The rush to send children abroad for higher education is turning into a financial nightmare for thousands of families in Kerala. Latest figures show the state tops the country in outstanding education loans, with over ₹9,387 crore disbursed across 2.57 lakh student accounts as of December 31, 2024.
Unlike other major states where loans are mostly used for domestic education, nearly 90% of Kerala’s education loans have reportedly gone into funding studies abroad—mostly in countries like Canada, UK and Australia. As more students return without completing their courses or securing jobs, repayment has become a mounting challenge.
Observers say this trend, intensified after the pandemic, is now pushing middle-class families to the edge—sometimes even leading to property seizure.
One such case is of a teenage boy from a migrant village in Idukki. Thomasukutty was the first in his locality to fly to Canada. His parents, hoping to boost their family’s status, mortgaged their house and land to fund the ₹30 lakh trip.
But once in Canada, the chosen course didn’t work out. A year and a half later, Thomasukutty was forced to return—depressed and jobless. The loan remained. The family managed to repay part of it with help from wealthier relatives. Many others have not been so fortunate.
With repayments faltering, Kerala has seen a surge in non-performing assets (NPAs) linked to education loans—₹880.74 crore as of the latest data, forming over 9.3% of the state’s education loan portfolio.
Meanwhile, banks are getting aggressive with recovery. Loans above ₹7.5 lakh require collateral, usually a home or piece of land. In several cases, these are now at risk. Under the SARFAESI Act, lenders are authorised to seize property when loans go unpaid.
A recent case in Muvattupuzha highlights the severity. The son of a middle-class couple had gone abroad on an education loan. With repayments failing, the bank moved to attach the pledged home. Only after the elderly parents raised a legal protest and threatened suicide was the action temporarily halted. The burden of debt, however, still looms.
For comparison, Maharashtra reported ₹6,158 crore in education loans, Andhra Pradesh ₹5,168 crore, and Telangana ₹5,103 crore. But in these states, a majority of students reportedly pursued courses within India.
Kerala, on the other hand, appears to have followed a different path—with students often taking loans of ₹20–30 lakh to pursue diploma or undergraduate courses abroad. In many cases, the course choices were reportedly based more on visa eligibility than academic or job-market relevance.
Financial experts have warned for years that the "foreign education at any cost" approach could become unsustainable. With banks now enforcing stricter recovery norms, education loans—especially those taken for overseas studies—are emerging as a major social stress point.
The dream of a foreign degree still holds power, especially among middle-class families looking for upward mobility. But the rising number of returnees without jobs, combined with the sheer size of unpaid loans, may soon force a rethinking of that dream.
