Education Loan Access Tightens Even as Study Costs Climb, Parliamentary Panel Raises Red Flag

 A new parliamentary report warns fewer students are receiving education loans despite rising tuition and living costs. Lawmakers say the trend undermines equal access to higher education.

A parliamentary committee reported in early December 2025 that education loan access is shrinking while total student debt has surged, signalling rising fees and tighter lending norms nationwide.

The Standing Committee on Education, Women, Children, Youth and Sports tabled its 372nd report in Parliament in December 2025. The report shows that even as higher-education fees in India increase sharply, education loan access continues to drop. This mismatch threatens millions of students depending on loans to pursue technical, professional and overseas education.

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Panel’s Data Shows Sharp Drop in Loan Accounts Despite Rising Education Costs

The committee highlighted that active education-loan accounts fell, even as the total amount borrowed by students more than doubled over 11 years.
 

• Loan accounts decreased by 2.73 lakh since 2014.
• Borrowing needs rose sharply because tuition, hostel fees and materials became more expensive.
• Many students were denied loans due to collateral, guarantor and documentation requirements.
• Under the PM Vidyalaxmi Scheme (2025), only 21,967 loans were disbursed out of 55,887 applications, and only ₹688.27 crore was released out of ₹4,427 crore sanctioned.

A LoansJagat explainer notes that many banks have tightened risk filters, limiting education loan access for students without strong guarantors.

Why Loan Access Has Declined: A Look at Past Trends and Structural Issues?

India’s higher-education landscape has undergone significant fee inflation. Engineering, medical and management courses in private colleges saw consistent double-digit increases in fees over the past decade. Study-abroad costs also surged due to currency depreciation.

Despite these trends, education loan access weakened for several reasons:
 

The Print reported that most education-loan disbursements remain concentrated in southern states like Tamil Nadu, Kerala and Karnataka, while states in North and East India receive far fewer approvals.

NDTV found that government-backed subsidised loan schemes were “underutilised due to slow processing, lack of clarity and low outreach,” limiting true access for underprivileged students.

These past shortcomings explain why the committee says current levels of education loan access are “not aligned with national education goals.”

What Stakeholders and Lawmakers Are Saying?

The committee chaired by MP Digvijaya Singh said the shrinking loan coverage “seriously threatens equal opportunity” in higher education. It recommended:

• Easier documentation
• Relaxed collateral rules
• More transparent approval processes
• Income-linked repayment options

Experts quoted in NDTV and TOI added that loan access must be expanded urgently to ensure students from weaker backgrounds are not locked out of professional courses.

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Conclusion

The parliamentary findings make one message clear: education loan access is shrinking at the very moment when costs are rising fastest. 

Without urgent reforms, India risks pushing millions of aspiring students out of higher education.
 

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