Nurses, Engineers, MBA Grads Biggest Contributors to Bad Debt in Education Loans: Report

Nurses, engineers, and MBA graduates top the list of contributors to education loan NPAs as of December 2020.

According to a report by Times of India, data compiled from all the state-level bankers’ committees (SLBCs), as of December-end, Rs 8,263 crore belonging to more than 3.5 lakh accounts that have availed education loans have been classified as nonperforming assets (NPAs) out of the total education loan outstanding of Rs 84,965 crore that more than 23.3 lakh accounts borrowed.

In NPAs against the outstanding loan amount, nursing tops the list with over 14%, followed by 12.1% in engineering, 7.1% in MBA and 6.2% in medical. Other streams together have 8.4% of the outstanding loans as NPAs.

Stream-wise data shows that of the Rs 84,965 crore total outstanding amount, loans to medical students is Rs 10,147 crore (11.9%), engineering students is Rs 33,316 crore (39.2%), nursing Rs 3,675 crore (4.3%), MBA Rs 9,541 crore (11.2%) and all other streams together Rs 28,286 crore (33.2%).

Compared to the national average of 9.7% of NPAs, it is 14.2% in the eastern region and 11.9% in the southern region. It is only 3.3% and 3.9% in the northern and western regions, respectively, while it is 6.1% and 6.8% in the central and northeastern regions.

While all this data is for the first three-quarters of this fiscal, data from previous years shows how the education sector is among the top contributors to NPAs after industry and agriculture.

Experts opined that job and income loss and drop-out rates following the covid outbreak were key factors behind the surge in NPAs for this loan category.

The rate of NPAs for education loans was significantly higher than in 2019-20 and is the highest in the last three financial years. NPAs for education loans stood at 7.61% in FY20, 8.29% in FY19, and 8.11% in the year ended 31 March 2018, according to finance ministry data. The category also witnessed significantly higher NPAs than housing, vehicle, consumer durable, and retail loans, which were between 1.52% and 6.91% in the financial year 2019-20.

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