KOCHI: Kerala’s education loan story is turning into a paradox. On the one hand, banks are reporting a rebound in outstanding loans: in the April–June quarter of 2025, the total shot up by Rs 1,155.71 crore to Rs 10,472.48 crore, marking a 12.4% growth over the previous three months. Loan accounts too swelled by nearly 30,000, touching 2.67 lakh. Yet, this sudden boom hides a harsher truth, students are under growing financial strain, parents are scrambling for alternatives, and colleges within the state are struggling to attract talent.
“The official ‘education loan’ portfolio no longer reflects the true picture of how Keralites are paying for higher studies. Don’t be misled by these figures,” says Amruth G Kumar, professor and dean at the Central University of Kerala. “Families are no longer depending solely on education loans. They are financing higher studies through agriculture loans, personal loans, even gold loans, because these come with lower interest rates,” he explains. “Only those with absolutely no other means are now forced to take education loans.”
Even the supposed relief built into such loans is being called out. “The moratorium period is a mirage,” Amruth argues. “Banks say repayment begins only after one-and-a-half years, but in reality, they charge for everything once it starts. By then, the debt is crushing. Parents realise too late that the moratorium is just a marketing trick.”
The problem, however, isn’t just financial, it’s academic. Students are voting with their feet, leaving Kerala’s campuses for institutions outside the state and abroad. Why? The courses on offer are outdated. “Most of our aided colleges still run traditional courses, BA History, BA Economics, BSc Botany, BSc Maths,” Amruth points out.
“But students today want hybrid, job-oriented courses. History needs to be linked with archaeology and tourism studies; economics should evolve into econometrics or computational economics. Globally, there are BSc programmes in renewable energy or pollution control. Where are those here?”
Rigid departmental walls are stifling innovation, he says. “We need combinations, bioinformatics, business analytics, data science. For that, you need teachers across disciplines working together. But our aided college system is stuck in silos. Students, meanwhile, look elsewhere.”
The banking sector, meanwhile, is grappling with the fallout. Kerala’s non-performing assets (NPAs) in education loans stood at Rs 713.78 crore as of June 30. The State Bank of India (SBI) alone has an exposure of over Rs 4,144 crore, cornering 40% of the state’s education loan market. It handles nearly 1 lakh accounts — 37% of the total.
“We are extending moratoriums in genuine cases. But stress is visible. Overseas loans typically run for 3–4 years, and those who borrowed around 2020 are now entering repayment. We are beginning to see the pressure,” an SBI official says.
This pressure, experts warn, could soon spiral unless Kerala reimagines both financing and education. Dr K Raviraman, expert member, Kerala State Planning Board, believes the state must push for an alternative. “We need a ‘Study Now, Pay Later’ model where students repay once they start earning. Many western countries have implemented such schemes successfully.”
Kerala’s rising loan figures reveal a state caught between outdated academic offerings and a financing system that weighs heavily on families.