data from RupeeRedee, a digital lending platform, highlights a notable trend: approximately 14 per cent of personal loan borrowers in the past financial year opted for education-related loans. The demographic statistics reveal that nearly 46 per cent of these loans were taken out by individuals aged between 21 and 30, while an additional 16.1 per cent belonged to those aged 31 to 35. This shift indicates that education financing is primarily being driven by working adults rather than just students or families.

In total, out of 2,265,697 loans examined, 315,540 were categorised as education loans, reflecting a growing trend towards borrowing for various educational purposes.

Diverse Learning Goals Fueling Loan Demand

The scope of education loans is expanding beyond traditional academic routes. Previously, they predominantly funded expensive degrees or postgraduate studies. However, current trends indicate that many young borrowers are utilising credit for shorter, more targeted learning opportunities, including professional certifications, coaching classes, and skill enhancement programs.

Although the dataset does not differentiate between loans for personal education and those for children, the age demographics provide crucial insights into borrowing behaviour. Artem Andreev, CEO of FincFriends, suggests that the surge in borrowing is linked to self-improvement initiatives, with early-career professionals seeking funding to secure better employment or elevate their skills for advancement.

This evolving landscape portrays education not as a singular investment but more as a recurring expense aligned with career progression.

Small Loan Sizes Indicate Shifts in Borrowing Behaviour

An interesting aspect of this trend is that the average education loan amount stands at Rs 14,928, which is considerably less than loans for home renovation or lifestyle expenses. This shift in borrowing size signifies a move away from large loans aimed at degree financing to smaller, more manageable expenses for ongoing education.

The modular structure of many modern online courses, often paid for in instalments, aligns well with this borrowing behaviour. This financing model caters to learners who prefer to take individual courses or certifications instead of comprehensive educational programmes, thus changing the perception of educational investment.

Young earners’ financial situations also influence their willingness to borrow. About 60 per cent of education borrowers report monthly earnings between Rs 20,000 and Rs 40,000, with the median income around Rs 30,000. Given the high costs of living, many find it challenging to pay for courses outright. Instead, spreading the cost through small loans has become a feasible alternative.

Education Borrowing Represents a Changing Mindset

The tendency to borrow for education illustrates a significant shift in perception among young adults. Statistics reveal that education borrowers typically apply for new loans within an average of 63 days, with 77 per cent returning for another within 12 to 24 months. This data suggests a cycle of continuous learning, where individuals take one course and subsequently pursue another, highlighting a fundamental change in how careers are viewed.

Andreev notes that mid-career professionals are increasingly utilising loans to remain relevant, change careers, or gain additional qualifications. Even among those aged over 40, there is evidence of recognising education as a lifelong endeavour, challenging traditional notions of learning being confined to early adulthood.

Furthermore, the trend of education borrowing is not restricted to metropolitan areas. States like Tamil Nadu, Telangana, Andhra Pradesh, Karnataka, and Bihar have shown considerable demand for education loans, with smaller regions also indicating rising educational borrowing rates.

Gender Disparity in Educational Borrowing

Nevertheless, the data displays a gender gap, with only 21 per cent of education borrowers being women, while men accounted for 79 per cent. This disparity could be attributed to various factors, including access to credit and financial decision-making within households. As education becomes increasingly crucial for career progression, these figures raise concerns about gender equity in financial access.

The overarching narrative about education loans reflects more than borrowing; it highlights a transformation in career outlook. For the younger generation, education is no longer a milestone achieved but a continuous journey requiring financial planning and, at times, credit. For many in their twenties, educational borrowing has become a necessary component of staying competitive in the job market.

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