For many Indian families, education is not merely important but also something that cannot be negotiated. It is one thing that the parents are willing to go into student loan debt for, especially if it will secure their children’s future. Whether it’s sending a child to a private medical college in Mumbai or an Ivy League university abroad, the belief is that a degree will pay for itself. Yet, very little is said about what occurs when that belief falls apart.
In addition to pressure from lenders, family and society at large also humiliate and silence students who are having difficulty repaying their debts. And in some cases, this pressure turns deadly. The student loan crisis in India isn’t just about money; it’s also a growing mental health issue that no one seems to be talking about.
How Big Is India’s Student Loan Problem?
In early 2024, there were 96,847 crore in outstanding educational loans in India, according to the Indian Banks’ Association (IBA). Contrary to about ₹73,000 crore in 2019, this is a significant gain. Over 40 per cent of this sum is made up of loans above ₹7.5 lakh, which are usually taken out for overseas education.
However, not everyone has equal access to these loans. The states of Tamil Nadu, Kerala, and Maharashtra account for the bulk of borrowers. In FY 2025, for instance, Gujarat disbursed ₹2,078 crore in education loans, a 6.5% increase over FY 2024. But the number of debtors increased just a little, from 21,810 to 22,419. Even in states that are comparatively better off, there is an increasing reluctance to take on student loan debt.
Access alone isn’t the issue, though; what occurs once the money is borrowed is. While banks are avoiding offering unsecured loans, students are increasingly resorting to private lenders and Non-Banking Financial Companies, which charge interest rates between 12% and 18%. Even while public sector banks have strict requirements for co-signers and security, they nonetheless provide student loans with interest rates as low as 8.5%. To meet tuition and visa requirements, many families take out informal loans or mortgage their homes.
The Dark Reality of Student Loan
Academic pressure often gets blamed for student suicides, but financial stress, especially from education loans, is an increasingly common cause. In 2022 alone, India recorded over 13,000 student suicides. Suicides linked to debt also rose sharply, from 4,970 in 2018 to 7,034.
In 2024, a Hapur couple and their daughter died by suicide after harassment over a ₹6 lakh education loan. While in Surat, 22-year-old Chit Gabani ended his life after losing savings and facing threats from a private lender. Similarly, in 2023, Bengaluru student Thejas Nair died by suicide after loan app agents exposed his data and threatened him daily.
Many of these students didn’t just miss payments; shame, pressure, and lack of support overwhelmed them. These cases show that India’s student loan crisis isn’t just a financial problem. It’s a growing mental health emergency.
When Foreign Degrees Leave You in Debt
International university loans are one of the education financing markets with the fastest rate of growth. The average cost of tuition, living costs, and a visa for an Indian student pursuing a master’s degree in the United States in 2024 was between ₹40 and ₹60 lakh. Australia and Canada are only somewhat less expensive.
In FY 2023-24, Indian students borrowed more than ₹21,000 crore to study abroad. Large compensation packages and an international lifestyle are expected. The facts: more stringent immigration laws, a crowded labour market, and payback deadlines that arrive before pay cheques arrive.
One Reddit user shared their experience of taking a ₹40 lakh loan for an MS in the U.S. Now back in India with a modest job, they’re paying ₹66,000 per month in EMIs—more than half their salary. “I cry myself to sleep,” they wrote, “thinking I should have stayed back and found a job in India instead.”
Many others say their interest rates were hiked suddenly, some as high as 18%, because they had little negotiating power and urgent timelines for visa approvals.
Government Banks vs Private Lenders: The Rate Difference
The disparity in interest rates between government banks and private lenders is stark, making the choice of lender crucial for students’ financial futures:
| Lender | Approx. Rate (p.a.) | Best for | Notes |
|---|---|---|---|
| SBI Scholar / Global Ed-Vantage | 8.15–9.80% | Premier institutes, reliable service | Female concession, low fees |
| PNB Pratibha / Udaan | ~7.00–8.10% | Top-tier institutions students | Among lowest rates available |
| BoB Premier Loan | 8.15–9.95% | Domestic & abroad at low fees | Zero processing fee, decent flexibility |
| UCO / IDBI / Central Bank | 8.0–9.5% | Collateral-backed reliable loans | Good for public bank borrower trust |
Despite these favourable rates from government banks, many students still end up with private lenders. This is due to stringent eligibility criteria and lengthy approval processes at public sector banks.
No Safety Net for Struggling Students
In India, families treat student debt like a sacred duty, non-negotiable and binding. Banks should offer a one-year moratorium after course completion, but lenders often send repayment demands much earlier. There’s little room for flexibility, let alone default.
Parents or guardians who co-signed the loans frequently experience harassment or legal action in the event that the student is unable to repay. Young graduates often feel stuck. They can’t afford to take risks, explore lower-paying but fulfilling careers, or pursue further studies.
The government has introduced a few programs to ease this burden. For example, the Credit Guarantee Fund for Education Loans (CGFEL) provides a safety net for loans up to ₹7.5 lakh. But few students use it. Interest subsidies aimed at economically weaker sections also miss their mark—delayed disbursals, low awareness, and paperwork hurdles keep many from benefiting.
India can’t afford to ignore the growing strain student loans are putting on young people. While the number of borrowers may still be relatively small, the emotional and financial cost is anything but. Education loans are no longer just a question of how to pay for college—they’re also tied to anxiety, isolation, and in some tragic cases, loss of life.
Fixing this doesn’t require sweeping reforms overnight, but it does require urgency. Loan terms must be fair and transparent. Debt counselling should be mandatory in colleges. Mental health support needs to acknowledge financial stress as a real and valid trigger. And most of all, families and institutions must stop treating debt as a personal failure and start seeing it as a structural issue.
Money isn’t the only issue with India’s student debt dilemma. It concerns the push to achieve success at any cost and the subsequent silence when things don’t work out as planned. The first step is to break that silence.
