3 days ago
Indian Students Shift Undergraduate Study Home, Postgraduate Abroad
Many Indian students now study for their first university degree in India and go abroad for a master’s degree.
This trend is growing in smaller cities and towns, not just in large cities.
One lender says 79% of the students it funds come from tier-2 and tier-3 cities.
The number of Indian students studying in other countries also increased between 2022 and 2024.
The United States and Australia are among the countries hosting many Indian students.
Families who earn money from farming may not have the property papers or tax records that banks often require.
Some lenders are instead looking at how much the student may earn after graduation.
This makes overseas education more accessible, but taking on this kind of loan is still a major financial risk for families.
More Indian students are completing undergraduate degrees domestically before pursuing postgraduate studies overseas.
Students from tier-2 and tier-3 cities represent 79% of international students funded by Prodigy Finance, most of them master’s students.
The number of Indian students abroad rose from 1.16 million in 2022 to 1.34 million in 2024, according to NITI Aayog.
More than 350,000 Indian students were enrolled in the United States in February 2026, while Australia hosted 110,662 between January and May 2026.
Because many rural families lack acceptable collateral or tax records, alternative lenders are offering education loans based partly on students’ future earning potential.
- Who
- Indian students, particularly those from tier-2 and tier-3 cities, and their families.
- What
- Students are increasingly pursuing undergraduate education in India and postgraduate specialisation abroad.
- Where
- Students come from across India and are pursuing postgraduate studies in overseas destinations including the United States and Australia.
- When
- The cited data cover 2022 through May 2026, including United States enrolment figures from February 2026.
- Why
- The shift reflects strong student ambitions, limited domestic postgraduate capacity, and difficulties obtaining conventional loans without collateral or formal income records.
Traditional Asset-Based Lending
Future-Income-Based Lending
Loan eligibility
Traditional Asset-Based Lending
Conventional banks generally require substantial collateral, a co-signer, property documents, or income-tax returns.
Future-Income-Based Lending
Alternative lenders assess a student’s prospective earning potential, allowing applicants without significant family assets to seek funding.
Access for rural families
Traditional Asset-Based Lending
Families dependent on farming may struggle to qualify because agricultural land cannot legally be pledged as collateral in India and farm income is tax-exempt.
Future-Income-Based Lending
Non-collateralised loans can address the financing gap faced by aspirational rural and semi-urban households.
Financial risk
Traditional Asset-Based Lending
Requiring collateral and co-signers limits lenders’ exposure when families have difficulty repaying overseas education debt.
Future-Income-Based Lending
Borrowing against expected future income can expand access, but it represents a high-stakes financial gamble for lower-income families.
Key facts
- Non-metro share
- Tier-2 and tier-3 city students make up 79% of the international students funded by Prodigy Finance.
- Indian students abroad
- The total increased from 1.16 million in 2022 to 1.34 million in 2024, according to NITI Aayog.
- United States
- More than 350,000 Indian students were enrolled in the United States as of February 2026.
- Australia
- Australia hosted 110,662 Indian students between January and May 2026.
- Average farm household income
- ICRIER data cited in the article puts average monthly income at approximately Rs 19,696.
- Graduate salary outcomes
- Market tracking cited in the article says 74% of international master’s graduates double their salaries after completing their degrees.
Quotes
Sonal Kapoor
Global chief business officer at Prodigy Finance
“Studying abroad is no longer just about wealthy students chasing prestige; it is about a farmer using years of savings to give their child a global engineering degree. Traditional banks typically demand heavy collateral and a co-signer, quietly excluding highly capable candidates. Lenders assessing future earning potential rather than physical family assets are stepping in to fill that structural void.”
financialexpress.com
Sources
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