KOCHI: Education loans can be brutal. Sherly Paul (name changed), a widow from Kochi, learned this the hard way. In 2010, she availed a Rs 20 lakh loan from the State Bank of India to fund her elder son’s BTech in London. But by the time the loan was paid off in 2015, she had coughed up nearly Rs 50 lakh, thanks to a steep interest rate of around 15% and the burden of paying a 33% margin money on each disbursal.
“When an instalment of Rs 13 lakh had to be paid for semester fees, the bank provided only Rs 10 lakh. We had to come up with Rs 3 lakh every time,” she recalls.
In 2016, she took another education loan — Rs 35 lakh from Canara Bank — for her son’s postgraduate studies in the US. This time, the interest rate was lower, starting at 11% and eventually dropping to 9%. But the total repayment still ballooned to Rs 50 lakh. “We pledged gold jewellery worth Rs 10 lakh last year to settle the loan,” she says. “When I considered another education loan for my younger son, my elder son asked, ‘Do you want to go through the same trauma?’”
Fortunately for Sherly, her son landed a well-paying job in the US after his degree. But many others haven’t been as lucky.
Dr Sathish, a member of the faculty at a homoeopathy college in Chottanikkara, borrowed Rs 20 lakh for his son’s education in the UK. His son worked part-time along with his studies to repay part of the loan. But after two years of searching for a job in Europe following graduation, he returned to Kerala unemployed.
And he’s not alone. A growing number of students are returning to Kerala on the expiry of their two-year post-study visa, having failed to secure proper employment abroad. Many spend their final months overseas working in retail stores, fuel stations, pubs, and other gig jobs — just to stay afloat.
The growing pressure on families is staggering. In most cases, overseas education was seen as a golden ticket — a route to high-paying foreign jobs and upward mobility. Instead, it’s become a financial sinkhole for many.
‘Kerala most exposed’
The numbers reveal the scale of the crisis. As of December 31, 2024, Kerala topped the country in education loan exposure, with outstanding loans totalling Rs 9,387.11 crore spread across 2,57,669 student accounts. This means nearly as many families are carrying the burden of overseas education-related debt. In comparison, Maharashtra had Rs 6,158.22 crore in education loans, Andhra Pradesh Rs 5,168.34 crore, and Telangana Rs 5,103.77 crore. What’s more alarming is that Rs 880.74 crore worth of loans in Kerala have already turned into non-performing assets (NPAs), accounting for 9.38% of the state’s education loan portfolio.
With defaults rising, banks are increasingly invoking the SARFAESI Act to recover dues by selling off mortgaged properties — usually land or home deeds used as collateral for loans above Rs 7.5 lakh. “We’re seeing a surge in such cases,” an official with a private bank said. “Most families had pinned all their hopes on a foreign job, and now they’re unable to meet repayments.”
‘Rise in legal interventions’
Legal interventions are becoming common, too. “When banks move to auction mortgaged properties, borrowers often rush to courts for a stay,” a Kochi-based lawyer said. “Technically, the courts have no jurisdiction, but banks often agree to settlement plans to avoid prolonged legal battles.”
According to Renu A, MD of Godspeed, a Kochi-based overseas education consultancy, poor planning and misaligned aspirations are at the heart of the problem. “Many students choose destinations or courses without understanding their strengths or researching job market trends,” she says. “They end up in areas with limited employment prospects or in institutions that don’t give them the competitive edge.”
What began as an aspiration to leapfrog into global careers is turning into a cautionary tale.